|Euro dips on German data, shares up as Fed eyed|
|Wednesday, 24 October 2012 14:22|
The euro slipped on Wednesday on signs that the euro zone is heading for a deeper recession than previously feared, but global shares inched higher after Tuesday's steep fall as investors awaited the Federal Reserve's announcement.
U.S. stocks rose slightly, though the S&P 500 has declined 3 percent over the last four sessions as weak earnings outlooks and top-line revenue misses by large multinational companies have raised concerns about a slowing economy.
The Fed's policymaking statement is expected at 2:15 p.m. (1815). Analysts believe the U.S. central bank will wait until at least December to make any changes in its current plans to buy $40 billion of mortgage debt per month. It's also likely that the Fed will repeat that is expects to keep overnight interest rates near zero through at least mid-2015.
Data showed China's manufacturing sector shrank for the 12th consecutive month in October, though signs that the slowdown was easing provided temporary relief to a slumping market.
Boeing Co (BA.N) reported stronger-than-expected earnings and raised its full-year 2012 outlook. Financials were among the day's top performers with Citigroup (C.N) up 1.7 percent at $37.53 and JPMorgan Chase (JPM.N) up 1 percent at $41.75.
"We're seeing some weakness in earnings, but it's the tone from company management that has people concerned. It was anticipated that earnings wouldn't be all that good, but the tone is catching people off guard," said Steven Bulko, chief investment officer of Lombard Odier Asset Management, in New York.
"A lot of companies are saying they exited the quarter weaker than where they entered," he added. "A lot are resetting expectations ahead of the fiscal cliff."
The euro fell against the dollar and yen on unexpectedly weak German data. But the euro's declines were limited after Greece's finance minister said Athens had been given additional time by international lenders to impose its austerity cuts, an assertion played down by leading EU officials.
The euro hit a session low of $1.2918, the lowest in a week, before paring losses to last trade at $1.2958, down 0.2 percent for the day.
Activity in Germany's manufacturing and service sectors declined for a sixth straight month in October as order books thinned, indicating Europe's largest economy has clearly stagnated in the second half of 2012.
Traders were shifting their attention to an announcement from the Federal Reserve's latest policy meeting later in the day. Most expect it to be a non-event following the central bank's aggressive easing action in September.
The Dow Jones industrial average .DJI was up 14.30 points, or 0.11 percent, at 13,116.83. The Standard & Poor's 500 Index .SPX was up 1.76 points, or 0.12 percent, at 1,414.87. The Nasdaq Composite Index .IXIC was up 2.18 points, or 0.07 percent, at 2,992.64.
European shares halted a three-day slide on Wednesday with the pan-European FTSEurofirst 300 .FTEU3 index closing up 0.5 percent after falling 1.7 percent on Tuesday. An index of world stocks .WORLD was up 0.2 percent at 1301.99.
Brent crude oil fell for a seventh consecutive session after U.S. crude stocks rose last week, offsetting earlier strength prompted by signs that Chinese demand could stage a recovery.
Brent crude for December delivery was down 47 cents at $107.78 a barrel and looked on track for its lowest close since early August. U.S. December crude was down 94 cents at $85.73 a barrel.
The benchmark 10-year U.S. Treasury note was down 4/32 in price, the yield at 1.777 percent.
EARNINGS STILL KEY
Boeing's stock slipped 0.6 percent to $72.39 after earlier rising as high as $75. The U.S. aircraft manufacturer posted stronger-than-expected results for the third quarter and raised its forecast for the full year as its defense business improved and commercial plane deliveries surged.
That optimistic outlook bucked a recent trend by companies with a large global footprint - including DuPont (DD.N), United Technologies Corp (UTX.N) and 3M Co (MMM.N) - of lowering their full-year forecasts.
Facebook Inc (FB.O) surged nearly 21 percent to $23.53 a day after the social networking company said its mobile advertising revenue increased in the third quarter at a much quicker pace than expected.
According to Thomson Reuters data through Tuesday, of the 161 companies in the S&P 500 that have posted earnings, 60 percent have beaten analysts' estimates. Earnings are expected to decline 2.2 percent in the third quarter, compared with the same period a year ago.
Financial information firm Markit said its U.S. "flash," or preliminary, Purchasing Managers Index for the manufacturing sector edged up to 51.3 this month from 51.1 in September. But slow growth and economic uncertainty suggested the sector's recent struggles may persist over the final months of 2012.
Data on the housing market showed new U.S. single-family home sales surged in September to their highest level in nearly 2-1/2 years, further evidence that the housing market recovery is gaining steam, while house prices rose 0.7 percent on a seasonally adjusted basis from July to August.