Fed Outlook Lifts U.S. Stocks on Second Day, Commodities Drop

Nichole Harper
18 Sep, 2014
New York City

Stocks on Wall Street extended gains for the second day in a row after the Fed pledged to keep rates low for a considerable period after the end of bond buying program next month. The dollar against most currencies and gold and oil and other resource materials traded at multi-year low.

[R]1:15 PM New York – Stocks on Wall Street extended gains for the second day in a row after the Fed pledged to keep rates low for a considerable period after the end of bond buying program next month. The dollar against most currencies and gold and oil and other resource materials traded at multi-year low.[/R]

Stocks on Wall Street extended gains for the second day after the Fed reaffirmed its commitment to low interest rate for “a considerable time” after the end of bond buying program as early as next month.

Tollbooth Index gained 0.5% or 44.88 to 9,525.52.

S&P 500 index increased 8.66 to 2,010.26 and the Nasdaq Composite Index added 28.47 to 4,590.68.

Initial claims of unemployment declined 36,000 to 280,000 for the week ending on Sept 13, the U.S. Labor Department reported today. Total claims of unemployment fell to a seven-year low.

U.S. Movers

ConAgra Foods Inc ((CAG)) jumped 2.5% or 80 cents to $32.81 after the packaged food maker reported total sales in the first-quarter ending on August 24 slid 0.4% to $3.70 billion from a year ago period.

Net income in the quarter surged 229.1% to $484.5 million or $1.12 a diluted share compared to $147.2 million or 34 cents from a same quarter last year.

The company raised its revenue forecast for the year between $2.23 billion and $2.24 billion from earlier range of $2.17 billion to $2.23 billion and adjusted EBITDA between $685 million and $695 million but lowered its estimate of diluted earnings per share in the range of $5.70 to $5.80.

Rite Aid Corporation ((MCS)) plunged 15.5% or $1.03 to $5.61 after the retail drugstore chain revenue in the second-quarter ending in August rose 3.9% to $6.5 billion from a year ago period.

Same store sales in the quarter jumped 4.1% and pharmacy sales rose 5.6%. The number of prescriptions filled in same stores increased 3.7% from the prior year period.

Net income in the quarter soared 289.6% to $127.8 million or 13 cents a diluted share compared to $32.8 million or 3 cents from a same quarter last year.

The stock plunged after the drug store chain operator estimated fiscal 2015 net income between 22 cents and 33 cents per share compared to previous estimate between 30 cents and 40 cents a share.

Red Hat Inc. ((RHT)) fell 20 cents to $60.88 after the open-source software solution provider agreed to acquire privately-held FeedHenry, a mobile application platform provider for $81.8 million in cash.

The transaction is expected to close in third-quarter of fiscal 2015.

European Markets

Investors focused on the outcome of referendum in Scotland that may lead to constitutional rearrangement in the United Kingdom after three centuries.

The results of referendum are scheduled to be announced from the early morning tomorrow and nearly 90% of 4 million eligible voters are expected to vote.

In London trading, FTSE 100 index increased 0.5% or 35.92 to 6,816.82 and in Frankfurt the DAX index climbed 1.2% or 120.78 to 9,728.28.

In Paris, CAC 40 index jumped 0.8% or 34.80 to 4,466.21.

Bayer AG climbed 5.8% to €112.35 after the Germany-based diversified manufacturer plans to spin-off its plastics business for about €8 billion or $10.3 billion to focus on life sciences operations.

Banco Santander, S.A gained 1.4% to €7.79 after the Spain-based commercial bank plans to launch public tender offer to acquire 25% stake of its Brazilian unit that it doesn’t already own.

Petra Diamonds Limited rose 0.3% to 196.40 pence after the U.K.-based reported revenue in the year ending in June soared 20% to $471.8 million from $392.5 million a year ago period.

Net profit in the year surged 142% from a year ago to $67.5 million compared to $27.9 million and diluted earnings per share jumped to 9.40 cents from 6.13 cents.

Asian Markets

Chinese Premier Xi Jinping pledged $20 billion of investments in India and work with the nation to address the rising trade imbalance.

China plans to invest in the development of industrial parks in Gujarat and Maharashtra and also open market for generic drugs and sea food from India and work on infrastructure development projects.

The Sensex Index climbed 480.92 or 1.8% to close at 27,112.21 The CNX Nifty jumped 139.25 or 1.7% to 8,114.75.

Stocks in Tokyo closed higher after the yen dropped to a new six-year low and the Nikkei index gained more than 1% and crossed 16,000 for the first time since January.

The yen softened after the U.S. Federal Reserve lifted its outlook for interest rates in 2015 and set expectations of rate increase next year.

However, the statement from the Fed was interpreted differently by currency traders. Currency market anticipates faster increase in rates and dragged the yen to a new six-year low.

In Tokyo, the Ministry of Finance reported merchandise trade deficit in August narrowed to 948.5 billion yen from 971.4 billion yen a year ago month and followed by 962.1 billion yen deficit in July.

August exports dropped 1.3% to 5.70 trillion yen from a year earlier and decline from 3.9% increase in the previous month. Imports slumped 1.5% to 6.65 trillion yen from a year ago period following 2.3% gain in July.

The Nikkei 225 Stock Average jumped 178.90 or 1.1% to 16,067.57 and the broader Topix index gained 12.95 to 1,317.91.

The yen declined to close at 108.61 against one U.S. dollar.