Fed Comments on Economy and Zero Rate Policy Fuels Market Rise

Nichole Harper
29 Jul, 2015
New York City

Federal Reserve left its key rate unchanged and said economy and job markets continue to improve. Fed comments lifted broad array of market indexes. S&P 500 index has rebounded nearly 2% after a correction of more than 3%.

[R]5:05 PM New York City, New York – Federal Reserve left its key rate unchanged and said economy and job markets continue to improve. Fed comments lifted broad array of market indexes. S&P 500 index has rebounded nearly 2% after a correction of more than 3%.[/R]

Market indexes on Wall Street advanced after the U.S. Federal Reserve left its key rate unchanged and said the economy and employment situation are continuing to strengthen.

After a two-day meeting, policymakers were expected to make no move and did not dispel widely held belief that the central bank is ready to raise rates as early September after almost a decade of zero rate.

On Wall Street, Tollbooth Strategy Index increased 31.80 or 0.3% to 10,806.60.

S&P 500 index rose 11.88 or 0.6% to 2,105.27 and the Nasdaq Composite Index gained 13.48 or 0.3% to 5,102.41.

Crude oil in New York gained $1.22 to $49.20 a barrel and gold fell $2.20 to $1,094.50 an ounce.

U.S. Movers

MasterCard Inc ((MA)) fell 61 cents to $94.55 after the electronic payment services provider reported revenues in the second-quarter ending in June rose 1% to $2.39 billion form a year ago period.

Net income in the quarter slid 1% to $921 million or 81 cents per diluted share compared to $931 million or 80 cents from the same quarter last year.

MasterCard said worldwide purchase volume in the quarter soared 12% to $841 billion and operating margin surged to 54.9%.

As of June 30, the company’s customers had issued 2.2 billion MasterCard and Maestro-branded cards.

Twitter Inc ((TWTR)) plunged 13.5% or $4.94 to $31.60 after the social network services provider said revenues in the second-quarter ending in June surged 60.9% to $502.4 million form a year ago period.

Net loss in the quarter narrowed to $136.7 million or 21 cents per diluted share compared to $144.6 million or 24 cents from the same quarter last year.

Twitter forecasted revenues for the third-quarter in the range of $545 million to $560 million.

For the year, the company forecasted revenue between $2.20 billion and $2.27 billion compared to prior estimate of $2.17 billion to $2.27 billion.

European Markets

In London trading, FTSE 100 index increased 49.70 or 0.8% to 6,604.94 and in Frankfurt the DAX index gained 24.25 or 0.2% to 11,199.59.

In Paris, CAC 40 index rose 14.59 or 0.3% to 4,992.15.

Barclays Plc jumped 2% to 285.30 pence after the U.K.-based financial services provider reported total revenues in the first-half ending in June increased 3.8% to £14.14 billion from £13.62 billion in a year ago period.

Net profit in the period surged 31% from a year ago to £2.11 billion compared to £1.61 billion and diluted earnings per share increased to 9.7 pence from 7 pence.

The lender said total adjusted operating expenses declined 7% to £8.26 million and pre-tax profit in the period climbed 25% to £3.11 billion form £2.50 billion in a year ago period.

LVMH Moet Hennessy Louis Vuitton SE gained 2% to €169.20 after the France-based luxury goods retailer reported revenues in the first-half ending in June soared 19.3% to €16.71 billion or $14 billion in a year ago period.

Net profit in the quarter jumped 4.6% from a year ago to €1.58 billion compared to €1.51 billion and diluted earnings per share increased to €3.13 from €3.

Asian Markets

In lacklustre but volatile trading, Nikkei average in Tokyo closed down as commodities traded lower and volatility in Chinese markets ebbed for now.

On the economic front, retail sales in June increased 0.9% to 11.46 trillion yen from 3% climb in May, the Ministry of Economy, Trade and Industry said.

Sales from large retailers slipped 0.3% to 1.64 trillion yen compared to after surging of 5.3% in last month.

The ministry added Wholesale sales added 0.9% to 26.98 trillion yen and commercial sales jumped 0.9% to 38.44 trillion yen.

The Nikkei 225 Stock Average slid 25.98 to 20,302.91 and the broader Topix index rose 4.48 to 1,633.94.

The yen closed at 123.63 against a dollar.

Hitachi, Ltd slipped 1.3% to 736.60 yen after the diversified technology company stated revenues in the first-quarter ending in June jumped 7% to 2.31 trillion yen from 2.16 trillion yen in a year ago period.

Net income in the quarter soared 131% to 54.9 billion yen compared to 41.8 billion yen and diluted earnings per share climbed to 11.36 yen from 8.66 yen the same period a year ago.

NTT Docomo Inc jumped 2.8% to 2,533.50 yen after the mobile and broadband service provider said revenues in the first-quarter ending in June edged up 0.1% to 1.08 trillion yen from 1.07 trillion yen in a year ago period.

Net income in the quarter jumped 23.8% to 168.78 billion yen compared to 136.38 billion yen and earnings per share climbed to 43.48 yen from 32.89 yen the same period a year ago.

For the year, the Docomo forecasted revenues to jump 2.9% to 4.51 trillion yen and net income to climb 14.6% to 470 billion yen.

Nomura Holdings, Inc fell 0.5% to 860.40 yen after the investment advisor said total revenues in the first-quarter ending in June jumped 10% to 508.45 billion yen from 462.15 billion yen in a year ago period.

Net income in the quarter climbed 246.1% to 68.74 billion yen compared to 19.86 billion yen and diluted earnings per share soared to 18.65 yen from 5.26 yen the same period a year ago.

Market indexes in Mumbai rose and rupee struggled near its recent low as crude oil decline extends deeper and commodities remained depressed.

Crude oil is trading down 55% from a year ago and a price of barrel traded in New York around $47 a barrel and in London traded near $52 a barrel. Also, the spread between the crude varieties is smallest in the year-so-far.

Weakening of oil and gold prices, India’s two largest imported products and the biggest contributors to trade deficit, have been on the decline in the last five week, helping the domestic economy and arresting inflationary forces.

Rupee strengthened 6 paisa to 63.85 against one U.S. dollar.

The Sensex Index advanced 104.20 or 0.4% to close at 27,563.43. The CNX Nifty increased 38.05 or 0.5% to 8,375.05.