The Federal Open Market Committee lowered its target for overnight interest rates by a quarter percentage point to 4.5% Wednesday. This is the lowest federal funds rate in the tenure of Fed chairman Ben Bernanke. The quarter-point drop in the rate was expected by traders and economists on Wall Street. However, the vote was not unanimous.
The U.S. economy shook off the worst housing downturn in a generation to grow at a 3.9% annual pace in third quarter, the best performance in six quarters. The increase in gross domestic product was better than the 3.4% gain expected by economists.
ADP reported that private payrolls grew by 106,000 in October, following a revised 61,000 gain in September.
U.S. compensation costs rose 0.8% in the third quarter, as benefits eased a bit. The increase in quarterly employment costs was below expectations.
Gains in spending on commercial and public construction projects offset another decline in spending on housing projects in September, pushing overall construction spending up by 0.3%.
Crude supplies fell by 3.9 million barrels to 312.7 million barrels in the week ending Oct. 26. Gasoline supplies rose by 1.3 million barrels to 195.1 million barrels.
J.P. Morgan Chase (JPM) announced that its mortgage origination rose 35% in the third quarter from year-ago levels, reaching $39.2 billion.
Google Inc. (GOOG) is in discussions with Verizon Wireless (VZ) to bring cell phones to market customized for Google's software. Google is expected to make an announcement related to its mobile plans in the next two weeks and hopes to have customized phones on the market by the middle of next year.
Alcatel-Lucent SA (ALU) said it will cut a further 4,000 jobs and replace its chief financial officer after it posted its third straight quarterly loss.
Wal-Mart Stores Inc. (WMT) said it will begin offering holiday deals to customers beginning Friday. The company said instead of waiting until the day after Thanksgiving -- the traditional start to the holiday shopping season -- it will offer the holiday prices three weeks early.
In Forex News Today
Prior to this afternoon?s Fed decision, analysts pondered the Federal Reserve's next move on interest rates, while currency investors considered the possible and likely market reaction -- the consensus for both is a matter of degree, not direction. As no one was expecting an interest rate hike, no one bet on a sustained dollar rally this quarter, either. And just as bad economic or corporate headlines -- or even record-high crude oil prices -- rarely seem to derail stock market rallies these days, nothing the Fed could possibly deliver was likely to stop or prevent the dollar's decline. Whatever the Fed decided to do, the dollar was likely to bear the near-term brunt of the market's knee-jerk reaction either way, and then move in one direction - down. Whether or not the Fed decided to cut rates today, many analysts believe that the dollar is in for a near term global beating.
Meanwhile, sterling rose to a 26-year high against the dollar after a member of the Bank of England?s monetary policy committee, questioned the need for a near-term cut in UK interest rates. Fears over the effect of the credit squeeze on the economy, combined with signs of a slowdown in the housing market, have seen markets price in a cut as the next move in UK interest rates, which at present stand at 5.75 per cent.
The Hong Kong dollar hit the upper end of its trading band for the first time this week, prompting the Hong Kong Monetary Authority (HKMA) to refute speculation that it would abandon its peg against the US dollar. Analysts said speculation had been increasing that they might abandon its peg to the dollar, or allow its currency to trade in a wider range, since a strengthening Chinese currency and a weakening US dollar were making the territory?s imports more expensive.
Scheduled Economic Reports (Thursday)
Initial Jobless Claims (Week of Oct 27), Incomes (Sep), Consumer Spending (Sep), Coe Inflation (Sep), ISM Manufacturing Index (Oct)
In Earnings News
Hess Corp.'s (HES) said earnings rose to $395 million, or $1.23 a share, up from $296 million, or 94 cents, earned in the year-earlier third quarter. Analysts were looking for earnings of $1.36 a share.
MasterCard Inc. (MA) said that increased cardholder spending, particularly overseas, boosted its profit by 63 percent in the third quarter. The company said profit in the July to September period was $314 million, or $2.31 a share.
Weyerhaeuser Co. (WY), one of the world's largest lumber and paper producers, said its third-quarter profit dropped 55 percent on charges and weakness in the housing construction market that hurt its real estate business.
Scheduled Earnings Reports (Thursday)
Exxon Mobil, Blockbuster, Eastman Kodak, Credit Suisse, Office Max, Electronic Arts, Napster, SBA Communications, Trump Hotels & Casino, World Wrestling Entertainment
Stocks in the News
Dell Inc (DELL) filed past-due reports with the SEC, including information for fiscal years 2003 through 2006 and the first quarter of fiscal 2007.
Sirius Satellite Radio (SIRI) and XM Satellite Radio Holdings Inc. (XMSR) continue to talk about merger possibilities. An independent proxy advisory firm, urged shareholders of the two companies vote in favor of a proposed merger.
DreamWorks Animation (DWA) said its third-quarter profit grew more than four-fold on proceeds from the hit sequel "Shrek the Third."
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