US Stock Futures Rise Ahead of Fed's Rates Decision
New York (Dec 16) US stock futures moved higher on Wednesday as investors waited for a decision from the Federal Reserve on whether it will raise interest rates for the first time in nearly a decade.
S&P 500 futures were up 0.49%, Dow Jones Industrial Average futures added 0.55%, and Nasdaq futures rose 0.47%.
The meeting, which concludes on Wednesday with an announcement at 2 p.m. EST, will likely result in the first interest rate hike since June 2006. Odds for a hike were boosted following a better-than-expected jobs report for November. Whether markets can extend Tueday's gains or shuffle further into the red for the year depends on the Fed's rhetoric in its statement and Chair Janet Yellen's comments in the press conference shortly after the central bank announces its decision.
"With respect to the FOMC statement, we expect little change in tone from what was a relatively upbeat October communiqué," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. "We expect the ... language to reinforce policymakers' desire to raise interest rates at a 'gradual' pace, economic and financial conditions permitting."
Crude oil supplies unexpectedly rose in the past week, according to the American Petroleum Institute. The agency said crude supplies increased 2.3 million barrels in the week ended Dec. 11. Analysts had expected inventories to decline by 2.5 million barrels. Official inventories data from the Energy Information Agency will be released later Wednesday. West Texas Intermediate crude oil was down 0.6% on Wednesday to $37.13 a barrel.
Valeant Pharmaceuticals (VRX) fell in premarket trading after reducing its profit forecasts for the fiscal fourth quarter and year ahead following months of scrutiny over its distribution model. The drugmaker said it expects adjusted fourth-quarter earnings of $2.55 to $2.65 a share, down from previous expectations of $4 a share. The company also slashed its fourth-quarter revenue outlook to $2.7 billion to $2.8 billion from previous guidance of $3.25 billion to $3.45 billion.
AstraZeneca (AZN) shares were on watch after the drugmaker agreed to buy Takeda Pharmaceutical's respiratory business. The $575 million dollar deal will give AstraZeneca access to Takeda's roflumilast, a treatment that focuses on chronic obstructive pulmonary disease.
Dover (DOV - Get Report) moved lower after reducing its outlook for the year. The machinery company said it expects full-year profit of $3.62 a share, down from previous guidance of $3.73 to $3.80 a share. Analysts had expected profit of $3.74 a share. Dover said the new outlook was due to market weakness and restructuring costs.
Heartland Payment Systems (HPY - Get Report) jumped on Wednesday after agreeing to be acquired by Global Payments (GPN - Get Report) for $100 a share. The deal is worth a total $4.3 billion and values Heartland at a 17% premium to its Tuesday close.
Ascena Retail Group (ASNA - Get Report) climbed after its board approved a $200 million share buyback plan. The retailer had $90 million remaining in its current buyback program.
Baker Hughes (BHI - Get Report) and Halliburton (HAL) shares were on watch after the companies said they had extended the time period to close their proposed merger. The oil companies have faced scrutiny from the Department of Justice over antitrust concerns.
Chipotle (CMG) expects to reduce its use of locally sourced ingredients in the face of an E.coli outbreak. Health officials have not been able to specify the cause of the outbreak, though said it was likely tied to produce. Cases of E.coli have been reported in nine states and hospitalized 52 people.
Data on U.S. housing starts in November will be released before the bell Wednesday. Economists expect the number of new homes being built over the month to have increased 1.135 million from an increase of 1.06 million a month earlier.
Industrial production activity in November, also out Wednesday morning, is expected to have fallen 0.1% in November, a slower contraction than the 0.2% decrease seen in October.