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While you were sleeping No rush to taper, Fed says

Thursday 11th July 2013

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Wall Street was mixed as minutes from the latest Federal Open Market Committee meeting showed policy makers were looking for further strength in the US labour market before easing the central bank's bond-buying program.

In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.20 percent, while the Standard & Poor's 500 Index declined 0.09 percent to 1,650.80. The Nasdaq Composite Index rose 0.31 percent. The S&P 500 today has swung between 1,647.66 and 1,657.92.

"While recognising the improvement in a number of indicators of economic activity and labour market conditions since the fall, many members indicated that further improvement in the outlook for the labour market would be required before it would be appropriate to slow the pace of asset purchases," according to the minutes of the FOMC's June 18-19 meeting released today.

The meeting took place before the release of the latest monthly government jobs data, released last Friday, showed companies added more jobs than economists had expected in June.

"The market's pretty convinced that the Fed's not going to do anything to dramatically change the liquidity that they're pumping into the system, and the minutes support that," Scott Wren, the St. Louis, Missouri-based senior equity strategist at Wells Fargo Advisors, told Bloomberg News.

Investors will closely watch Fed Chairman Ben Bernanke who is set to speak later today in Boston.

Bond investors had a more sombre take on the FOMC minutes, pushing yields on the 10-year US Treasury five basis points higher to 2.68 percent. The US dollar shed 1.1 percent against the euro.

US wholesale inventories dropped 0.5 percent in May because of stronger sales, according to Commerce Department data released earlier in the day. Economist polls by Reuters and Bloomberg News had predicted an increase.

"With the drawdown in inventories, if the pace of sales is maintained, we'll see a pickup in production," Millan Mulraine, director of US rates research at TD Securities in New York, told Bloomberg News. The sales figures show "we're ending the second quarter on fairly strong footing."

Hewlett-Packard increased 2.6 percent to US$26.12. Citigroup upgraded its recommendation for the computer maker to buy from sell and doubled its price estimate for the shares to US$32.

In Europe, the benchmark Stoxx 600 Index ended the day with a 0.1 percent gain from the previous close. Elsewhere, France's CAC 40, the UK's FTSE 100 index and Germany's DAX all ended 0.1 percent weaker.

BusinessDesk.co.nz

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