The markets drifted higher ahead of Tuesday's FOMC meeting. The Dow Jones Industrial Average gained 63.56 points (+0.46%), Standard & Poor's 500 index increased 5.70 points (+0.37%), and the Nasdaq finished up 13.25 points (+0.47%). Volume on the NYSE was light at 1.18 billion shares as expected, and advancers beat decliners by a ratio of about 9:7.
Oil continued its trek to $100/barrel Monday, rising $1.67 to $93.53. Bad weather forcing Mexico to shut down 20% of its production was the main reason for the increase. Merrill Lynch (+2.0%) dominated the headlines again, after it was reported CEO Stan O'Neal is close to a deal to leave the company (full story). The US 10-Year Treasury traded 7/32 higher in price, yielding 4.38%. The dollar index declined 0.3%.
After the day crude had, it is no surprise energy (+0.7%) was a leading sector. The materials sector (+1.2%) had the best day however. The financial sector (-0.1%) lagged despite the Fed forecasted by experts to ease. Dow component Verizon (+0.9%) beat estimates (full story), while Kellogg (-2.4%) slumped on a disappointing outlook (full story).
Consumer confidence (10:00 AM) will be released before the Fed meeting begins (2:30 PM). A 25 basis point cut is already priced in, but things get complicated if the Fed decides to do something different. No cut will greatly disappoint the market; while another 50 basis point cut could signal the Fed is extremely concerned about the economy and cause panic or propel the markets to new highs.
Commentary: Cutting Rates Further Will Only Lead to Disaster • Johnson & Johnson: Strong Earnings, Revenue and Dividend Trends
Stocks to watch: MER, VZ, K