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News That Moved the Market
Markets End Higher After FOMC Minutes Released. The markets were able to end the day with gains after investors mulled over the latest FOMC minutes. The Fed said it was ready to continue easing rates, but once the economy resumes some momentum, but it will look to swiftly increase rates again. It also projected the economy's growth to slow to 1.2%-2.0%, a drop from the 1.8%-2.5% it forecasted in October. Inflation was a hot topic, as the Fed still expected the economic slowdown to help dampen such pressures, however, it was clear in the minutes this view was not shared by all members. Dallas Fed president Richard Fisher voted against the last rate cut, believing the upside risks to inflation trumped downside risks to growth. In all, the minutes had both good and bad points, but investors keyed in on the fact the Fed was ready to cut rates again to spur growth and avoid a recession.
Inflationary Pressures Remain. Before the Minutes were release, the Labor Department announced consumer prices jumped 0.4%, while core prices increased 0.3%. The figures were greater than expected, and revealed the economic slowdown had failed to alleviate inflationary pressures. Year-over-year, CPI increased 4.3%, while core CPI climbed 2.5%. The Fed will now have to be extremely careful easing rates, and must look to increase rates again as soon as it thinks the economy can handle it.
Another Record Day For Crude. Oil marched higher, closing at $101.32, an all-time record. Greater demand along with a further weakening dollar were catalysts for the increase. Some experts believe the only thing that will ultimately end crude's rally is a serious world economic downturn.
Quick Tics: The Commerce Department reported a small gain in housing starts…Hewlett-Packard (HPQ, +7.9%) reported a stellar quarter and forecasted higher earnings for next quarter than analysts expected…KKR Financial Holdings (KFN, 1.9%) will delay repaying debt on asset-backed paper and will enter restructuring negotiations….The price wars in telecom took their toll on the companies involved including AT&T (T, -4.3%) and Verizon (VZ, -0.3%).
Notable Earnings (Full List Here):
Safeway (NYSE:SWY) Before Open
8:30 AM: Jobless Claims
10:00 AM: Leading Indicators
10:00 AM: Philadelphia Fed
10:30 AM: Crude Inventories