For the day, the Dow ended lower by 2.99 points (0.02%) at 13,245.45. Nasdaq ended lower by 8.49 points (0.3%) at 3,013.81. S&P 500 ended higher by 0.64 points (0.04%) at 1,428.28. Dow was trading higher by 67 points earlier during the day.
Among the ten economic sectors, the financial and telecom sectors remained strong. Technology and consumer staples remained weak. The thirty Dow components had a mixed finish.
As expected, the Federal Open Market Committee held its Federal Funds Rate steady at 0-0.25%. In addition, the Fed announced 'Operation Twist' will be replaced by a Treasury purchasing program with an initial rate of $45 billion per month. Also of note, the key interest rate is expected to remain at exceptionally low levels until a target unemployment rate of 6.5% is reached.
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In addition, the central bank has released its December projections. The outlook painted a cautious picture as the high end of its 2012 GDP growth forecast was lowered to 1.8% from 2.0%. Further, the low end of its 2013 growth expectations was reduced to 2.3% from 2.5%. Inflation expectations remain anchored and PCE inflation is not expected to exceed 2.0% over the next three years. Regarding unemployment, the Federal Reserve projects the rate to decline to 6.5% in 2015.
Following the news from the Fed, Ben Bernanke spoke in front of the media. During his press conference, the Chairman said asset purchases are expected to continue until a substantial improvement in the economy is observed. He also noted that if the effectiveness of the purchasing program declines, appropriate modifications will be made.
In overnight news, European stocks and the Euro currency were firmer on ideas the FOMC would implement further easing of U.S. monetary policy. News that Greece did meet its target number for the buying back of its bonds also supported the European markets. Euro zone leaders meet again on Thursday to discuss disbursing more aid to Greece.
Also in the U.S, attention of the market place remains on the "fiscal cliff" tax increases and spending cuts that is fast approaching.
The dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3% on Wednesday.
Among economic data expected for the day, the Commerce Department in US reported that import prices fell 0.9% in November on the back of lower fuel prices. Nonfuel import prices also declined, with prices falling across a broad range of categories. Export prices, excluding agriculture, decreased by 0.7% in November after they had increased by 0.2% in the prior month. Excluding oil, import prices decreased by 0.2%, which follows the 0.3% increase experienced in the prior month.
Separately, the November Treasury budget showed a $172.1 billion deficit, which was wider than the deficit of $172 billion expected.
Among the Dow components, DuPont rose 1.4% after the chemicals company said it would repurchase as much as $1 billion of its shares in 2013 and that 2012 profit would come in at the high end of its outlook.
Wal-Mart Chief Executive Officer made cautious comments about the ongoing holiday shopping season. Wal-Mart stock lost nearly 3.0% in reaction to the comments, and the weakness spilled over to apparel retailers.
Decliners edged past advancers on the New York Stock Exchange, where 695 million shares traded. Composite volume neared 3.7 billion.
Bullion metals ended higher at Comex on Wednesday, 12 December 2012. Prices fell amid lower dollar after the U.S. Federal Reserve announced a new bond-buying program. Gold for February delivery rose $8.3 (0.5%) to settle at $1,717.9 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Prices shed 0.4% last week. Prices rose to a high of $1,725 during intra day trading. On Wednesday, March silver rose 77 cents, or 2.3%, to settle at $33.78 an ounce.
Crude oil prices ended higher for second consecutive day on Wednesday, 12 December 2012 at Nymex. On Wednesday, light and sweet crude oil futures for light sweet crude for January delivery closed higher by $0.98 (1.1%) at $86.77/barrel. Prices traded at around $86.79 before the Fed announcement, topped $87 after and then slipped back as Fed Chairman Ben Bernanke began speaking at a news conference just ahead of the Nymex close.
In the weekly inventory report, the U.S. Energy Information Administration reported a modest unexpected rise in crude supplies and a bigger-than-expected increase in stocks of gasoline for the week ended 7 December 2012. Crude supplies climbed by 800,000 barrels. Market had expected the data to show a 2.5 million-barrel decline in weekly crude supplies. Gasoline inventories rose 5 million barrels, while distillate stocks, which include heating oil, added 3 million. Market was looking for a rise of 2.5 million in gasoline inventories and a climb of 1.25 million in distillate supplies.
The IEA slightly raised its forecast for oil demand for 2013, but said the tepid rate of global economic expansion would keep demand relatively sluggish.
Indian ADRs mostly lower on Wednesday. In the IT space, Wipro was up 0.5% and Infosys was down 0.7%. In the Banking space, ICICI Bank was down 0.2% HDFC Bank was down 1.1%. In the other space, Sterlite was down 1.2%, Dr Reddys was down 0.44%. Tata Motors was up 3.4%. MTNL lost 6.5%.
For tomorrow, the weekly initial and continuing claims will be reported at 8:30 ET. In addition, November retail sales, retail sales ex-auto, PPI, and core PPI will also be released at 8:30 ET. Lastly, October business inventories will cross the wires at 10:00 ET. Earning reports will continue to trickle in.
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