Stock futures flat ahead of retail sales, claims
Gold prices dangle under $1,700 an ounce
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — Retail sales data for November is expected to call the tune Thursday, with U.S. stock index futures struggling to find direction as the bullish impact of the Federal Reserve’s decision a day earlier to provide additional monetary stimulus was offset by worries over the so-called fiscal cliff.
S&P 500 Index futures SPZ2 -0.03% fell 2.5 points, or 0.2%, to 1,424.80, while futures on the Dow Jones Industrial Average DJZ2 +0.06% lost 8 points, or 0.1%, to 13,222. Nasdaq 100 futures NDZ2 +0.05% slipped 0.25 point, or less than 0.1%, to 2,670.
“At least for now, the Fed decision didn’t trigger any further risk-on reaction on global markets. The jury is still out, but we have the impression that even some consolidation may be on the cards,” wrote strategists at KBC Bank in Brussels.
U.S. stocks posted a flat performance Wednesday after Federal Reserve Chairman Ben Bernanke warned that the central bank doesn’t have the ability to shield the economy from the full impact of the fiscal cliff — a combination of heavy spending cuts and tax hikes due to begin taking effect Jan. 1. Many economists fear that failure to avoid the cliff would trigger a recession.
The White House and congressional Republicans remain locked in talks aimed at reaching a budget deal.
Negotiations over the fiscal cliff appeared to make little headway Wednesday. Top House Republicans indicated negotiations could run into late December. See: Don’t make holiday plans, Boehner tells Republicans .
“Without clarity out of Washington, it seems $45 billion only buys a flat market nowadays,” said Matt Basi, senior sales trader at CMC Markets U.K..
Stocks were lifted earlier Wednesday after the Fed said it would add $45 billion a month in Treasury purchases to its current round of $40 billion-a-month purchases of mortgage-backed securities.
Moreover, the Fed surprised market participants by saying it would hold official rates close to zero as long as the unemployment rate remains above 6.5% and inflation isn’t forecast to rise above 2.5%. See: Fed sets jobless, inflation targets; to buy bonds .
Adam Sarhan, chief executive of Sarhan Capital, a New York boutique investment firm, said some investors may be reading the Fed’s criteria as an either/or proposition, when in fact the central bank is signaling that both conditions must be met before it will begin to tighten policy.
“That’s a critical point that investors need to be aware of,” he said.
November retail sales data highlights a trio of economic reports set for release at 8:30 a.m. Eastern time. Sales likely rose 0.4%, driven by strong demand for autos, according to economists surveyed by MarketWatch. See: What to watch on the U.S. economy on Thursday .
Excluding autos, sales are expected to fall 0.2% due in part to Hurricane Sandy. The report is one of the most closely watched on Wall Street and will be dissected by investors for any signs spending is getting weaker.
Economists expect first-time applications for unemployment benefits last week to remain near the 370,000 level. Producer prices are forecast to have dropped 0.5% in November, reflecting a further decline in the cost of gasoline. The core rate, which excludes food and energy, is forecast to show a 0.2% rise.
Data on October business inventories is due at 10 a.m.
Pier 1 Imports Inc. PIR -1.95% said fiscal third-quarter profit edged up 3% as the home-furnishings retailer saw double-digit revenue growth and stronger margins, although sales were hit by Hurricane Sandy. See: Pier 1’s earnings up 3%; lifts view, dividend .
Google Inc. GOOG +1.93% released a downloadable version of its Maps app for Apple Inc.’s AAPL -0.99% iPhone, which appeared on Apple’s app store late Wednesday, The Wall Street Journal reported. The Google Maps app was kicked off the iPhone in favor of Apple’s own software in September, prompting numerous complaints about inaccuracies and other problems. See: Google releases version of Maps app .
In other markets, gold futures GCG3 -1.35% dropped $23.90 to trade at $1,694 an ounce, as precious-metals markets saw gains scored in the wake of the Fed’s decision to expand monetary stimulus give way to profit-taking. See: Gold prices skid on profit-taking after Fed
Nymex crude-oil futures fell 60 cents to $86.17 a barrel in electronic trade.
The dollar index DXY -0.03% , which measures the U.S. unit against a basket of six major rivals, rose 0.2% to 79.917.
William L. Watts is MarketWatch’s European bureau chief, based in Frankfurt. Follow him on Twitter @wlwatts.