- Taper speculation picks up after budget deal
- Fed to balance taper with forward guidance, says Danske Bank
- US producer prices fall 0.1 per cent m/m
Dow Jones: 0.07%
S&P 500: 0.03%
Wall Street benchmarks edged higher on Friday with markets bouncing back slightly after hitting a one-month low the previous session.
However, gains were limited as investors continue to adopt a cautious approach ahead of the policy meeting at the Federal Reserve on December 17-18th.
The S&P 500
was up just 0.03% early on after hitting 1,775.50 on Thursday, its lowest close since November 12th, while the Dow was 0.07% higher than its worst finished since November 7th.
The upside moves come after a bipartisan US budget was passed by the House of Representatives last night by a wide margin (332 to 94), easing the fiscal uncertainty that has weighed on markets as of late. The deal is expected to sail through the Senate next week, putting an end to three years of spending battles that brought the government to near-collapse.
"A lot of things have fallen into place and past week's budget deal in the US Congress was yet another factor speaking in favour of Fed tapering soon," said analysts at Danske Bank in a note to clients.
They believe the Fed will begin to scale back its stimulus programme next week but expects the central bank to balance a taper with stronger forward guidance in an effort to leave overall financial conditions unchanged.
"In contrast with what happened over the summer the market now seems very much prepared for Fed tapering," Danske Bank said.
There was little in the way of economic data out for release today, though US producer prices fell by 0.1% month-on-month in November, as expected by the consensus, due to a 0.7% decline in gasoline prices.
Tech stocks in focus: Adobe, Qualcomm, Google
Adobe Systems gained as much as 10% after it added more subscribers in the fourth quarter than analysts had estimated. Markets were shrugging off the guidance for estimated adjusted earnings per share 22-28 cents this quarter, below the current consensus forecast of 34 cents.
Steve Mollenkopf has been named as the new Chief Executive Officer (CEO) at Qualcomm, pushing the price of the wireless technology group higher. Software firm Microsoft was trading lower on the news given that Mollenkopf had been rumoured to take over from Steven Ballmer as Chief Executive when he steps down.
Analysts at Evercore raised their price target on Google stock to $1,250 from $1,100 before. Google was also rising on speculation that is considering designing its own server processors, sending Intel sharply lower on competition fears.
Shares in oil explorer Anadarko Petroleum tumbled following a negative legal sentence related to its 2005 spin-off of Tronox.
Texas Industries surged after Bloomberg reported that the building materials company is thinking about a sale.