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US: Fed minutes drop no hint of QE3

Zareena Sayeedova, Leading Analyst, Global Markets (Finam)

On Wednesday, April 3, US equity benchmarks saw mild losses on the back of economic data and Fed minutes. After the S&P 500 Index hit a record high since May 2008 on Monday, buying sentiment on the stock market had begun to peter out, due to part to a recent batch of uninspiring economic numbers. For the record, factory orders in February rose 1.3% after the revised 1.1% contraction in January, while analysts had, on average, expected a 1.5% increase. It should be noted that factory orders, excluding the transport sector, rose to a 5-month high.

The Fed minutes showed the central bank’s governors believe that the economic environment is just the same as it was during the January meeting. Furthermore, investors read between the lines that no additional stimulus measures would be forthcoming unless the economy abruptly deteriorates. For this reason, by the closing bell market sentiment was far from positive as no hints on QE3 were in the cards.

The external news flow was rather negative for American trading as Asian markets looked mixed, and Europe slipped into the red.

In the indexes, the Dow Jones Industrial Average lost 0.49% to finish at 13,199.55, the Standard & Poor's 500 Index shed 0.40% to 1,413.31 and the technology-heavy Nasdaq Composite eased 0.20% to end the session at 3,113.57.

In commodities, NYMEX light, sweet crude for May delivery dropped 1.2% to USD 104.01/bbl, while COMEX gold for April delivery fell 0.4% to USD 1,670/oz. In FX trading, the greenback edged higher against the pound sterling and the yen, but weakened versus the euro.

In the blue-chip segment, few liquid names ended higher, including American Express, McDonald’s and Merck. Among the decliners, the likes of Bank of America, Cisco Systems, Citigroup, HP and JPMorgan pulled back over 1%.

Of the S&P 500’s 10 industry groups commodities tumbled around 1%. Newmont Mining shares plunged 3.4%, Valero Energy sank 3.5% and Transocean gave up 2.8%.

Auto giant General Motors shed 4.6% after releasing disappointing US auto sales data.

Apple shares advanced 1.7% to a fresh high after being upgraded for two days in a row as on Monday Topeka Capital Markets set the target price for the stock at USD 1,001 and on Tuesday Piper Jaffray raised its target price to USD 910.

Uranium producer Uranium Energy crashed 12% to USD 3.57 on news the company intends to sell 5.6 mn shares at USD 3.60 apiece.

Apparel retailer Urban Outfitters gained 2.3% after being upgraded from Sell to Neutral at Citigroup.