Stocks Edge Up, Anticipating Fed Meet
A sprinkling of deal news, sinking oil prices and a firmer dollar are in the background as stocks edge higher Tuesday.
The big news for markets though will come in the Federal Reserve's meeting minutes, set for release at 2 p.m. ET. The minutes of the September 18 meeting and the August 16 call will be released. Traders are watching for hints of what made the Fed take the aggressive step to slash the Fed funds rate by a half point, greater than the 1/4 point widely expected.
Also on the horizon today is the earnings release from Alcoa, the first Dow component to announce results and the official kickoff of the earnings reporting season.
Big on CNBC today and on CNBC.com is the debate of Republican presidential candidates, the first to include Fred Thompson. The debate is also significant for its focus on economic issues. CNBC's Maria Bartiromo and MSNBC's Chris Matthews will moderate the debate, which will air on CNBC beginning at 4 p.m.
The International Monetary Fund is cutting its 2008 growth forecasts for the U.S., Europe and China as a result of the impact of the subprime tsunami. The IMF now sees world growth at 4.8%, down from July's estimate of 5.2%. It sees the U.S. economy growing by 1.9%, down from its prior forecast of 2.8%, and Europe is expected to grow by 2.1%, down from an estimated 2.5%. China's galloping growth rate is even being trimmed from 10.5% to 10%.
A batch of deal activity is making headlines. AT&T is buying Aloha Partner's wireless spectrum for $2.5 billion. KKR is buying Turkish freight company, U.N. Ro-Ro for $1.3 billion and J.P. Morgan and an investment group are buying Southern Water Capital Ltd from the Royal Bank of Scotland for $2.6 billion.
Not a merger, but a joint venture of some impact is planned by Molson Coors Brewing and SABMiller Plc for both companies' U.S. operations. The two companies will share ownership in the venture equally, a move they say will help them compete more effectively, presumably with industry heavy weight Anheuser-Busch. The combined company will have revenues of $6.6 billion.
The Supreme Court today will hear the case of StoneRdige Investment Partners vs. Scientific-Atlanta over whether third parties, like brokers or accountants, can be held liable for helping public companies defraud investors. The case is being closely followed on Wall Street, where these types of lawsuits could proliferate.
"The Supreme Court's decision in the StoneRidge case will have a direct bearing on the suit by Enron shareholders against the investment banks they say aided and abetted the fraud," CNBC's senior correspondent Scott Cohn says. The high court has yet to determine whether it will hear the Enron case. Cohn says his legal sources believe that is because it involves many of the same issues that will be decided in StoneRidge.
CNBC's Hampton Pearson will be at the court today.
Oil Drip Oil continues to sink this morning, after losing a dramatic 2.7%, or $2.20 per barrel to $79.02.
John Kilduff, senior vice president at MF Global, said he expects oil to continue to decline into his target range of $74 to $76 per barrel. "I think the dollar stabilization is key," said Kilduff, a CNBC contributor. As the dollar wilted, oil ran up, hitting a new of $84.10 per barrel in September.
Small Business Optimism
The index for small business optimism rose a point in September to 97.3, but remains below its historical average of 100.2 now for 17 of the last 18 months. the National Federation of Independent Business says the index performance reflects the sub-par growth of the economy.
The survey does show some growing concern about the cost and availability of credit but it's not a major concern."Overall the indicators still tell us things are pretty comfortable out there. Credit standards haven't really been raised and we're in good shape," Bill Dunkelberg, chief economist at NFIB, said on "Squawk Box."
Bank of America put a target of $670 on Google, raising it from $620. Google hit $600 for the first time yesterday.
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