Stocks are set to add to yesterday’s gains after the Federal Reserve's latest minutes pointed to interest rates staying where they are for a while.
The Fed’s committee members are worried about the influence of external forces, notably China’s economic slowdown.
While rather downbeat on the outlook for the American economy, the prospect of easier monetary policy (for the next few months at least) boosted sentiment yesterday, with the Dow Jones ending the day up 0.8%, the broader-based S&P 500 ahead 0.9% and the tech-heavy NASDAQ after 0.4%.
“The Fed minutes released overnight seemed to cement investor expectations for the Fed to delay their first rate rise until 2016,” said Angus Nicholson of spread betting group IG.
“As the probability of a December Fed rate hike fell to 38.8%, the dollar weakened noticeably seeing renewed vigour breathed in currencies and commodities.”
IG Index’s trading platform is pointing to the Dow Jones opening around 32 points higher at 17,083 and the S&P kicking off at about 2,017, up four points.
The projected gains pale in comparison with yesterday’s advances, with third quarter results from Alcoa (NYSE:AA) after the bell last night acting as a bit of a dampener on sentiment.
The company said economic growth in the People’s Republic is slowing faster than anticipated, which is having an effect on vehicle production and construction.
The company’s earnings came in below expected, at an underlying seven cents a share on revenue of US$5.57bn; analysts covering the stock had expected earnings per share of 13 cents on revenue of US$5.66bn.
Shares dived 4% last night in after-hours trading but pre-market trading today has seen that decline pared to 1.9% at US$11.01.
Video streaming specialist Netflix (NASDAQ:NFLX) has received a lift from Pacific Crest, which has raised its target price to US$140 from US$122.
Elsewhere in the media sector, the same broker has initiated coverage on 21st Century Fox (NASDAQ:FOX) with an ‘overweight; rating and a price target of US$32.