Because earnings season is well behind us — an island of earnings reports this week from companies like Oracle (ORCL) and FedEx (FDX) notwithstanding — and expectations running high regarding a new statement from the U.S. Federal Treasury, then markets are understandably focused on whether or not the Fed will adjust its language when discussing what to do about interest rates.
“Patience” is the word. Will it be removed? Probably so. Will its absence mean the Fed is more likely to raise rates sooner than anticipated (generally speaking: after June, likely September if not after)? This is unclear. We all know Fed-speak is practically a linguistic art form unto itself, but interpreting it is not always so easy.
In any case, literally the entire global economy — in a day-to-day market context — is awaiting Fed Chair Janet Yellen’s comments, especially in light of the Euro approaching parity with the U.S. dollar, American employment closing in on optimum levels, etc. Regardless whether the outlook remains cloudy following the Fed’s official statement, expect near-term market activity to reflect the appreciation or disappointment of whatever statement is made.
In oil prices, WTI levels have fallen another 15 basis points to $44.16 per barrel. This is still higher than the $43 floor we’d lived through previously, but just the way Fed rate expectations affect market activity, falling oil prices clear have an effect on stock trading too.
Israel’s elections are tomorrow, and the anticipation regarding whether Benjamin Netanyahu’s Likud party can keep control of the Knesset while his rivals have formed a coalition that may remove the long-time Prime Minister from power, especially in light of his address of U.S. Congress in opposition of President Obama’s peace talks with Iran. Israel has become much more than just a military base for the U.S.; the country’s technology industry has brought lots of investment from the West, especially the U.S.
FedEx is currently an Zacks Rank #2 (Buy) stock, largely due to its upwardly revised fiscal Q3 earnings estimates over the past month. Its Earnings ESP is currently at a positive 2.13%, meaning we are likely to see a positive earnings surprise on Wednesday. Oracle remains a Zacks Rank #3 (Hold) with a negative Earnings ESP of 4.69%. Nike (NKE), which also reports this week, also stands at a Zacks Rank #3, but has a positive Earnings ESP of 2.35%. Last quarter the company posted a positive surprise of 5.71%.
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