Wednesday, June 22, 2011

U.S. Stocks Little Changed Ahead of Federal Reserve Decision

U.S. stocks were little changed, following a four-day rally for the Standard & Poor’s 500 Index, as the Federal Reserve meets to set its benchmark interest rate and decide whether to increase stimulus measures.

Adobe Systems Inc. (ADBE), the largest maker of graphic-design software, slumped 4.4 percent after forecasting profit that fell short of analysts’ estimates. FedEx Corp. (FDX), operator of the biggest cargo airline and considered a proxy for the economy, added 2.7 percent after forecasting earnings that may top analysts’ estimates as global shipping demand climbs.

The S&P 500 gained 0.1 percent to 1,296.44 at 10:06 a.m. in New York. The benchmark gauge had risen 2.4 percent over the last four days. The Dow Jones Industrial Average retreated 3.44 points, or less than 0.1 percent, to 12,186.57 today.

“It’s a countdown to the Fed’s decision,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, which manages $1.5 billion. “I’m expecting a very muted message. While are certain signs that the economy continues its recovery, there’s also softness,” he said. “The FedEx data today is as good as anything. Boxes are still moving and that’s a sign that business is getting done.”

The S&P 500 retreated 5 percent from this year’s high at the end of April through yesterday amid weaker-than-estimated economic data and concern about Europe’s debt crisis. The index was still up 3 percent in 2011 through yesterday on government stimulus measures and better-than-expected earnings.

Repeat a Pledge
The Federal Reserve will probably affirm a decision to end bond purchases and repeat a pledge to keep the benchmark interest rate close to zero, economists said in a Bloomberg survey before today’s announcement.

The Federal Open Market Committee’s meeting yesterday and today is the last one before Aug. 2, when the Treasury Department says it will no longer be able to borrow to finance government operations unless lawmakers agree to raise the $14.3 trillion debt ceiling. The FOMC will release its statement at 12:30 p.m. in Washington, and Bernanke is scheduled to meet the press at 2:15 p.m.

Adobe fell 4.4 percent to $30.61. The company said profit for the third quarter may be as low as 50 cents a share, compared with the 54-cent average analyst projection, excluding certain items.

FedEx gained 2.7 percent to $91.51. The company said profit in the 12 months through May 2012 will be $6.35 to $6.85 a share, according to a statement today. That compares with an estimate of $6.54 from 26 analysts surveyed by Bloomberg. Net income for the fourth quarter climbed 33 percent to $558 million, or $1.75 a share, from $419 million, or $1.33 a share, a year earlier, the company said.

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