An investor checks stock information in front of an electronic board as his figure is reflected in a marble counter at a brokerage house in Wuhan, Hubei province, August 23, 2011.STRINGER/CHINA/Reuters
Global stocks were relatively unchanged on Friday morning, ahead of a much-anticipated speech from the chairman of the Federal Reserve, who is expected to comment on what needs to be done to help the faltering U.S. economic recovery.
U.S. stocks were down slightly with about 90 minutes before markets open, suggesting little change when trading begins. Futures for the Dow Jones industrial average were down 0.3 per cent. Futures for the broader S&P 500 were down 2 points or 0.2 per cent. Both indexes fell in afternoon trading on Thursday, despite showing gains earlier in the day, after European authorities extended a ban on short-selling.
In Europe, stocks continued to struggle with investors again focused on the health of the euro zone's banks. Britain's FTSE 100 was down 0.8 per cent and Germany's DAX index was down 2.1 per cent. In Asia, Japan's Nikkei 225 rose 0.3 per cent in overnight trading.
These early moves, though, are mere throat-clearing for what is expected to be an interesting day in the markets. Fed chairman Ben Bernanke will approach the podium at Jackson Hole, Wyo., at 10 a.m. (ET). Some of the stock market rallies earlier in the week were in anticipation that Mr. Bernanke would outline ways to stimulate the economy, perhaps resorting to a third round of quantitative easing, or QE3. In his speech last year at Jackson Hole, Mr. Bernanke laid the groundwork for QE2, which sent stocks surging after a lengthy correction.
This time, opinion is divided over what the Fed chairman will do, or even can do. The Federal Reserve has made it clear in recent statements that the bar for another round of stimulus is set high, and its last monetary policy statement it resorted to simply stating that it will leave its key interest rate at exceptionally low levels until at least the middle of 2013.
Investors will have other things to chew on, though. At 8:30, the Commerce Department will release its second reading on U.S. gross domestic product growth for the second quarter. The first reading was a big disappointment, coming in at an annualized rate of just 1.3 per cent. Economists are expecting a further slide to 1.1 per cent.
As well, the University of Michigan's consumer sentiment survey will be released shortly before Mr. Bernanke's speech. The survey hit a multi-year low two weeks ago.
In earnings news, Royal Bank of Canada reported a loss of $92-million in the fiscal third quarter, due to charges related to the sale of a U.S. bank. However, earnings from continuing operations, which is what analysts like to look at, rose to $1.57-billion or $1.04 a share, up from 92 cents a share last year.
Tiffany & Co. reported that its second quarter earnings rose 33 per cent over last year. The shares rose 7.8 per cent in premarket activity.
David Berman