There is a lot of red in markets this morning as the main event of the week draws near: the release of minutes from the Federal Reserve's July meeting.
The minutes are getting an unusually high amount of focus, as market watchers are still far from unanimous on whether the Fed will begin to taper its $85-billion (U.S.) in bond purchases next month. It's also a reflection that there are few key economic releases and central bank speeches this week to pour further fuel on the debate of where central bank stimulus measures are heading.
The minutes this afternoon should reveal the positions of Fed officials on the tapering debate, including from some of the more dovish members who have been concerned recently about withdrawing stimulus too soon. Perhaps more importantly, the minutes could provide clues on the size of the initial reduction in asset purchases and whether the reduced purchases will be made in treasuries or mortgage-related assets.
According to the latest Bloomberg tally, 65 per cent of economists believe policy makers will taper stimulus in September.
Although major commodities are pointing down this morning, which should keep the resource-heavy TSX under pressure, the 10-year U.S. Treasury yield remains below the 2-year high on Monday, and emerging markets showed signs of stability overnight. The Jakarta composite index, which plunged 11 per cent over the past four trading days amid concerns over capital outflows and an end to the Fed's money printing, was up 1 per cent. India's Sensex lost 1.5 per cent, as the rupee dropped almost 2 per cent to a record low of 64.44 against the greenback. Overall, the MSCI Emerging Markets index was down 0.6 per cent.
Now, here's a closer look at what's going on this morning and what's to come.
Futures: S&P 500 -0.36 per cent; Dow -0.31 per cent; Nasdaq -0.38 per cent; S&P Toronto -0.14 per cent
Hong Kong's Hang Seng -0.69 per cent
Shanghai composite index +0.02 per cent
Japan's Nikkei +0.21 per cent
London's FTSE 100 -0.72 per cent
Germany's DAX -0.23 per cent
France's CAC 40 -0.10 per cent
WTI crude oil (Nymex Oct) -0.07 per cent at $105.04 (U.S.) a barrel
Gold (Comex Dec) -0.68 per cent at $1,363.30 (U.S.) an ounce
Copper (Comex Dec) -0.82 per cent at $3.31 (U.S.) a pound
Canadian dollar at 95.90 (U.S.), down 0.0031 from yesterday's North American close.
U.S. dollar index up 0.20 at 81.11
U.S. 10-year Treasury yield 2.83 per cent, up 0.005
ECONOMIC INDICATORS TO WATCH:
(10 a.m. ET) U.S. releases existing home sales for July, forecast to rise to 5.150 million on an annual rate from June's 5.08 million.
(2 p.m. ET) FOMC releases minutes of its July 31 meeting.
STOCKS TO WATCH:
Target Corp. reported a 13 per cent drop in second-quarter earnings as it spent money on opening stores in Canada and dealt with cautious shoppers in the U.S. Revenues of $17.12-billion were below Street forecasts of $17.28-billion and the company provided a muted full-year outlook. Shares are down 2 per cent in the premarket.
Staples Inc. reported weaker-than-expected quarterly results amid dismal sales in international markets such as Europe and Australia, prompting the largest U.S. office supply retailer to cut its outlook for the year. Shares are down 12 per cent in the premarket.
Sears Canada said second-quarter revenue fell 9.6 per cent and, excluding a one-time gain, it lost 11 cents per share. That was worse than 10 cents a year earlier.
Lowe's Companies Inc. reported a 26-per-cent rise in second-quarter earnings, beating Street views. Shares are up 4 per cent in the premarket.
Home building Toll Brothers reported a 24-per-cent jump in revenue and earnings per share in line with analysts' estimates. Shares are up 1 per cent in the premarket.
Other earnings today include: Wheels Group; American Eagle Outfitters Inc.; The Madison Square Garden Co.; PetSmart Inc.; and J.M. Smucker Co.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
A programming error at Goldman Sachs Group Inc. caused unintended stock-option orders to flood American exchanges this morning, roiling markets and shaking confidence in electronic trading infrastructure.
It's another bubble for real estate in Nevada and Arizona.
The Dow Jones industrial average's relative strength to the broader U.S. market has hit a bull market low.
Low-volatility ETFs may not be what they used to be.
An ETF designed to capitalize on buyback bonanzas has beaten all of its peers and the market this year.
Emerging market equities are emerging as one of the poorest investment bets of recent years.
The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities. You can also be notified using our dashboard feature when new articles appear from this author. Read more on using this feature here.