REUTERS/ Danish Siddiqui
It was a busy day in the markets, particularly in central bank land, with the FOMC releasing the minutes from its October meeting and the ECB floating the idea of a negative deposit rate.
First, the scoreboard:
- Dow: 15,900.82 (-66.21, -0.41%)
- S&P 500: 1,781.38 (-6.49, -0.36%)
- NASDAQ: 3,921.27 (-10.28, -0.26%)
And now the top stories:
- The FOMC released the minutes from its October meeting this afternoon, prepping markets for the "trimming [of] the pace of purchases" — the so-called taper — "in coming months." The FOMC said that while the government shutdown caused limited and temporary risk to the economy, it still saw "several significant risks" in the future. "In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective," according to the minutes. Stocks, bonds, and gold all drifted lower after the release. Earlier in the day, St. Louis Fed President Bullard told Bloomberg TV that a December taper was "still on the table."
- The European Central Bank may move the deposit rate into negative territory if more monetary easing is necessary, Bloomberg's Jana Randow and Jeff Black reported this morning. " Policy makers hope that the measure, obliging banks to pay to hold a liquidity cushion, would prompt them to lend cash to companies and households instead, the people said. At the same time, a negative deposit rate also risks curbing banks’ profit as loan rates fall while the institutions may be unable to pass negative rates onto depositors," according to the report in Bloomberg. The euro plunged this morning on the news.
- Goldman Sachs released its list of Top 10 market themes for 2014. The bank is more bullish on U.S. GDP than the consensus estimate, predicting 2.9% growth. It's "showtime for the U.S./developed market recovery," according to the report. " As we move into 2014 and that [fiscal] drag eases, we expect the long-awaited shift towards above-trend growth in the US finally to occur, spurred by an acceleration in private consumption and business investment."
- Existing home sales dropped 3.2% month-over-month in October, the second straight monthly decline. "The erosion in buying power is dampening home sales," NAR chief economist Lawrence Yun said in a press release. "Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new home construction is needed to help relieve the inventory pressure and moderate price gains."
- This morning we also saw inflation figures, with year-over-year CPI falling to 1.0%. That was the lowest year-over-year print in nearly 50 years, excluding the financial crisis.
- Retail sales beat expectations today, rising 0.4% in October (economists estimated a 0.1% advance). September's print was revised to 0.0% from -0.1%. "The stronger retail sales figure was driven by solid performance of furniture (1.0%) and electronics (1.4%) sales during the month," said Gennadiy Goldberg, a strategist at TD Securities.
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