The day the markets have anticipated is finally here: the Federal Reserve will wrap up a two-day policy meeting and announce whether there will be any quantitative easing steps taken. Ahead of the announcement, exchange traded funds (ETFs) paused for breath.
The markets seem all but assured that the Federal Reserve will announce a purchase of long-term Treasuries in an effort to kick-start the economic recovery. Ahead of the news, iShares Barclays 20-Year Treasury Bond (NYSEArca: TLT) is up 1%. [QEII Makes Commodity ETFs a Hot Ticket.]
If the Fed does indeed take those steps, the effect on the U.S. dollar might be keenly felt. An injection of more cash would devalue the greenback, but PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN) is flat so far today. [6 ETFs to Diversify From the Dollar.]
As expected, the mid-term elections produced a change in the U.S. House of Representative leadership from Democratic to Republican hands. But Democrats did manage to barely hold on to their Senate majority. For the most part, the election played out pretty much as traders expected and the market reaction is muted as investors are focused on the Fed announcement due today at 2:15 Eastern. Direxion Daily 30YR Treasury Bull 3Xs Shares ETF (NYSEArca: TMF) is up over 3% in anticipation of the Fed news.
Among companies reporting before the bell, Time Warner Inc. (NYSE: TWX) reported third-quarter net income fell 21% on 1.8% higher revenue, but lifted its adjusted profit forecast for 2010, shares are down over 2% in early trading. AOL Inc. (NYSE: AOL) stock is roaring this morning up more than 6% after reporting third-quarter profit more than doubled from the year-ago period on lower costs, even as advertising and subscription revenues fell. PowerShares Dynamic Media (NYSEArca: PBS) is down about 0.3% so far; Time Warner is 4.8%. [Is Innovation Hurting the Media ETF?]
In Asia, Hong Kong’s Hang Seng index broke the 24,000 mark to trade at its highest level since mid-2008, led by banks and the U.S. dollar is trading lower against most other major currencies. The iShares FTSE China ETF (NASDAQ: FCHI) is benefiting from the early trend. [How to Choose China ETFs.]
Gregory A. Clay contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.