Overnight Markets: Fed stance weighs on US stocks

Most US equities fell on Tuesday after the Federal Reserve inched closer to further steps to spur the economy but did not announce further quantitative easing.

The Dow Jones industrial average was up seven points, or 0.07%, at 10,761. The Standard & Poor's 500 Index fell three points, or 0.26%, at 1,140. The Nasdaq Composite Index was down six points, or 0.28%, at 2,349.

The Federal Open Market Committee yesterday moved to keep fund rates unchanged and said that, if required, it would take measures to bring inflation over time to levels consistent with its mandate.

Homebuilders inched lower even as a report showed that housing starts climbed to a four-month high, suggesting the housing market could be starting to stabilise after the end of homebuyer tax credit. Some analysts expressed concern that the increase is primarily due to a surge in the number of multi-family properties being constructed, a much more volatile figure than single-family housing. DR Horton lost 0.6% and Pulte Group fell 1.6%.

Financials were also among the fallers, with Morgan Stanley retreating by 2.9%. M&T Bank declined 2.5% after it was reported that it may offload a majority stake to Banco Santander when it merges with the Spanish bank’s US unit. Banco Santander’s US shares edged higher by 0.2%.

In other company news, shares of Carnival Corp, the world’s largest cruise company, rose 3% after it  reported better-than-expected quarterly earnings. Airlines also gained after the International Air Travel Association said that carriers were expected to post sharply higher profits this year than previously forecast. UAL Corp advanced 4.8% and Continental Airlines was boosted by 4.9%.

In Asia, most stocks were treading higher on Wednesday, led by healthcare and financials, overshadowing declines by Japan’s exporters after the dollar weakened against the yen in response to the Fed’s statement that it was willing to ease monetary policy further to boost economic growth.

The MSCI Asia Pacific Index gained 0.5% to 126 as of 10:24 a.m. in Tokyo. Japan’s Nikkei 225 Stock Average fell 0.1%, while Australia’s S&P/ASX 200 Index advanced 0.2%. Markets in China, South Korea and Taiwan are closed for holidays.