MarketView for September 12

Summary

Wall Street ended little changed on Wednesday, erasing early gains, as the uncertainty before a Federal Reserve decision on another round of monetary stimulus to boost the economy became increasingly evident. However, there was some early momentum in the markets after Germany's Constitutional Court approved the new euro zone rescue fund, which will allow the European Central Bank to buy sovereign bonds in an effort to reduce crippling borrowing costs faced by Spain and Italy.

However, the gains faded as investors shifted their attention to the Fed, which concludes a two-day meeting on Thursday. Equities have rallied on expectations of more Fed action to keep interest rates low, leading some analysts to warn of disappointment. The current consensus puts the odds of a third round of bond buying from the Fed at 65 percent, up from 60 percent in August.

Apple’s shares were up 1.39 percent to $669.79 after it unveiled its iPhone 5. The introduction of the new iPhone comes as Apple tries to fend off competition that has reached a fever pitch. Also in the technology sector, Facebook rose 7.7 percent to $20.93 after Chief Executive Mark Zuckerberg hinted at new growth areas from mobile to search in his first major public appearance since the company’s IPO in May.

The S&P 500 index has advanced more than 9 percent since the start of June on hopes for global central bank stimulus. The index has been unable to break through the 1,438-1,440 level, seen as a significant resistance point.

Uncertainties about the economic outlook, highlighted by recent profit warnings from FedEx Corp. and Intel, could also limit the market's upward momentum.

Ford saw its share price rise 0.59 percent to $10.21 on unofficial comments that the company's board of directors decided to discuss this week a succession plan for Chief Executive Alan Mulally, who is expected to retire by the end of 2013.

Chesapeake Energy fell 1.04 percent to end the day at $19.89 after the company said it is selling $6.9 billion in gas fields and pipelines, with most of its assets in the Permian Basin being sold to Royal Dutch Shell and Chevron, as well as most of its remaining infrastructure network.

The shares of Mediware Information Systems gained 39 percent to end the day at $21.86 after the clinical software solutions provider agreed to be acquired by private equity firm Thoma Bravo LLC for $22 per share in cash.

Volume was once again light, with about 6.15 billion shares changing hands on the three major equity exchanges, a number that was well below last year's daily average of 7.84 billion shares.

Wholesale Inventories Rise

According to a report by the Commerce Department, wholesale inventories increased 0.7 percent in July to $485.2 billion, the most in five months, suggesting that economic growth started the third quarter on slightly better footing than expected. Inventories are a key element in the government's measure of changes in gross domestic product. Weaker growth in inventories dragged on GDP during the second quarter, when the economy expanded at a 1.7 percent annual rate.

July's gain in inventories was enough for some economists to slightly raise forecasts for third-quarter GDP, although others said the drop in sales negated the boost. Sales unexpectedly fell, falling by 0.1 percent.

In July, automobile inventories rose 0.4 percent and computer equipment stocks jumped 3.8 percent, while metals fell 0.7 percent.

With the data in hand, Barclays raised its estimate for third quarter growth by two tenths of a point to a 2.2 percent rate. Macroeconomic Advisers lifted their forecast by a tenth to 1.4 percent.

In a separate report, the Labor Department said U.S. import prices rose in August for the first time in five months, climbing 0.7 percent. The cost of petroleum imports increased 4.1 percent. Higher prices at the pump threaten to hurt consumers' pocket books.

There was little sign of broader inflation pressures in the import data. Non-petroleum import prices declined 0.2 percent, a sign that the cooling global economy is reducing companies' ability to raise prices.

Prices for imported consumer goods outside automobiles fell 0.3 percent, while prices were flat for cars and auto parts brought into the country. Import prices were flat from major trading partners Japan and China. Import prices from the European Union fell 0.4 percent. The report also showed export prices rose 0.9 percent last month.