By Jonathan Cheng
NEW YORK (MarketWatch) -- Investors nudged U.S. stocks
cautiously higher after an improving jobs picture and the
Republican Party's takeover of the House of Representatives, though
the market waited anxiously for the outcome of the Federal Reserve
meeting.
The Dow Jones Industrial Average (DJI) gained eight points to
11197 in early trading, while the Standard & Poor's 500-stock
index (SPX) gained less than one point to 1194 and the Nasdaq
Composite (RIXF) edged down two points to 2532.
The cautiousness came ahead of a long-anticipated policy
announcement from the Fed, due at 2:15 p.m. ET. Investors have
already bid the markets higher in recent weeks as expectations have
grown that the central bank will turn to some form of quantitative
easing to boost the U.S. economy.
The early gains in stocks came against a backdrop of dramatic
political change, as voters Tuesday gave Republicans control of the
House of Representatives, though Democrats clung to a slim majority
in the Senate.
An employment report from Automatic Data Processing on Wednesday
morning showed private-sector employment increasing by 43,000,
topping consensus estimates of a 22,000-job gain. The estimated
change in employment for September was revised to a smaller drop of
2,000 instead of a decline of 39,000 first reported. Even so, ADP
said the employment market remains "frustratingly stagnant."
In addition to the Fed announcement, investors were also eyeing
the data calendar Wednesday, with October service-sector data and
September factory orders on deck. U.S. auto stocks are likely to be
closely watched, with October car sales also expected
Wednesday.
Companies in focus include BlackRock, which tumbled 3.9% after
Bank of America said it is offering at least 34.5 million shares it
holds in the money manager, while fellow part-owner PNC Financial
Services Group is selling up to 7.5 million shares. Bank of America
(BAC) may also sell another 6.3 million shares in the overallotment
option. PNC (PNC) gained 0.9% while Bank of America added 0.8%.
On the earnings front, Qwest Communications International (Q)
rose 0.6% after recording a third-quarter loss, though the company
issued an optimistic revenue forecast and notched up a rise in
adjusted profit that topped analysts' estimates. CenturyLink (CTL),
which agreed to buy Qwest, edged up 0.2% ahead of its earnings
report later in the day.
Garmin (GRMN) plunged 6.1% after the digital navigation device
maker reported a 30% increase in earnings, though that number
missed expectations and came amid weaker sales and margins.
CVS Caremark (CVS) slipped 0.9% after the company reined in its
full-year profit forecast, though the drugstore chain met earnings
expectations.
MGM Resorts International (MGM) gained 1.5% as the company's
third-quarter loss narrowed amid sharply lower write-downs related
to its struggling Las Vegas City Center complex.
Time Warner (TWX) shed 0.4% after its earnings fell 21%, as the
media giant took a hit related to debt redemptions, though adjusted
earnings rose and handily topped analysts' estimates as revenue
increased. The company also increased its profit target.
Aetna (AET) slipped 1.1% after earnings rose 53% as investment
gains and lower medical costs offset continued declines in
employer-based membership.
Wellpoint (WLP) traded flat after third-quarter profit rose 1.2%
following prior-year write-downs as claims costs rose, contrasting
with a trend seen in much of the health-insurance industry this
year.
U.S.-traded shares of French bank Société Générale (SCGLY)
surged 4.1% after the French lender said its third-quarter net
profit doubled due to lower bad loan provisions and growth in
international retail banking.
Stocks in Europe stuck largely to the sidelines ahead of the Fed
decision, with the Stoxx 600 index e edging up 0.4%. 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.
In foreign-exchange markets, the dollar was flat against other
major currencies. Treasurys gained, pushing the yield on the
benchmark 10-year note (UST10Y) to 2.552%. Oil pared an early jump
to trade at about $84.26 a barrel.