The Federal Reserve's Tuesday afternoon announcement highlighted the U.S. economy's exposure to financial troubles abroad while citing signs of moderate growth within the U.S.
"Federal Reserve policy makers said the U.S. economy is maintaining its expansion even as the global economy slows, while refraining from taking new actions to lower borrowing costs," reports Bloomberg.
According to the Fed, issues pertaining to the unemployment rate "remain elevated" and debate exists on how to approach it. Similarly, interest rates, inflation and bond purchases bear addressing.
But don't hold your breath, members of the Fed are at ends of how to address these issues. More importantly, "any additional stimulus is greatly going to depend on what happens in Europe or any changes in the U.S. outlook," said John Silvia, chief economist at Wells Fargo Securities LLC. "They will wait for a longer meeting, maybe in January, to come up with anything regarding communications."
The Fed said it expects inflation to settle at levels at or below those consistent with its price stability mandate. The Fed also noted it would keep its Fed funds target rate at low levels "at least through mid-2013."
Stocks dipped after the Fed's statement, and the dollar rose against the Euro.
In short, the Fed has taken no action, nor indicated strong intentions to make decisions in the future.
The key takeaway was that the U.S.' greatest risk comes from troubles in Europe. Investors are sure to keep their eyes on the headline.
Think things might improve?
If so, you may be curious what companies could benefit most from increased growth in the U.S. For ideas, we took a look at large-cap companies (market caps above $10 billion) on the S&P 500 index. We screened the names for those with the highest levels of profitability compared to their industry peers based on pre-tax, operating and gross margins.
Do you think these companies are operating well enough to benefit from a U.S. rally?
List sorted by greatest difference in gross margin. (Click here to access free, interactive tools to analyze these ideas.)
1. Prudential Financial
4. Aon Corporation
5. The McGraw-Hill Companies
7. The Chubb Corporation
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Profitability data sourced from Fidelity.
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