Dow Looks for Direction Following the Fed Statement

U.S. equity markets are signaling a slightly lower open to today's trading this morning, perhaps taking a cue from the European market reaction to a bond offering from Spain. Let's take a look at where futures markets were standing within the past hour.

While Spain was able to sell more bonds than it expected today, skyrocketing borrowing costs are front and center and will likely be a major focus during European policymaker meetings next week. A stark contrast exists between surging borrowing costs abroad and U.S. treasury yields sitting near record lows, something that the Federal Reserve looks to maintain with yesterday's extension of its Operation Twist bond-buying program. Reports have surfaced that policymakers in Europe could begin asset purchases of their own to help drive down funding costs on their home turf. Specifically, it's been suggested that the soon-to-be-approved European Stability Mechanism could begin buying Italian and Spanish debt to help ease pressure from rising rates.

In other macro news this morning, reports on weekly jobless claims are released at 8:30 a.m. EDT, followed by 10 a.m. reports on both manufacturing activity from the Philadelphia Federal Reserve Bank and an update on existing-home sales.

Moving to individual company events, news surfaced yesterday evening that Dow component Johnson & Johnson (NYSE: JNJ) is nearing a settlement with the Justice Department following the latter's investigation into illegal marketing practices for an antipsychotic drug. Reports peg the final settlement amount at between $1.5 billion and $2 billion, though the number could go even higher, possibly exceeding the $2.3 billion paid by Pfizer (NYSE: PFE) in 2009 for similar marketing misbehavior.

A red bath for Bed Bath
Away from the Dow, shares of home gadgetry retailer Bed Bath and Beyond (Nasdaq: BBBY) were off more than 10% lower in after-hours trading yesterday following disappointing guidance for its fiscal second quarter. Of note, the company highlighted efforts to strengthen its online retail presence, investing in a new website, distribution center, and data center in the face of growing competition from the likes of Amazon.com (Nasdaq: AMZN), which has increased its focus on the home furnishings segment lately. The additional investments from Bed Bath and Beyond are expected to amount to a $0.09-per-share drag on profitability later this year, and they speak to the growing importance of online platforms for retailers.

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