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Market Preview: All Eyes on Ben

UBS is anticipating a change in the language of the policy statement, specifically saying it believes the Fed will acknowledge increased risks to its outlook and hint that it's willing to do more if the recent softness in the economic data continues or the situation in Europe worsens substantially. The firm allowed that an extension of Operation Twist is possible then offered up three reasons why it believes "outright balance sheet expansion" is unlikely.

"First, some members who may support easier conditions in the near term remain concerned about the overall size of the Fed's balance sheet and its impact on the eventual exit strategy," UBS said. "Secondly, balance sheet expansion would be negative for the dollar and, as such, an easing program that weakened the dollar would likely create concern within the Fed that it might add to Eurozone stress. Finally, balance sheet expansion would be considered to be more inflationary due to the currency impact and the risk it might drive a rebound in commodity prices that would further pressure US consumers."

Given the build-up, it seems reasonable to assume that the Fed will at least rationalize sticking with Operation Twist a bit longer, if only to maintain status quo on the home front while so much uncertainty is still swirling abroad.

As for Wednesday's scheduled news, Bed, Bath & Beyond (BBBY) is reporting its fiscal first-quarter results before Wednesday's opening bell, and the average estimate of analysts polled by Thomson Reuters is for a profit of 84 cents a share in the May-ended period on revenue of $2.25 billion.

Shares of the Union, N.J.- based home products company, which were already up more than 25% so far in 2012, hit a new 52-week high of $75.84 during Tuesday's session before closing at $74.72.

The company has beaten the consensus view in eight straight quarters, delivering an average upside surprise of 11.3%, but the sell side has its shares of doubters with 13 of the 28 analysts covering the stock at either hold (12) or underperform (1), and the 12-month median price target at $75.50.

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