U.S. stock futures steady ahead of Fed


By Barbara Kollmeyer, MarketWatch


Federal Reserve chief Ben Bernanke at a June 7 hearing on the U.S. economic outlook and policy on Capitol Hill in Washington.

MADRID (MarketWatch) — U.S. stock-market futures edged up Wednesday ahead of a policy decision from the Federal Reserve, with investors hoping for some sort of easing.

Futures for the Dow Jones Industrial Average DJU2 +0.10%  rose 10 points to 12,7772, while those for the Standard & Poor’s 500 index SPU2 +0.14%  gained 1.3 point to 1,352. Futures for the Nasdaq 100 index NDU2 +0.36%  added 5.5 points to 2,618.

The Federal Open Market Committee concludes its two-day meeting Wednesday, with the decision expected at 12:30 p.m. Eastern time. Fed Chairman Ben Bernanke is scheduled to hold a press conference at 2:15 p.m. Eastern.

Nick Beecroft, senior markets consultant at Saxo Capital Markets U.K., said he expects the U.S. central bank to extend its current bond-buying program, otherwise known as Operation Twist.

“This will probably disappoint equity markets, which seem to be expecting ’another shot of heroin,’ “ he said in research commentary, referring to quantitative easing by the Fed.

Beecroft said the FOMC’s likely to opt for an extension of Operation Twist over more full-blown quantitative easing in a bid to save ammunition in the event of a euro-zone disintegration, or even a disorderly exit by Greece from the common currency.

“While hopes of another round of Fed easing have helped markets over the last few days, the average five-day return before a FOMC meeting since 2007 has been negative at around 0.4%,” noted Jim Reid, a strategist at Deutsche Bank.

“So the 2.54% cumulative rally that we’ve seen over the last five days is rather impressive relative to the average past experience particularly given the ongoing crisis in Europe,” Reid wrote in a research note. “We may have preempted some positive liquidity vibes from Bernanke, so he may have to deliver to sustain the recent price action.”

U.S. stock gauges finished at five-week highs Tuesday after well-received housing data and as the FOMC convened its two-day meeting. The Dow industrials DJIA -0.20%  closed up 95.51 points, or 0.8%, at 12,837.33, after scaling down a 157-point gain. The S&P 500 SPX -0.24%  rose 1%.

Fed hopes lift U.S. stocks

Speculation that U.S. central bankers were set to unveil additional stimulus measures powered U.S. stocks in their Tuesday advance.

European’s Stoxx Europe 600 indexXX:SXXP +0.56%  was up 0.2% at 248.75.

The Group of 20 summit in Los Cabos, Mexico, concluded late Tuesday with a lengthy task list for Europe, including pressure to cut borrowing costs within the region. Full story: Europe gets lengthy homework assignment from G-20.

The euro EURUSD +0.14%  traded at $1.2704, after rising above $1.27 on Tuesday’.

The yield on Spain’s 10-year government bond ES:10YR_ESP +0.13%  fell 25 basis points to 6.72%.

Crude for July delivery CLN2 -2.39%  fell 30 cents to $83.73 a barrel, while gold for August delivery GCQ2 -0.24%  shed $17.80 to $1,605.40 an ounce.

Procter & Gamble Co. PG -3.45%  fell 1.7% ahead of Wall Street’s open after the consumer-products maker cut its fourth-quarter profit and sales estimates and outlined initial estimates for fiscal 2013. Market Pulse: P&G cuts fourth-quarter revenue and earnings targets .


Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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