Stock futures point lower with Wall Street anxious ahead of Tuesday Fed meeting
NEW YORK -- U.S. stocks pointed toward a lower opening today, as the market traded nervously ahead of Tuesday's decision by the Federal Reserve on interest rates.
Most market participants are betting on a quarter-point cut in the benchmark federal funds rate Tuesday. And with all of the recent weak economic data _ such as a decrease of 4,000 jobs in August and weaker-than-expected retail sales _ some are anticipating a half-point rate cut.
But another possibility _ which would likely cause a huge selloff in the stock market _ is that the Fed might not go through with a rate cut at all, if policy makers believe the economy is still growing moderately and that inflation remains a threat.
Keeping Wall Street nervous about the financial sector Monday, regional bank National City Corp. said after-tax losses for its mortgage banking division will probably be close to $160 million in the third quarter, at the high end of its previously projected range. The profit warning followed that of Northern Rock, Britain's fifth-largest mortgage lender, which saw its stock plummet Friday and again on Monday. The Bank of England had to provide cash to the British lender.
Meanwhile, a European Union court dismissed most of Microsoft Corp.'s appeal against an EU antitrust order to share communications code with rivals and sell a copy of Windows without Media Player. The order also upheld a $613 million fine for the company, which fell 1.2 percent in pre-market trading.
Dow Jones industrial average futures expiring in December fell 53, or 0.39 percent, to 13,498. S&P 500 index futures dropped 9.90, or 0.66 percent, to 1,488.10, and Nasdaq 100 Index futures fell 9.75, or 0.48 percent, to 2,015.25.
Last week, stocks saw sizable gains, due largely to high expectations of a rate cut. The Dow ended up 2.51 percent, the Standard & Poor's 500 index rose 2.11 percent, and the Nasdaq composite index rose 1.42 percent. The Dow is just 4 percent below its all-time high of 14,000.41, reached in July before fears escalated about bad home loans and excessive leveraged debt.
The dollar on Monday rose against the euro and pound, but fell versus the yen.
Crude oil prices slipped to 75 cents to $78.35 a barrel in premarket electronic trading on the New York Mercantile Exchange, as traders prepared to cash in profits from last week's record levels.
In European trading, Britain's FTSE 100 fell 1.70 percent, Germany's DAX index fell 0.52 percent and France's CAC-40 fell 1.65 percent.
Japanese markets were closed Monday for a holiday, and China's volatile Shanghai Composite Index rose more than 2 percent to another record, but most Asian stocks fell. Hong Kong's Hang Seng Index declined 1.20 percent.
In corporate news, Deutsche Telekom AG said Monday it will buy the shares it does not already own of SunCom Wireless Holdings Inc. Deutsche Telekom's T-Mobile USA unit will buy the outstanding shares for $1.6 billion and assume debt of $800 million.
Another deal came from defense contractor ITT Corp., which said it is acquiring aerospace company EDO Corp. for about $1.19 billion in cash.
No major companies release earnings on Monday, but later in the week, the major investment banks _ Bear Stearns, Lehman Brothers, Morgan Stanley and Goldman Sachs _ release their third-quarter results. Investors are eager to see how the banks fared during August's tighter credit and stock decline.