U.S. stock futures edge lower as investors await fresh report on the nation's service economy
NEW YORK -- U.S. stock futures dipped today as investors awaited a report on the health of the nation's service economy.
Any weakness in service sector growth could support the case for further interest rate cuts from the Federal Reserve.
The Institute for Supply Management issues a reading Wednesday morning on business activity in the U.S. service sector, whose non-manufacturing industries range from banking to retail and travel and account for 80 percent of U.S. economic activity. The trade group is expected to report slower growth in September, following Monday's a weaker-than-expected reading on the manufacturing sector.
The Fed cut its key lending rate last month by a half percentage point. Many investors expect the central bank to trim rates further this year, but there is debate over whether the reductions will come at the Fed meeting Oct. 30-31 or in December.
Despite lower interest rates, home buying continued at its sluggish pace. The Mortgage Bankers Association on Wednesday said mortgage application volume fell 2.7 percent in the week ended Sept. 28. The MBA composite index, which gauges the level of mortgage applications, fell to 636.7 from 654.2 a week earlier.
Dow Jones industrial average futures for December fell 32, or 0.2 percent, to 14,074. Standard & Poor's 500 futures lost 4.70, or 0.30 percent, to 1,549.90. Nasdaq 100 index futures shed 6.25, or 0.29 percent, to 2,129.25.
Wall Street ended mixed on Tuesday, as investors adjusted their portfolios in the second trading session of the fourth quarter. The Dow closed with a moderate loss, while the Nasdaq composite index posted a gain.
Bond prices rose Wednesday, as yields slipped. The 10-year Treasury note fell to 4.52 percent from 4.53 percent late Tuesday.
European markets were mixed. Britain's FTSE 100 gained 0.40 percent, Germany's DAX index rose 0.08 percent, and France's CAC-40 fell 0.14 percent.
In Asia, Japan's Nikkei stock average closed up 0.90 percent. Hong Kong's Hang Sang index fell 2.55 percent.
In corporate news, Germany's Deutsche Bank AG on Wednesday said it would book a $991.6 million charge in the third quarter on losses related to subprime mortgage lending, but the bank expects gains on asset sales and tax credits to offset those losses. Deutsche projects a profit of $1.98 billion, higher than a year ago.
The bank's forecast follows warnings on results from Citigroup Inc. and Switzerland's UBS AG on Monday. However, shares of banks have been resilient this week, as investors appear relieved to get bad news of the turbulent third quarter out of the way amid indications earnings may return to normal levels this quarter.
In commodities trading, gold edged higher in premarket activity on the New York Mercantile Exchange following a sharp fall on Tuesday. Crude oil held over $80 a barrel in electronic trading.
The U.S. dollar slipped against the euro while trading mixed against other world currencies.