US STOCKS-Futures point to rebound; Fed action eyed
NEW YORK |
NEW YORK Dec 12 (Reuters) - U.S. stocks looked set to rebound on Wednesday, with index futures up sharply on news reports the Federal Reserve is actively considering measures to address liquidity shortages.
Stocks tumbled on Tuesday after the Fed trimmed interest rates by a quarter-percentage point. Many on Wall Street had hoped for more from the Fed in the form of a half-percentage point reduction and a clear indication in the accompanying statement that more rate cuts were to come.
A Fed source told Reuters late on Tuesday that policy-makers recognized that funding pressures had become worse and they were considering tools to address them.
"The declines in markets were so sharp. (The Fed is) so concerned that confidence is rattled that they're going to try to do some 'Fed speak' to show they're prepared to support the market," said Peter Dunay, investment strategist at Leeb Capital Management in New York.
"If the market continues to decline and there are additional problems in the financials, they may be forced to act inter-meeting."
S&P 500 futures SPc1 were up 11 points, above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures DJc1 rose 85 points, and Nasdaq 100 NDc1 futures gained 16.25 points.
The Financial Times Web site said an overhaul by the Fed was likely to take the shape of a new liquidity facility to auction loans to banks. The Fed could make the move on Wednesday, it said. For details, see [ID:nL12310882].
The top economic indicators on tap for Wednesday were October trade data and November import and export prices, all set for release at 8:30 a.m. (1330 GMT)
On Tuesday, the Dow Jones industrial average .DJI fell 294.26 points, or 2.14 percent, to 13,432.77. The Standard & Poor's 500 Index .SPX lost 38.31 points, or 2.53 percent, to 1,477.65. The Nasdaq Composite Index .IXIC declined 66.60 points, or 2.45 percent, to 2,652.35.
Shares of Boeing (BA.N) were down 4 percent in European trading after Morgan Stanley downgraded the jet maker to "equal weight" from "overweight," according to theflyonthewall.com.
After Tuesday's closing bell, shares of Manitowoc (MTW.N) rose 5.6 percent in reaction to the construction equipment maker's upgrade of its 2007 earnings estimates. (Editing by Kenneth Barry)
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