* Merck shares off 5 pct in premarket after results
* U.S. private sector adds 119,000 jobs in April -ADP
* U.S. Fed expected to maintain $85 bln/month in bond buys
* Futures: S&P down 2.1 pts; Dow off 23 pts; Nasdaq up 2 pts
By Angela Moon
NEW YORK, May 1 Wall Street was set for a
slightly lower open on Wednesday, weighed by weak results from
Merck and as investors waited to hear from the U.S. Federal
Reserve on the state of the economy.
U.S. stock index futures cut modest gains to trade negative
following a jobs report that showed U.S. private employers added
119,000 jobs in April, well below economists' expectations, in
the latest piece of data to suggest the economy is encountering
a soft patch.
"Overall the employment report suggests the pace of economic
growth is ticking over below par at this stage, something
corroborated by weakening demand from the euro zone," said
Andrew Wilkinson, chief economic strategist at Miller Tabak & Co
in New York.
In earnings, Merck & Co Inc reported
lower-than-expected first quarter sales, as generic competition
hurt demand for its Singulair asthma drug and the stronger
dollar hit overseas sales. The stock was down 5.1 percent in
The U.S. Federal Reserve, which is holding a two-day policy
meeting, announces its latest decision at 2 p.m. EDT (1800 GMT)
and the European Central Bank follows on Thursday. The Fed is
likely to keep its foot on the stimulus pedal, especially after
disappointing economic data.
Expectations of more action to boost growth, in particular
anticipation of an interest rate cut by the ECB, have helped
European shares rally more than 3 percent from mid-April lows.
S&P 500 futures fell 2.1 points and were below fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration of the
contract. Dow Jones industrial average futures lost 23
points while Nasdaq 100 futures added 2 points.
"The Fed will be the key today. I expect them to acknowledge
that the economy has slowed down, and if anything, that will
reinforce the notion that the Fed stimulus will be around till
the end of the year," said Peter Cardillo, chief market
economist at Rockwell Global Capital in New York.
The S&P 500 closed out its sixth straight month of gains,
its longest winning streak since September 2009, with investors
using any pullback as a buying opportunity.
The benchmark index hit a new intraday high in the last
minutes of trading on Tuesday, following a session in which
moves were slight as investors found few reasons to extend
In focus is the 1,600 level on the S&P 500 Index.
"We got back to 1,596 yesterday, so I think the
psychological resistance is still in place," said Bryan Sapp,
senior trading analyst at Schaeffer's Investment Research.
Chesapeake Energy Corp reported a quarterly profit
that topped Wall Street expectations on Wednesday, helped by
lower production expenses and higher oil and natural gas prices.
The stock was up 4.3 percent in premarket trade.
Shares of MasterCard fell 2 percent premarket after
the world's second-largest credit and debit card network
reported a 8.4 percent increase in revenue but fell short of the
average analyst estimate.
DreamWorks Animation SKG Inc shares were up 10
percent in premarket trade following upgrades from a number of
brokerages after reporting earnings late Tuesday.
The Institute for Supply Management's gauge of
manufacturing, due at 10:00 a.m. EDT, is likely to show a
reading of 50.9 for April, according to Reuters survey, compared
to the previous month's reading of 51.3.