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Wall Street seen falling as oil nears $100

FRANKFURT, Nov 21 (Reuters) - U.S. index futures pointed to a weak start on Wall Street on Wednesday, set to erase gains from the previous session as economic growth concerns got the upper hand again and the oil price neared the $100 mark.

At 1044 GMT, the Dow Jones future DJc1 was 0.9 percent lower, the S&P 500 future SPc1 was down 1.1 percent and the Nasdaq future NDc1 dropped 1.1 percent.

The indicative Dow Jones Index .DJII, which tracks how the Dow stocks are traded in Frankfurt, was down 0.7 percent.

“The markets are facing a severe headwind again today,” said Tom Hougaard, chief market strategist at City Index Markets.

“There is still a sense that a low is in the making, but with the Asian indices firmly in red overnight, it might not be today,” he added.

Asian stocks slipped to multi-month lows and European shares fell nearly 2 percent as oil got close to the $100 a barrel mark and the dollar fell to record lows.

The U.S. Energy Information Administration inventory report, which is due at 1530 GMT, may push the oil price past the benchmark.

“Volatility is there to stay for the next couple of weeks,” said David Pieper, analyst at German bank LBBW.

“It looks like the market still needs something to stabilise and that something could for example be clear signal from the Federal Reserve on future interest rate moves,” he added.

Minutes of the Federal Reserve’s Oct. 30-31 meeting, which were released on Tuesday, said the Fed was unsure last month whether lower borrowing costs were needed to cushion the U.S. economy from a housing slump and credit woes but decided to cut interest rates as a form of insurance.

The latest Reuters survey taken shortly after the Fed cut short-term interest rates in October showed many primary dealers see the current easing cycle to have ended, or to end with one more quarter-point easing, which would take the federal funds rate to 4.25 percent from the current 4.50 percent.

Adding to investors’ concerns about the state of the U.S. economy were updated forecasts by the U.S. central bank that showed officials expect a much more sluggish economy next year compared to forecasts before financial turmoil hit in the summer.

On Wednesday, market players will eye the November University of Michigan sentiment data at 1500 GMT for further clues whether the credit crisis has spilled over into the real economy while also looking at data on initial jobless claims at 1330 GMT. Wednesday's earnings diary includes reports from Abercrombie & Fitch ANF.N, Deere & Co DE.N and Gap Inc GPS.N.

The Dow Jones industrial average .DJI rose 0.40 percent on Tuesday, the Standard & Poor's 500 Index .SPX gained 0.45 percent and the Nasdaq Composite Index .IXIC rose 0.13 percent. (Reporting by Eva Kuehnen; editing by Paul Bolding)