Stock Futures Pare Gains as Focus Remains on Fed

NEW YORK (TheStreet) -- U.S. stock futures were paring gains as the markets weighed mixed personal income and spending data against the possibility of more monetary easing following the two-day Federal Reserve meeting that begins Tuesday.

Futures were also holding gains amid mounting anticipation over the European Central Bank meeting on Thursday.

Futures for the Dow Jones Industrial Average were rising 16 points, or 2.99 points above fair value, at 13,017. Futures for the S&P 500 were up 1.1 points, or 1 point above fair value, at 1382, while futures for the Nasdaq 100 were up 7.25 points, or 6.83 points above fair value, at 2643.

"The Federal Open Market Committee (FOMC) is likely to ease monetary policy at the ... meeting in response to the continued weakness of the economic data and the persistent downside risks from the crisis in Europe," said Goldman Sachs economists. "We expect an extension of the current 'late 2014' interest rate guidance to 'mid-2015.'"

"Although a new Fed asset purchase program is a possibility in the near term if the data continue to disappoint, our central expectation is for a return to QE in December or early 2013."

U.S. stocks slumped Monday amid some mild profit-taking ahead of the Fed's policy meeting.

The Commerce Department on Tuesday reported that personal income rose 0.5% in June after increasing by an upwardly revised 0.3% the previous month. Personal spending was unchanged after a downwardly revised 0.1% dip in May. Economists in a Thomson Reuters poll predicted that personal income rose by 0.4% in June and that personal spending inched up 0.1%.

At the same time, the U.S. Bureau of Labor Statistics reported that compensation costs for civilian workers increased by a seasonally adjusted 0.5% for the three-month period ended June 2012, as expected.

The Case-Shiller 20-city home-price index for May will be released at 9 a.m. and is predicted to fall 1.5% after declining by 1.9%.

The Chicago purchasing managers index for July, to be released at 9:45 a.m., is expected to have fallen to 52.4 from 52.9 last month.

At 10 a.m., the Conference Board is expected to say that consumer confidence fell in July to 61.5 from 62.

September crude oil futures were up 42 cents at $90.20 a barrel. December gold futures were up by $4.70 at $1,628.70 an ounce.

The benchmark 10-year Treasury fell 3/32, raising the yield to 1.511%. The greenback was trading down 0.11%, according to the dollar index.

The FTSE in London was off 0.1% and the DAX in Germany was up 0.64%. The Hong Kong Hang Seng index finished up 1.08% and the Nikkei in Japan settled higher by 0.69%.

On the corporate front, BP (BP), the British oil giant, posted underlying replacement cost profit in the second quarter of $3.7 billion, down from $5.7 billion a year earlier. Including charges, BP reported a loss for the period of $1.4 billion.

BP wrote down the value of its assets by $5 billion -- $2.7 billion for U.S. refineries and $2.1 billion for U.S. shale gas assets. It also took an additional provision of $847 million for the Gulf of Mexico oil rig disaster, bringing the total it has set aside to more than $38 billion.

Pfizer (PFE) posted second-quarter profit Tuesday of 62 cents a share on revenue of $15.1 billion. Analysts, on average, expected the drug giant to post second-quarter profit of 54 cents a share on revenue of $14.87 billion.

Seagate Technology (STX) , the hard disk drive maker, on Monday reported a non-GAAP profit of $2.41 a share in its fiscal fourth quarter on revenue of $4.48 billion, falling short of Wall Street's expectations for earnings of $2.51 a share on revenue of $4.56 billion.

Ten jurors were selected Monday in the patent battle between tech giants Apple (AAPL) and Samsung Electronics. The trial is expected to last about four weeks.

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-- Written by Andrea Tse in New York.



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