Stock Futures Tick Lower Ahead of Fed

Traders also await the GDP data and other economic reports.
By Sarina Penn ,

Wall Street was once again holding back Wednesday prior to the

Federal Reserve's

expected interest-rate decision and other crucial economic data.

S&P 500

futures were edging down 2 points to 1391 and were more than 2 points below fair value. Futures on the Nasdaq 100 were off nearly 4 points to 1936 and were nearly 4 points under fair value.

Last time out, the broad indices drifted to a narrowly mixed finish amid Fed anticipation, gloomy economic numbers and another round of earnings. All told, the

Dow Jones Industrial Average

lost 40 points at 12,832, and the S&P 500 gave up 5 points to 1391. The

Nasdaq Composite

crept up 2 points to 2426.

Regardless of what occurs in the first few hours of the trading day, the culmination of the session may well be determined by what the central bank decides at the conclusion of its two-day gathering. The Federal Open Market Committee, the policymaking arm of the Fed, is due to post its interest-rate decision at 2:15 p.m. EDT, and its statement should also clue investors into whether the central bank will give its rate-easing cycle a rest.

The Fed has pulled the fed funds target rate down by three percentage points since September in an effort to rev up the credit-crunch-battered U.S. economy, which decelerated sharply last quarter and continues to show signs of distress in unemployment numbers, manufacturing declines and sliding consumer spending.

At the same time, a relentless upward drive in commodities prices have spurred considerable inflationary worries, and two members of the FOMC dissented from the last rate-cut decision for that very reason. Nevertheless, futures were recently pricing in a high chance that the fed funds target rate, which currently stands at 2.25%, will be decreased by another 25 basis points. The discount rate, or that at which the Fed lends money to banks, is currently at 2.50%.

Investors were also gearing up for preliminary first-quarter gross domestic product numbers from the Commerce Department, due out at 8:30 a.m. EDT. The report should be telling as to whether the U.S. is in fact in a recession. However, worth noting is that this is the first report of three on the opening quarter of the year, and revisions are not uncommon. In the fourth quarter, GDP growth slowed to just 0.6% from nearly 5% in the prior period.

Elsewhere on the economic docket, ADP should come out with its April employment data at 8:15 a.m. EDT. At 9:45 a.m. EDT, Midwest manufacturing figures are due from the Chicago Purchasing Managers Association.

On the corporate side,

Citigroup

(C) - Get Report

dropped 3.3% after the banking behemoth announced after the prior market close that it plans to offer $3 billion in stock in order to shore up its dwindling cash pile.

As for the day's earnings, Dow component

General Motors

(GM) - Get Report

widened its first-quarter loss, but the carmaker trounced expectations when stripping out certain items. On an adjusted basis, GM lost 62 cents a share, compared with Thomson Financial's $1.60 target. Shares climbed 5.9% in premarket trading.

Fellow Dow member

Procter & Gamble

(PG) - Get Report

posted rising first-quarter earnings of $2.71 billion, or 82 cents a share, edging past the consensus analyst estimate by a penny. P&G also bumped up the lower end of its current-quarter outlook by 2 cents a share.

Commodities surrendered more ground. Crude oil was slipping 26 cents to $115.37 a barrel, and gold futures were off $10.20 to $866.60 an ounce.

Treasury prices were picking up. The 10-year note rose 5/32 in price to yield 3.80%, and the 30-year bond added 12/32 in price, yielding 4.53%.

The major overseas markets were uniformly lower. In Asia, Tokyo's Nikkei 225 lost 0.3% overnight to 13,850, and Hong Kong's Hang Seng Index shed 0.6% at 25,755. As for Europe, the FTSE 100 in London, Germany's Xetra Dax and the Paris Cac were all falling 0.3% or more.

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