Stock futures little changed as Federal Reserve begins meeting; productivity surges

NEW YORK (AP) — Stock futures are little changed Tuesday as the Federal Reserve begins a two-day meeting that could provide new signs into how the economy is faring.

A new report showing industrial production surged in the second quarter had little effect on futures trading.

After a steep run-up in recent weeks on the strength of better-than-expected earnings, investors have paused amid a lull in new economic and profit data.

Overseas markets were mixed as new economic reports showed China’s stimulus measures were helping buffer the country from the global downturn, though weak fundamentals persist.

In the U.S., investors are turning their attention to the Fed’s two-day meeting that kicks off Tuesday.

It is widely expected the Fed will hold interest rates steady at near zero when they end their meeting Wednesday, but the group’s economic assessment will be closely studied to determine how the economy is faring.

Ahead of the opening bell, Dow Jones industrial average futures fell 18, or 0.2 percent, to 9,302. Standard & Poor’s 500 index futures declined 2.40, or 0.2 percent, to 1,005.10, while Nasdaq 100 index futures fell 4.50, or 0.3 percent, to 1,608.00.

Earlier Tuesday, the Labor Department said productivity — which measures the amount of output per hour of work — grew 6.4 percent during the second quarter. Economists polled by Thomson Reuters were expecting growth of 5.3 percent.

The growth was likely tied to businesses successfully cutting the number of hours worked faster than the decline in output, rather than the result of improving production. Labor costs fell 5.8 percent during the quarter.

The aggressive cost-cutting helped many companies exceed earnings expectations last quarter as the ongoing recession hindered sales and revenue.

Aside from the productivity report, investors will also get new data on wholesale inventories Tuesday.

The Commerce Department is expected to report wholesale inventories fell in June for the 10th consecutive month, declining 0.9 percent. However, sales at the wholesale level are expected to have ticked 0.5 percent higher during the month, a sign the economy might be improving.

The inventories report is due out at 10 a.m. EDT.

Meanwhile, bond prices rose slightly as the Treasury Department prepares this week to auction off a record $75 billion in debt. The auctions start Tuesday with the sale of $37 billion in three-year notes.

Investors will be keeping a close eye on demand for the new debt. Fewer buyers could force the government to increase the interest it pays, which would drive up borrowing costs for consumers and slow an economic recovery.

The yield on the three-year note, which moves opposite its price, declined to 1.77 percent from 1.78 percent late Monday. The yield on the benchmark 10-year Treasury note fell to 3.77 percent from 3.78 percent late Monday.

The dollar was mixed against other major currencies, while gold prices rose.

Overseas, Japan’s Nikkei stock average rose 0.6 percent. In afternoon trading, Britain’s FTSE 100 fell 0.2 percent, Germany’s DAX index fell 0.3 percent, and France’s CAC-40 declined 0.01 percent.

source: yahoo finance

Tags: fed meeting, stock futures, wallstreet

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