U.S. stocks are likely to start the day lower as indicated by stock futures. It seems that after several days of advances in which markets seem to be on their way to recovery and stabilization and investors' sentiment is improving, some may think it prudent to take some profit ahead of some key economic reports today -- Fed's Beige Book -- and Friday's August employment report.Yesterday U.S. markets finished the day higher on speculation the Federal Reserve will cut rates on September 18, the date on the next policy meeting. Several economic indicators released yesterday seemed to have supported this. The Dow industrials finished up 91 points, 0.86%, but it was the Nasdaq that made a more significant gain of 1.3%.
Today, the Fed's Beige Book, which describes economic conditions in regions around the country, is due at 2:00 p.m. EDT. Investors, who by and large have decided the Fed should cut rates in two weeks, will nonetheless look for clues as to the Fed's next move. While the Chirman Bernanke has always maintained the Fed is trying to control inflation, he may also be wary of keeping this tight rein for too long. Sine a rate cut now will trickle down the economy and affect it in over a year, many believe that since the economy has been slowed by a stumbling housing market (and the subprime meltdown along with its rising mortgage defaults as well as a credit crunch) then Bernanke will have to move.
Much before the Beige Book is released, July pending home sale will be reported at 10:00 a.m. EDT.
Crude inventories will be reported at 10:30 a.m. EDT. Oil prices rose today ahead of the report which is expected to show a decline in crude and gasoline stocks. Also, expectations that the Atlantic hurricane season would intensify, pushed oil prices higher.
Overseas, Asian markets mostly closed mostly higher with Hong Kong shares setting a record high in early trading but with Japanese stocks ending the day lower. European shares were also lower today after a recent strong run.
In corporate news:
Mattel Inc. (NYSE: MAT) recalled yet another 800,000 Chinese-made toys because of excessive amounts of lead paint. These recalls have been a blow to the company's reputation as they made many parents nervous buying Mattel toys.
Costco Wholesale Corp. (NASDAQ: COST) reported August sales. Total sales rose 6% from the year-earlier month to $4.84 billion and same-store sales rose 2%. COST shares are down 7.48% in premarket trading (7:18 a.m.).
Goldman Sachs downgraded Altria Group, Inc. (NYSE: MO) to Neutral from Buy and cut its 12-month price target to $76 from $79 mostly based on valuation. Goldman said it now prefers Carolina Group, the tobacco unit of Loews Corp (NYSE: CG).
Another analyst calls involves metals. Merrill Lynch upgraded long-term price forecasts for a range of industrial metals and related commodities.
Finally, today Apple Inc. (NASDAQ: AAPL) will host the event only recently announced, The Beat Goes On. It is expected Apple will reveal several news products, especially new iPods, but perhaps an iPhone Nano as well.
More corporate news: Before the bell: AMZN, GE, AA, CP, GES, PALM ...
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