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U.S. stock futures are indicating a slightly higher start for the day as the Street awaits the Federal Reserve's FOMC meeting policy statement to be delivered in the afternoon. Oil is still big in the news with its new intra-day record today and the financial sector will be under scrutiny as well as when the first of the investment bank, Lehman Brothers reports today.
[Update 8:45: Futures turned even higher after Lehman's better-than-expected results and as PPI report came lower than expected and giving the Fed less of a reason to hold rates.]

Yesterday U.S. stocks closed down. The Nasdaq Composite leading the losses with a 20 point drop, or 0.79%. The Dow industrials lost 39 points or 0.29% and the S&P 500 ended 7 points down or 0.48%.

Today investors will await the Fed decision regarding its monetary policy and interest rate. The Fed is widely expected to ease policy and cut rates by 25 bps (a quarter of a percent), although some are expecting a half a percentage cut. If the Fed indeed cuts rates, it will be the first time in four years it does so (and the first time in a year it makes any move), as so far policy focus has been to curb inflation. Now the Federal Reserve may be cutting rates to stop recession. The Fed needs to weigh in inflation vs. recession risk and act accordingly, which would probably mean a quarter point cut. Despite most investors expecting such a move, many also believe that if the Fed cuts only 25 bps and lower the Fed funds rate from 5.25% to 5%, the market may decline, although a statement indicating further cuts in the future are a possibility may help Street sentiment. Should the Fed decide not to move, we may see a significant selloff.

Today, at 8:30 a.m., before the opening bell, investors may gain more insight into the Fed's intentions when August producer price index, or prices (inflation) at the wholesale level will be reported. Economists have forecast PPI to have dropped by 0.3% in the month after an increase of 0.6% in July. Core PPI, which excludes volatile energy and food prices, is expected to have risen by 0.1%, same as the month before.

Overseas, Asian markets generally finished the session lower and in Europe markets seem to await the U.S. Fed decision, trading flat. But, inflation rate in the U.K. was lower than expected and U.K. mortgage banks, as well as Northern Rock, rallied today after the government said it would bail out Northern Rock.

More indication about the condition of the financial companies following the subprime meltdown and a global credit crisis when Lehman Brothers (NYSE: LEH) reports third-quarter results before the market opens. Analysts expects a 6% drop in EPS to $1.47 a share.
Morgan Stanley (NYSE: MS) reports on Wednesday and Bear Stearns (NYSE: BSC) and Goldman Sachs (NYSE: GS) on Thursday. Merrill Lynch (NYSE: MER) is reporting next week.

Contract talks between the United Auto Workers and General Motors Corp. (NYSE: GM) should resume today. In the meantime, Goldman Sachs downgraded GM to Neutral from Buy due as the positive elements are probably already priced in.

More corporate news: Before the bell: AAPL, ETFC, ADBE, BAC ...

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