Before the bell: Futures rise ahead of Fed decision

Posted Nov 4th 2009 7:30AM by Melly Alazraki
Filed under: Before the Bell, International Markets, Time Warner (TWX), Berkshire Hathaway (BRK.A), Market Matters, Johnson and Johnson (JNJ), Economic Data, Oil, Federal Reserve, Burlington Northern Santa Fe (BNI)

U.S. stock futures climbed on Wednesday morning, ahead of the decision by the Federal Reserve on interest-rate and monetary policy. This afternoon, the Fed will give its outlook on the economy and the corresponding policy it's taking. It is widely believed the Fed will not raise rates. Meanwhile, more earnings and economic data are on tap.

Unlike this morning, traders appeared more cautious Tuesday, as the Fed began its two-day policy meeting. Stocks ended mixed and fairly unchanged following news that Warren Buffett's Berkshire Hathaway (NYSE: BRK.B) has decided to buy Burlington Northern Santa Fe (NYSE: BNI) in a deal worth $44 billion and as Johnson & Johnson (NYSE: JNJ) announced a 6-7% workforce reduction.

At 2:15 p.m. today, the Federal Open Market Committee will conclude its two-day policy meeting with an announcement. While they are sure to leave a key interest rate at a record low to continue stimulating the economy, investors will want to hear what policymakers think about the strength and sustainability of the recovery, especially in light that less government stimulus money is available and, unemployment is still on the rise, the credit and financial markets are still fragile and the housing market no out of the doldrums.

Also due out Wednesday are two key employment readings: October Challenger job cuts at 7:30 a.m. Eastern and ADP employment report at 8:15 a.m. At 10:00 a.m., the ISM services reading for October will also be released.

Meanwhile, oil prices fell slightly to near $79 a barrel Wednesday in Asia despite an unexpected drop in U.S. crude supplies which suggested demand may be picking up. At 10:30 a.m. today, another inventories report will be released and give a better picture of supplies.

Overseas, Asian stocks were mostly positive after the World Bank boosted its forecast for China this year from 7.2 percent to 8.4 percent. European stock markets recovered Wednesday, helped by upbeat earnings reports across the region.

Finally, Time Warner (NYSE: TWX), parent of this blog, reported a 38 percent drop in third-quarter profit Wednesday, hurt by declines at its AOL and publishing segments, but the results beat expectations and the company is boosting its full-year earnings forecast.

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