Before the bell: Futures decline despite FedEx lifting guidance

Posted Dec 8th 2009 7:50AM by Melly Alazraki
Filed under: Before the Bell, International Markets, Market Matters, FedEx Corp (FDX), Economic Data, Commodities, Oil

U.S. stock futures fell Tuesday morning following a mixed close Monday after Federal Reserve Chairman Ben Bernanke's somewhat sobering comments about the economy. FedEx lifted its earnings guidance, but that, too, failed to improve sentiment as investors worried about the economy and employment picture.

On Monday, Bernanke gave a cautious assessment of the economy. While he dampened speculation of an early U.S. interest rate rise, he said the economic recovery still faced "formidable headwinds." His remarks drove investors toward government debt. European Central Bank President Jean-Claude Trichet echoed these sentiments.

At 11:24 a.m. Eastern, President Obama is due to speak on the economy at the Brookings Institution in Washington. He is expected to propose re-allocating $200 billion from the TARP money to fund new job creation efforts. Meanwhile, a survey released early Tuesday from employment services company Manpower Inc., showed that fewer companies plan to cut jobs in the first quarter of 2010.

Overseas markets also reacted to Benrnanke's comments. Asian stocks ended generally lower as did European stocks. Japan unveiled an $81 billion stimulus plan, and the Nikkei 225 ended a six-session winning run with a 0.27% decline.

The dollar fell vs. the Japanese yen but was fairly steady vs. the euro. Oil, meanwhile, rose back above $74 a barrel on Tuesday after a 2% fall the previous day, but the slow recovery in energy demand and ample supplies limited gains. After a three-session decline, g old rose 0.5% in Europe on Tuesday after Bernanke's comments boosted interest in the precious metal as an alternative asset. [Update: As the morning progressed, most of the above trends reversed course: the dollar strengthened against most major currencies, oil fell below $73 and gold continued to decline.]

Of the companies in focus, FedEx (FDX) lifted its earnings estimate for the quarter late Monday due to improved activity. General Motors, which is due to update on its turnaround efforts in a press conference at 8:30 a.m., is apparently talking to China's BAIC about a partial sale of assets associated with its Saab brand, according to reports.

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