Before the bell: Futures climb ahead of data, Fed statement

Posted Dec 16th 2009 7:40AM by Melly Alazraki
Filed under: Before the Bell, International Markets, Market Matters, Economic Data, Oil, Federal Reserve

U.S. stock futures advanced Wednesday morning, ahead of the much anticipated statement from the Federal Reserve coming this afternoon. Oil and commodity prices, too, rose after nearly two weeks of softness. Investors also await several key economic reports due out this morning, including inflation and housing figures.

After a reportedly higher-than-anticipated inflation rate of 1.8% Tuesday, stocks closed the day in the red. This morning, investors will get a chance to see how much inflation has hit consumers as the Commerce Department will release the consumer price index at 8:30 a.m., an hour before the opening bell. November CPI is expected to have risen 0.4% after climbing 0.2% the previous month. Core CPI, which excludes the often volatile food and energy prices, is expected to be up 0.1% in November after a 0.3% gain in October. While the producer price index (PPI) rose due largely to increased output, consumers will feel the increase in energy prices in the last month.

Also at 8:30, the Commerce Department will release housing starts and building permit figures for November. Housing starts are expected to have increased to a 574,000 annual unit rate in November from a 529,000 unit annual rate in October. Building permits are expected to have expanded to a 570,000 unit annual rate in November from a 552,000 unit annual rate.

Then, at 2:15 p.m., the Federal Open Market Committee will release its statement on monetary policy decisions and the economy following a two-day meeting. The expectation is that the Fed will maintain its extra loose monetary policy because of the still high unemployment rate. Rates will likely remain at a record low.

Mostly, investors will keep an eye on the language of the statement. Chairman Ben Bernanke is expected to be more upbeat about the economy, given all the positive indications of the past months. However, some economists worry about next year, when the government's stimulus money runs out. Of course, the Fed, which has to balance out inflationary pressures as well, will caution against such risks. So the question of how long the rates will remain low will be also of interest.

Also, as oil prices hovered near $71 a barrel Wednesday after snapping a nine-day losing streak Tuesday, gains were tempered by a U.S. crude supply report that showed an unexpected rise in inventories last week. Another such report is due at 10:30 a.m. from the Energy Department's Energy Information Administration.

Overseas, most markets in Asia fell, but European stock markets rose Wednesday following a report that global finance regulators will give lenders a decade or more to meet stricter capital rules, causing banks to rally.

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