What a difference a day makes. On Tuesday, investors were edgy on concerns the Federal Reserve might not lower interest rates, as well as several disappointing quarterly reports, but sentiment has swung 180 degrees on Wednesday, with stock-index futures higher as investors are expected to go bargain hunting. Interest-rate futures have priced in 94 per cent odds that the central bank will reduce its overnight benchmark by 25 basis points to 4.5 per cent. The Fed's half-point cut last month fuelled a 3.7 per cent rise in the S&P 500 since then. Speaking for the majority, investment adviser Dennis Gartman contends the Fed does not like to mislead the market, and it does not wish to create confusion. "Rather, the Fed, like the government in China, wishes above all to avoid chaos. Moving 25 basis points shall avoid chaos; moving zero or 50 would be inordinately chaotic." Ahead of the Fed's report at 2:15 p.m. EDT, investors will be eyeing an initial estimate of third-quarter U.S. economic growth before the opening bell, manufacturing activity in the U.S. Midwest and weekly fuel inventory report. David Moore, a commodity strategist with the Commonwealth Bank of Australia, told Reuters that profit taking is weighing on the price of crude oil, which has dropped below $90 (U.S.) a barrel, even as the U.S. dollar fell to another record low against the euro. With two hours before trading begins, Dow Jones industrial futures are up 39 points, S&P 500 futures up 6.4 points and Nasdaq futures up 9.25 points, all mirroring a bullish tone in Europe, where Deutsche Bank posted better-than-expected profit for the third quarter and signalled a good start to the final quarter. Among the S&P 500 companies set to announce quarterly results are Exxon Mobil Corp., Kraft Foods Inc., Prudential Financial Inc. and Weyerhaeuser Co. In the stocks to watch list, Verizon Wireless and Sprint Nextel Corp. are reported to be in "advanced talks" with Google Inc. about selling cell phones powered by Google software next month.
Stock futures higher on Fed hype
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Last updated Thursday, Apr. 09 2009, 8:57 PM EDT