Wall Street heads for higher open before Fed talks

August 5, 2008 5:51:21 AM PDT
Wall Street headed for a higher open Tuesday as investors awaited the Federal Reserve's meeting on interest rates and eyed with cautious optimism the declining price of oil. The Fed, seeking to support an anemic U.S. economy and also contain inflation, is expected to keep its benchmark federal funds rate steady at 2 percent. As always, investors will be keen to see in the Fed's statement what its bias is toward future rate moves.

The Fed announcement is expected at 2:15 p.m. EDT.

In the meantime, the market will parse the Institute for Supply Management's report on the service sector during July. That will be issued at 10 a.m.

Investors are also keeping an eye on oil prices, which plunged to their lowest level in three months on Monday as the threat from Tropical Storm Edouard weakened. Crude has closed lower in six of the last nine sessions and is 18 percent off its all-time high above $147 reached July 11.

Light, sweet crude fell $2.32 to $119.09 in premarket electronic trading on the New York Mercantile Exchange.

Oil's retreat has eased some of Wall Street's concerns about consumer spending, which accounts for more than two-thirds of the nation's economy.

In early Tuesday's trading, Dow Jones Industrial average futures rose 69, or 0.61 percent, to 11,340.

The Standard & Poor's 500 index futures rose 7.8, or 0.62 percent, to 1,256.60, and the Nasdaq 100 index futures added 14, or 0.77 percent, to 1,825.75.

Bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its prices, fell to 3.96 percent from late Monday's 3.97 percent.

The dollar traded mostly higher against other major currencies, while gold prices fell.

In corporate news, Archer Daniels Midland Co. on Tuesday reported a 61 percent plunge in fourth-quarter profit, but said revenues soared amid higher prices for commodities like wheat and corn. D.R. Horton Inc., the nation's largest homebuilder, posted a narrower fiscal third-quarter loss as charges to write down the value of property declined.

Overseas, Japan's Nikkei stock average fell 18.52, or 0.14 percent, to 12,914.66. Britain's FTSE 100 rose 63.80, or 1.20 percent, 5,384. Germany's DAX index rose 138.08, or 2.17 percent, to 6,487.89, and France's CAC-40 rose 61.09, or 1.43 percent, to 4,341.72.


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