Wall Street to Open Flat With Fed Ahead

[January 30, 2008]  NEW YORK (AP) -- Stocks headed for a largely unchanged opening Wednesday, with investors unlikely to make bold moves ahead of a widely expected interest rate reduction by the Federal Reserve.

The market has been banking on a new rate cut to be announced Wednesday afternoon, following the central bank's drastic 0.75 percentage point reduction in the overnight fed funds rate a week ago. The only uncertainty in investors' minds is whether the Fed will put in place a sizable 0.50 percentage point cut or more cautiously order a 0.25 percentage point cut.

A larger cut would show central bankers remain concerned about stimulating a flagging economy. A smaller move would point to continuing nervousness about inflation.

The futures contract for the Dow Jones industrial average was unchanged at 12,471. The Standard & Poor's 500 futures contract dropped 0.60 percent, or 0.02 percent, to 1,361.50 as the Nasdaq 100 contract declined 8 points, or 0.22 percent, to 1,804.0.

Treasurys were slightly higher, sending yields lower. The yield on the 10-year benchmark note stood at 3.66 percent, down from 3.68 percent late Tuesday.

The fourth-quarter report on gross domestic product is due at 8:30 a.m. Eastern time. The nation's economic growth is expected to have slowed in the period to a 0.8 percent annual pace, down from 1.2 percent in the third quarter, according to a poll of economists by Thomson/IFR.

Concerns that global banks have not seen the last of the fallout from the subprime mortgage crisis were reinforced by news Wednesday that two major European banks have revealed further impact from the crisis.

Swiss bank UBS said it will have a $11.4 billion fourth-quarter loss, largely due to subprime problems. Analysts had expected a much smaller shortfall. French bank BNP Paris Wednesday said its quarterly profit will decline by 40 percent from year-earlier levels.

Investors also are looking ahead to earnings reports from closely watched companies Amazon.com Inc., Boeing Co, Merck & Co., Kraft Foods and United Parcel Service Inc.

Overseas markets fell ahead of the U.S. rate decision. In Tokyo the Nikkei fell 0.99 percent. In Europe, London's FTSE 100 dropped 0.58 percent, France's CAC 40 lost 0.39 percent and Frankfurt's DAX gave up 0.58 percent.

[Associated Press; By LESLIE WINES]

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.