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 A second straight day of mixed earnings and economic reports is also
dragging down stocks Wednesday.
Many traders had been predicting the Fed would buy between $500
billion and $1 trillion in Treasurys to drive interest rates lower
and boost lending and spending. But new reports says the central
bank might announce a smaller plan after its meeting next week.
The Dow Jones industrial average is down 68, or 0.6 percent, at
11,101. The S&P 500 is down 7, or 0.6 percent, at 1,179, while the
Nasdaq composite is down 15, or 0.6 percent, at 2,482.
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THIS IS A BREAKING NEWS UPDATE.
AP's earlier story is below.
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NEW YORK (AP) -- Stock futures slipped Wednesday as concerns grew
over whether the Federal Reserve's expected plans to buy Treasury
bonds might be smaller than anticipated.
A second straight day of mixed earnings and economic reports were
also a drag on the market.
Many traders had been predicting the Fed would buy between $500
billion and $1 trillion in Treasurys to drive interest rates lower
and boost lending and spending. That expectation had been priced
into the market in recent weeks driving the market higher, so
anything that might fall short of that could hurt stocks.
A report in The Wall Street Journal said the Fed's bond purchases
might amount to a few hundred billion dollars over several months,
which would fall short of those predictions. The report came a day
after William Dudley, the president of the Federal Reserve Bank of
New York, said the central bank cannot fix the sluggish economy
immediately.
Treasury prices fell Wednesday, driving interest rates higher.
Stocks had been reacting favorably to the expected program because a
bond purchase by the Fed would drive interest rates lower. And with
interest rates so low, investors would eventually turn to stocks for
better yields on their investments.
The Fed meets next week and details of any bond-buying program are
expected to be announced when the meeting wraps up Nov. 3.
Ahead of the opening bell, Dow Jones industrial average futures fell
39, or 0.4 percent, to 11,085. Standard & Poor's 500 index futures
fell 5.70, or 0.5 percent, to 1,177.10, while Nasdaq 100 index
futures fell 8.00, or 0.4 percent, to 2,108.00.
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 The yield on the benchmark 10-year Treasury note, which moves
opposite its price, rose to 2.69 percent from 2.64 percent late
Tuesday.
Its yield briefly climbed above 2.70 percent Wednesday for the first
time since late September, just before the Fed first hinted it was
considering buying bonds to stimulate the economy. Consumer goods maker Procter & Gamble Co. said its profit slipped
during the most recent quarter, but results still beat forecasts.
Its shares rose 74 cents to $63.60 in pre-opening trading.
Traders weren't as happy with Sprint Nextel Corp., which reported a
widening loss. Its shares fell 17 cents, or 3.6 percent, to $4.60.
A report on durable goods orders also provided a mixed picture of
the health of the economy. The Commerce Department said durable
goods rose faster than economists had forecast in September.
However, excluding the volatile transportation sector, orders fell.
Economists polled by Thomson Reuters had forecast a rise in orders
excluding transportation.
The report indicates the pace of growth in manufacturing is slowing.
Manufacturing had been one of the brightest spots in the economy
during the first half of the year.
Traders will continue to get earnings and economic reports
throughout the week that should provide further signals about the
health of the economy.
Signs of a strong economy could lead the Fed to ratchet back its
plans as well. A key reading on gross domestic product, the broadest
measure of the country's economic growth, is due out Friday.
[Associated
Press; By STEPHEN BERNARD]
Copyright 2010 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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