Most on Wall Street expect either a quarter-point cut in the benchmark federal funds rate or a half-point cut, given last month's decline in jobs and weakening retail sales. Equally important is how the Fed characterizes the housing, credit and stock markets' drag on the U.S. economy, and if it suggests there are more rate reductions to come.
Dow Jones industrial average futures expiring in December rose 29, or 0.21 percent, to 13,532. S&P 500 index futures rose 2.00, or 0.13 percent, to 1,491.80, and Nasdaq 100 Index futures rose 3.50, or 0.17 percent, to 2,009.50.
On Monday, stocks fell moderately on very thin trading volumes. Tuesday is expected to be another low volume session until the Fed's decision is released, although some notable economic and corporate data will be reported before then.
The Labor Department's August producer price index is scheduled to come out at 8:30 a.m. EDT. According to a Thomson Financial survey, economists on average are anticipating a 0.3 percent decline in the headline PPI, and a 0.2 percent uptick in the core PPI, which eliminates food and energy prices. In August, commodity prices fell alongside stocks as investors pulled their money out of riskier assets and placed it in safer securities like Treasurys.
Commodity prices have since bounced back. Crude oil prices rose 40 cents to $80.97 a barrel in premarket trading on the New York Mercantile Exchange, moving further into record terrain. Though the effect of high oil prices on the U.S. consumer is a concern
-- especially given that the dollar is near record lows versus the euro -- the Fed tends to measure inflation with often-volatile food and energy prices stripped out.
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The dollar fell against the euro Tuesday, but rose versus the pound and the yen.
Tuesday morning also brings some notable third-quarter earnings reports
-- from Lehman Brothers Holdings Inc., the first of the Wall Street brokerages to reveal how August's market turmoil affected its operations.
Later, at 1 p.m. EDT, the National Association of Home Builders releases its housing market outlook, and the market is anticipating the index for September to weaken compared to August.
In European trading, Britain's FTSE 100 rose 0.36 percent, Germany's DAX index fell 0.10 percent and France's CAC-40 rose 0.24 percent.
In Asia, Japan's Nikkei index fell 2.02 percent and Hong Kong's Hang Seng Index fell 0.09 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com/
Nasdaq Stock Market: http://www.nasdaq.com/
[Associated Press; by Madlen Read]
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