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Stocks set to drop

By CNNMoney.com staff


NEW YORK (CNNMoney.com) -- U.S. stocks were headed for a lower open Wednesday, as investors continued to worry about the recovery as they mull the Federal Reserve's latest policy statement.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were all slightly down of the opening bell. Futures measure current index values against perceived future performance.

Stocks rallied Tuesday after the Fed said it would take any action necessary to support the recovery, but gains were short lived as investors considered the Fed's downbeat economic outlook.

While the Fed said it expects improvement ahead, the central bank also cautioned that "the pace of economic recovery is likely to be modest in the near-term."

Investors were also disappointed that the Fed didn't announce any new specific measures or put a dollar figure on its policy of quantitative easing -- buying long-term U.S. treasurys to boost the economy -- said Frank Longman, senior vice president and desk analyst for Brean Murray, Carret & Co.

Traders will be closely watching the Fed's securities purchases on Wednesday, he said, for any indication of how yesterday's statement translates into real action.

Companies: Microsoft (MSFT, Fortune 500) said late Tuesday that it was hiking its quarterly dividend by 23% to 16 cents a share. Shares of Microsoft fell 0.7% in premarket trading.

Shares of Adobe Systems (ADBE) got slammed after the company issued a sales and earnings outlook that fell far short of analysts estimates. After the closing bell Tuesday, Adobe reported a solid quarterly profit but the disappointing guidance sent the stock tumbling. Shares were down 15% premarket.

World markets: European stocks fell in morning trading. Britain's FTSE 100 lost 0.6%. The CAC 40 in France and Germany's DAX both declined about 1%

Asian shares ended the session mixed. The Nikkei in Japan lost 0.4%, while the Hang Seng in Hong Kong and Shanghai Composite closed the session with modest gains.

Currencies and commodities: The dollar fell against the euro, the Japanese yen and the British pound.

Crude oil for November delivery, the most active contract, rose 36 cents to $75.33 a barrel. Traders are awaiting the government's latest data on oil inventories due at 10:30 a.m. ET.

Gold futures continued their march toward $1,300 an ounce. Gold for December delivery climbed $19.80 to $1,294.10 an ounce, after posting a new intra-day record of $1,296.50 earlier.

Bonds: The price on the 10-year Treasury note was slightly higher, pushing down the yield to 2.59% from 2.62% late Tuesday. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.62%3.69%
15 yr fixed2.77%2.80%
5/1 ARM3.12%3.07%
30 yr refi3.61%3.69%
15 yr refi2.76%2.83%
Rate data provided
by Bankrate.com
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Find personalized rates:
Index Last Change % Change
Dow 15,973.84 313.66 2.00%
Nasdaq 4,337.51 70.67 1.66%
S&P 500 1,864.78 35.70 1.95%
Treasuries 1.75 0.10 6.33%
Data as of 8:17pm ET
Company Price Change % Change
Bank of America Corp... 11.95 0.79 7.08%
General Electric Co 28.26 0.81 2.95%
Cisco Systems Inc 25.11 0.43 1.74%
Chesapeake Energy Co... 1.59 -0.19 -10.67%
Freeport-McMoRan Inc... 5.53 0.64 13.09%
Data as of 4:15pm ET

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