Tuesday December 15th


Futures off highs as 3M weighs; Fed meeting eyed

U.S. stock index futures pointed to a higher open Tuesday amid some stabilization in oil prices as the key two-day Federal Reserve meeting was set to begin. Dow futures briefly gained more than 150 points before paring gains to trade about 130 points higher as 3M fell more than 4.5 percent pre-market trade. The firm lowered its 2015 earnings outlook, citing continued slow growth in the global economy. The company said it now expects full-year growth of about 1 percent, compared with previous guidance of 1.5 to 2 percent. Apple also weighed, falling 1 percent in pre-market trade, after key supplier Dialog Semiconductor lowered guidance for fourth-quarter revenue. The Fed begins meeting Tuesday, and will release its post meeting statement Wednesday at 2 p.m. ET. The central bank is widely expected to raise the fed funds rate by a quarter point Wednesday, while emphasizing that the pace of tightening will be gradual. A hike would be the first since June 2006. U.S. stock index futures held near earlier levels after the headline November Consumer Price Index (CPI) came in unchanged, while ex-food and energy the figure rose 0.2 percent. The Empire Manufacturing index for December showed minus 4.6, compared with November's minus 10.7 print. The U.S. dollar index turned higher but continued to trade essentially flat against major world currencies, with the euro near $1.099 and the yen at 121.02 yen against the greenback as of 8:40 a.m., ET. Treasury yields edged higher, with the 2-year yield at 0.97 percent and the 10-year at 2.26 percent. The NAHB housing market index is due at 10:00 a.m. and the latest capital inflows data at 4:00 p.m. Oil prices remain in focus, after U.S. crude settled up 69 cents on Monday, or 1.94 percent, at $36.31 a barrel, pausing a six-day losing streak that took crude to its lowest in nearly seven years. Internationally traded Brent pared gains to trade about 20 cents higher just above $38 a barrel, while U.S. crude turned lower to trade 10 cents lower just above $36.20 a barrel, as of 8:41 a.m., ET. European equities traded higher Tuesday morning, buoyed by positive car registration data in the European Union, ahead of the Fed meeting. The pan-European Stoxx 600 index was last up nearly 2 percent. Asian markets closed mostly down after selling off on Monday, with some energy stocks seeing a rebound after oil prices rose in the U.S. session. The Chinese market fell into negative territory again in the afternoon, with the Shanghai Composite closing down 10 points, or 0.28 percent, at 3,510. The smaller Shenzhen Composite was up 25 points, or 1.1 percent, at 2,264. The Nikkei 225 index saw a brief uptick at market open before falling back firmly into negative territory, closing down 317 points, or 1.68 percent, at 18,566 after hitting a near six-year low on Monday. Trade in U.S. stocks was volatile Monday, with the Dow Jones industrial average adding 100 points as the close approached, after earlier falling more than 100 points. Gold steadied on Tuesday, arresting the previous day's 1 percent slide as the dollar retreated, but moves were muted as traders awaited the outcome of this week's Federal Reserve policy meeting. Gold has fallen 10 percent this year, largely on the back of expectations that the Fed is set to hike rates for the first time in nearly a decade. Rising rates increase the opportunity cost of holding non-yielding bullion. Spot gold was at $1,065.65 an ounce, up from $1,062.60 late on Monday, while U.S. gold futures for February delivery were up $1.60 an ounce at $1,065.