U.S. Stock Futures Advance on Speculation the Fed Will Cut Rates


U.S. stock-index futures advanced on speculation the Federal Reserve will cut its benchmark lending rate by 50 basis points to 4.75 percent. Standard & Poor's 500 Index futures expiring in December added 7 to 1,496.8 as of 8:27 a.m. in New York. Dow Jones Industrial Average futures increased 50 to 13,553 and Nasdaq 100 Index futures advanced 17 to 2,023.

Wall Street desperately wants a rate cut to help offset tightening credit conditions and inspire confidence in global financial markets, which have been rocked by troubles in subprime mortgages and commercial paper.

Signs of economic trouble, including a surprising drop in U.S. jobs in August and soft retail sales data, have provided room for the Fed to shift its focus from stamping out inflation to keeping the economy growing. Many economists, including former Fed Chairman Alan Greenspan, say the risk of recession has increased amid the latest market turmoil and eroding house prices.

Once the Fed tilts policy in a new direction, a series of rate moves are usually in store, but the size and speed of subsequent shifts in credit costs can vary. Investors will scour the statement the Fed will issue announcing its rate decision for signs of how aggressively the central bank will move in coming months.


TradingEconomics.com, Bloomberg, Reuters
9/18/2007 6:04:10 AM