Stock futures dip after snap-back rally
Stock index futures fell on Wednesday after a sharp snap-back rally in the last session as investor fears about the economy and high levels of public debt looked set to generate more volatile trading.
Stocks zigzagged on Tuesday after the Federal Reserve promised to hold interest rates low for at least two years before the S&P 500 index rallied 5 percent into the close. But the Fed's statement also underlined the struggling economy and was a reminder that markets would likely remain choppy.
At this point of time, investors' heads are spinning, said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.
We anticipate further volatility, he said. I even think we are going to retest the lows that were set on Monday.
Even with Tuesday's rally, the broad S&P 500 is down 14 percent from a peak at the end of April after falling precipitously over the last two weeks -- a period that saw an escalating financial crisis in Europe, political gridlock in Washington, and a downgrade of the U.S. credit rating.
S&P 500 futures lost 8.3 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 82 points, and Nasdaq 100 futures dropped 13.50 points.
Tokyo's Nikkei average closed up 1.1 percent on Wednesday, but European stocks rose 0.8 percent after the previous session's rebound from a 20 percent dive over the last 2-1/2 weeks.
Gold held steady, hovering near a lifetime high around $1,778 an ounce struck in the previous session, but further gains could be capped by any rebound in equities.
In corporate news, HSBC Plc is selling its $30 billion U.S. credit card arm to Capital One Financial Corp for a premium of $2.6 billion, as Europe's top bank streamlines its mammoth operations.
A Reuters poll showed Wall Street economists see the odds of around one-in-three that the United States will slip back into recession.
On the earnings front, investors awaited results from Cisco Systems Inc, News Corp, Computer Sciences Corp and Macy's Inc.
(Reporting by Edward Krudy; editing by Jeffrey Benkoe)
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