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Wall Street fixed on Fed as oil hits 2009 low

2014-08-23T010045Z_2_LYNXMPEA7L0TG_RTROPTP_3_CBUSINESS-US-MARKETS-GLOBAL_original

U.S. stock index futures signaled a higher open on Tuesday, after U.S. crude futures slipped to levels not seen since 2009 ahead of the U.S. Federal Reserve’s latest monetary policy meeting.

On Monday, U.S. crude futures for January delivery declined $1.90, or 3.3 percent, to close at $55.91, the lowest finish since May 2009.

Read More Market’s seasonal cheer on hold until oil finds footing

Brent also took a hammering, falling over $1 per barrel and below $60 for the first time since July 2009 in early European trading on Tuesday, as Chinese factory activity slowed and emerging market currencies stumbled.

Tuesday also brings the start of the Fed’s two-day Federal Open Market Committee (FOMC) meeting, with many market-watchers expecting the central bank to drop its pledge to hold interest rates low “for a considerable time”.

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Read More Gross: US structural growth rate to be about 2% or less

Star bond fund manager Bill Gross said he anticipates economic growth in the U.S. to fall to 2 percent next year as a result of the decline in the oil price.

Gross said it would be “very difficult” for oil prices to stabilize, adding that he was watching the move in oil, “quite a bit.”

“Oil determines currency movements; currency movements determine spread markets, risk markets, high yield markets, the potential for bankruptcy for not only companies but countries,” Gross said in an exclusive interview with CNBC.

Read More Oilslumps near $59 for first time since 2009

Other data expected on Tuesday includes new housing starts in November, which are expected to show only modest positive change in single-family starts, but multi-family activity could pick up from a lackluster reading in October.

“The bigger picture suggests that the pick-up in housing supply growth from the lows of earlier years appears to be progressing at a glacial pace,” said director of euro area economic research at Daiwa Capital Markets, Robert Kuenzel.

Meanwhile, the flash estimate of December’s manufacturing PMI is expected to see a modest rise to 55.2 in a modest turnaround after three consecutive monthly falls.

Read More Russiaraises key rate to 17%, effective Tuesday

European shares were lower in morning trade on Tuesday with a continued fall in the price of oil offsetting a modest rally in the banking sector.

Major earnings expected on Tuesday include FactSet (FDS) before market open, with Darden Restaurants (DRI) and Dave & Buster’s (PLAY) coming after market close.

tracy collins

http://www.moneyandtechnology.com

I am a freelance writer blogger social media marketer and content marketer with twelve years of experience in writing and blogging.

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