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US STOCKS-Futures dip as Fed remarks digested; Facebook gains

Ryan Vlastelica
Thursday, 31 Oct 2013 | 7:57 AM ET

* Investors focus on Fed comments, indexes near highs

* Facebook rises in premarket, trading could be volatile

* Weekly jobless claims, October Chicago PMI data on tap

* Futures down: Dow 27 pts, S&P 2.4 pts, Nasdaq 11.75 pts

NEW YORK, Oct 31 (Reuters) - U.S. stock index futures edged lower on Thursday, suggesting the market's rally may have run out of steam, as investors digested recent comments from the Federal Reserve.

The central bank said Wednesday it had a weaker growth outlook for the U.S. economy, though it held its stimulus program steady for now, as expected. The comments sparked an equity market decline, with the S&P 500 snapping a four-day streak of gains.

The Fed, along with five other major central banks, said Thursday they would make their web of currency swap arrangements permanent as a "prudent liquidity backstop" in case of future global financial strains.

"The market is a little soggy today. Some investors are viewing yesterday's statement as more hawkish than they would have liked, and making the swap facilities permanent is a bit of a confusing move," said John Brady, managing director at R.J. O'Brien & Associates in Chicago.

The accommodative monetary policies of the Fed have fueled the market's gains this year, boosting the S&P by more than 23 percent so far in 2013 to hit a series of record highs. However, that advance has come amid weaker-than-expected economic data and an earnings season marked by weak revenue, leading many analysts to call for a pullback.

Earnings and data will continue to be in focus, with weekly jobless claims on tap, along with the October Chicago Purchasing Managers Index. While weak data could spur worries about the pace of economic growth, bullish data may spark concerns the Fed will scale back stimulus sooner than expected.

Claims are seen falling by 11,000 to 339,000 in the latest week, while the Chicago PMI is seen falling to 55 from 55.7 last month.

Facebook Inc rose 3.4 percent to $50.70 in premarket trading, after reporting strong growth in its mobile advertising business late Wednesday. Trading could be volatile as the company said it didn't plan to boost the frequency of ads shown to users, comments that erased the social networking giant's steep gains after the market closed Wednesday.

S&P 500 futures fell 2.4 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 slid 27 points and Nasdaq 100 futures lost 11.75 points.

The Dow has gained 3.2 percent in October, while the S&P has added 4.9 percent and the Nasdaq is up 4.2 percent.

In a pronounced consolidation, the S&P could find support at its 14-day moving average of 1,740.39, which is 1.3 percent below its current level.

Expedia Inc soared 19 percent to $59.40 a day after reporting third-quarter earnings that beat expectations, while Starbucks Corp dipped 1.6 percent to $79.50 in light premarket trading a day after giving a disappointing outlook.

Of 313 companies in the S&P 500 that reported earnings through Wednesday morning, 68.4 percent topped Wall Street expectations, above the 63 percent beat rate since 1994 and the 66 percent rate for the past four quarters, according to Thomson Reuters data.

Revenue performance has been mixed, however, with 53.7 percent of S&P 500 companies beating expectations, well below the 61 percent average since 2002, but above the 49 percent rate for the last four quarters.

"While revenues have been disappointing, I'm not concerned about the level of the market, since so long as the Fed is pumping liquidity in, I'm not sure where else there is to go," said Brady.

Exxon Mobil Corp, MasterCard Inc and American International Group are among the companies scheduled to report earnings Thursday.

According to two sources familiar with the matter, US Airways Group and American Airlines are considering giving up takeoff and landing slots at Washington's Ronald Reagan National Airport to win regulator approval of their $11 billion merger.

U.S. stocks fell Wednesday, with trading volatile after the Fed's less optimistic outlook on growth. Both the Dow and S&P had hit record intraday highs earlier in Wednesday's session.

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