Futures Remain Lower After Inflation News
U.S. stock index futures remained lower despite a slightly better-than-expected gain in industrial production, and a slightly better-than-expected report on consumer price inflation and better-than-expected news from a regional manufacturing survey.
Industrial output rose 0.4 percent in November, according to Federal Reserve data. That's above an expected gain of 0.3 percent, according to economists surveyed by Reuters. In October, industrial product fell 0.2 percent from a previously reported flat reading. The November reading was the biggest gain since July.
Capacity utilization rose to 75.2 in November, from a revised 74.9 in October, still far below its long-term average. Capacity utilization measures how fully firms are using resources.
The Consumer Price Index rose 0.1 percent in November, the Labor Department reported. Excluding volatile food and energy prices, the core CPI also rose 0.1 percent. Economists surveyed by Reuters had expected the CPI to rise by 0.2 percent.
Also, The New York Fed's "Empire State" general business conditions index gained 22 points to 10.57 in December from a drop of 11.14 in November. The index was boosted by growth in new orders and shipments, the New York Federal Reserve said.
Investors also have their eye on the Senate, which was preparing to vote on crucial legislation extending the Bush-era tax cuts. Economists expect the tax cuts, if passed, would add one percentage point to economic growth, as a one-year cut in payroll taxes and more certainty would boost activity. But other analysts warned that the tax bill would make the $14 trillion debt of the U.S. even worse.
In other economic news, the Mortgage Bankers Association said applications for home loans felllast week as mortgage rates hit a seven-month high.
Industrial production data will be released at 9:15 a.m. Analysts surveyed by Briefing.com expect it to have nudged up by 0.2 percent in November after stagnating in October.
The bond market reboundedafter a strong selloff that coincided with Tuesday's Federal Open Market Committee statement in which the central bank said it was holding rates steady and continuing with its $600 billion quantitative easing program to buy Treasurys. The benchmark 10-year note's price fell to3.39 price after hitting a six-month high of 3.49 percent late Tuesday.
The dollar rose against a basket of currenciesas the euro fell. Moody's delivered another blow to the region as it downgraded the outlook for Spain’s sovereign credit rating because of the nation's growing debt. Moody’s stressed, however, that it did not expect Spain to have to resort to a bailout from the European Union like Greece and Ireland.
European stocks were down, led by Spanish banks, on the news. In Greece, flights were grounded and trains brought to a standstill as fresh anti-austerity protestsculminated in a national walkout.
In the U.S., the holiday shopping season is in full swing, as the majority of Americans completed only half of their Christmas shopping, according to a new survey.
The slightly improved economic outlook means travel is likely to rise as well, with the AAA predicting a 3.1 percent rise in the number of Americans traveling for the end-year holiday.
In corporate news, McDonald's said it would double the number of its restaurants in Chinato 2,000 by 2013, to take advantage of the rapid growth in the country.
Best Buy fell in premarket trading after Oppenheimer downgraded the electronics retailer to "perform" from "outperform," in a report titled, "A Stark Reminder That TV Sales Matter." Best Buy shares had plunged Tuesday after the retailer reported disappointing earnings as sales of flat TV screens and other electronics slowed.
Dynegy shares jumped in the pre-market afterCarl Icahn said he had agreed to buy the energy companyfor $665 million in cash. Dynegy shareholders rejected a bid by the Blackstone Group three weeks ago.
And in the financial sector, Wells Fargo is urging regulators to demand mortgage lenders to hold more of the loans they originate on their books, instead of selling them on, according to a report in the Financial Times.
The move signals a break-up with the strategy of other big U.S. banks, the paper wrote.
Regulators are currently in the process of deciding what mortgages will be exempt from a provision in the Dodd-Frank reform law requiring banks to keep 5 percent of the risk on home loans they create.