Futures Off Lows on Housing Report

U.S. stock index futures pointed to a lower open for Wall Street -- the first day of the two-dayFederal Reserve interest-rate meeting -- after package-delivery company UPS said after the bell Monday its profit would miss market expectations.

But some before-the-bell news helped lift investor spirits and futures were well off their earlier lows, indicating it might not be as bad a day as feared for Wall Street.

United Parcel Service warned that second-quarter earnings would be below expectations, blaming high fuel prices and a sluggish U.S. economy, and its shares fell 4.5 percent in premarket trading.

Oil also weighed on the market, with U.S. light, sweet crude picking up another $1.32 a barrel to rise to $138.06 by 8 am ET as fears rose about an attack on Iran's nuclear facility.

Futures were well off their morning lows nearing the start of trading, helped by Dow Chemical , which announced its second price increase within a month that it said was caused by surging energy prices. The price increase amounts to as much as 25 percent in certain areas and includes transportation surcharges. Company shares gained 1.5 percent in premarket trading.

The indexes also were helped by housing news that again was bad but no worse than the market expected.

home prices extended their record slide in April, with every top metropolitan area now posting annual losses and many showing double-digit declines.

The S&P/Case Shiller composite index of 20 metro areas fell 1.4 percent in April from March and slumped by a record 15.3 percent over the year. But the decline overall was less than analysts had anticipated.

Most economists expect the Fed to talk tough on inflation but keep the rates on hold due to the weakened economy when the announcement arrives Wednesday.

The Fed's job to fight higher prices will be made more difficult by evidence that job losses, so far largely contained in the financial and housing sectors, are likely to spread to other areas of the economy, depressing consumption even further.

"I think we have to see the Fed just stay on hold, even though a rate increase has been priced in by the end of the year," Kevin Sullivan, portfolio manager at Clariden Leu, told "Worldwide Exchange."

Meanwhile, supermarket chain Kroger reported a profit that beat expectations as the company used lower prices and gasoline discounts to help lure customers.

And stock-exchange consolidation continued, with NYSE-Euronext buying 25 percent in Qatar's Doha Securities Market to get access to the fast-growing Middle East. The Qatari state will keep the remaining 75 percent stake of the exchange.

Shares of financials were likely to continue to come under pressure, though some companies looked like they might get a bounce after Monday's drubbing. Lehman Brothers, which fell 5.8 percent Monday, moved up aout 1 percent premarket.

But Citigroup, which announced it was cutting 10 percent of the workforce in its investment bank division, dropped about 0.8 percent premarket. And Washington Mutual was down 2.5 percent after Lehman slashed its price target for the savings and loan from $27.25 to $10.