Futures Slide as Durables Pop Fizzles

Futures tilted lower Wednesday, after a fleeting boost from an unexpected jump in durable-goods orders, as the market waited for the Federal Reserve's decision on interest rates.

That followed a sharp rally in the prior session, when the Dow Jones Industrial Average rocketed 889.35, its second-biggest point gain on record, as investors went on a bargain-hunting bonanza.

Orders for durable goods, which are items such as cars and appliances that are meant to last three years or more, rose 0.8 percent. Economists had expected a 1.2-percent decline. The increase was largely due to a rise in car and plane orders. Excluding transportation, orders for all other durable goods fell 1.1 percent.

Traders will be watching to see what the Fed does this afternoon. Expectations point to a rate cut of half a percentage point.

"I don't think they even need to cut," Bob McTeer, former president of the Dallas Fed, said on CNBC. "However, I think the market reaction to not cutting or even cutting a quarter-point would be unnecessary to endure."

On Tuesday, the Dow Jones Industrial Average finished up 889.35, or 11 percent, to close at 9065.12, due to a bargain-hunting bonanza.

It was the second-biggest point gain on record and the seventh-largest percentage gain and some analysts said investors may now pausing for breath.

The market also will digest earnings from both Kraft and Procter & Gamble, both of which reported earnings before the bell that satisfied analyst estimates.

For Kraft, Earnings per share, excluding one-time items such as a gain from the sale of its Post Cereals business, were 44 cents a share, flat with a year earlier and a penny ahead of expectations.

Procter & Gamble shares were indicating higher in premarket trading after the world's largest consumer products maker said profit in its fiscal first quarter rose to $3.35 billion, or $1.03 per share, from $3.08 billion, or 92 cents a share, a year earlier. That was 5 cents ahad of estimates.

Experts have warned that the rally must be handled with care, as there is still some downside potential in the market.

The Bank of Japan is expected to follow the Fed's lead later this week and European central banks next week.

The Treasury Department met with privately held banks Tuesday to discuss ways they could get access to fundsfrom the government's $700 billion financial rescue program, according to Reuters.

GMAC, the auto and mortgage finance company, said Tuesday it had been approved to use the commercial paper funding facility created earlier this month by the U.S. Federal Reserve with the aim of easing pressure on the corporate credit market.

In earnings news, Japan's Sony posted a 90 percent fall in quarterly profit as growing worries about the global economy sent the yen higher and hit camera sales, and the company kept its annual profit outlook of a 58 percent decline.

The issue of CEO pay resurfaced as Rep. Henry Waxman, who chairs the House Committee on Oversight and Government Reform, disclosed that he sent letters to the first nine major banks set to receive a capital injection from the government, seeking information on their compensation and bonus plans for 2008 and other years.

New York Attorney General Andrew Cuomo also said that he would be looking into the issues, though he isn't opening a formal investigation at this time.

In earnings news, Dow components are due to report results before the bell.

And on the economic front, weekly mortgage application data are out at 7:00 am New York time and durable goods orders will be released at 8:30 am.