BEFORE THE BELL: US Stock Futures Down;2-Day Fed Meeting On Tap

22nd Jun 2010 12:45

By Steve Goldstein U.S. stock futures declined Tuesday, with worries over the health of the European banks at the forefront as the Federal Reserve begins its two-day interest rate setting meeting. Futures on the Dow Jones Industrial Average dropped 24 points. S&P 500 futures fell 3.3 points to 1107.30 and Nasdaq 100 futures slipped 4 points to 1895.50. U.S. stocks couldn't hold early gains Monday, as early optimism over China's decision to let the yuan move against the dollar was checked by worries over Europe's health when French bank BNP Paribas' credit rating was downgraded. After rising as much as 140 points, the Dow Jones Industrial Average finished with a decline of 8 points. Tuesday's session includes data on May existing home sales as the Federal Open Market Committee begin its two-day meeting. As is custom, no comment is expected on the first day. Steve Barrow, a strategist at Standard Bank, said the time to lock in rates is when the Fed removes language about keeping interest rates low for an extended period of time--which he doesn't expect on Wednesday. "The bottom line is that the time for fixing longer-term borrowings in the U.S. is not now, but it could be in the next few months," he said. Overseas, a closely watched German business climate indicator made a surprise increase in June. The U.K. is set to announce a package of spending cuts and tax hikes, including a levy on banks. Meanwhile, the People's Bank of China raised the reference rate on the yuan by 0.4%, though yuan in the over-the-counter market declined slightly. Drug-store chain Walgreen Co. (WAG) slipped 2% after reporting a declining quarterly profit. Cruise operator Carnival Corp. (CCL), and after the close, computer software maker Adobe Systems Inc. (ADBE), will report earnings. In Washington, negotiations over financial sector reform continue. The major Asian stock market indexes closed lower, and in late morning trade, the Stoxx Europe 600 fell 1.2%. BNP Paribas (BNPQY, BNP.FR) shares dropped 3.5% in Paris. The euro traded below $1.23, and oil futures fell by more than $1 a barrel. Yields on 10-year Treasury bonds fell 2 basis points to 3.23%. -By Steve Goldstein; 44 2078 429 424; [email protected] (END) Dow Jones Newswires June 22, 2010 07:45 ET (11:45 GMT)