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Wednesday, October 8, 2008

Pre market Futures sour on Rate Cut

NEW YORK ( -- U.S. stock futures pointed to a lower open, as the initial enthusiasm following the Federal Reserve's announcement of an emergency rate cut wore off.

U.S. futures were volatile all morning, initially trading sharply lower on the heels of the global market turmoil and following a massive selloff in U.S. markets on Tuesday.

The Fed teamed up with five other central banks in a coordinated effort aimed at stemming the fallout from the spreading financial crisis around the world.

Futures spiked immediately following the Federal Reserve's emergency rate-cut announcement, which brought the target for the federal funds to 1.5%, down a half-point. The move also brought European stocks into positive territory, albeit briefly.

But both futures and European stocks eventually lost steam, suggesting anxiety peristing over whether the latest moves will have a big enough impact.

The regulatory moves came after the the world crisis deepened overnight. Asian markets were hurting at the close, with Japan's Nikkei index down about 9.4%, its third-steepest one-day drop ever. Hong Kong's Hang Seng index plunged 8.2%, despite the government's pledge to drop interest rates by one full point.

The Dow could use some good news, having fallen nearly 900 points over the past two days. The blue-chip index shed more than 500 points, or more than 5%, on Tuesday, after Federal Reserve chairman Ben Bernanke warned of more hard times ahead.

Economy: At 10 a.m. ET, the National Association of Realtors will release its August figures pending home sales, a leading indicator of housing activity. Investors aren't likely to get any comfort from this report. A consensus of economists interviewed by expect a dip of 1.2%, compared to a decline of 3.25% in July.

At 10:35 a.m. ET, investors will be watching for the crude inventories report from the Energy Information Administration for the week ending Oct. 4. The Platts survey of analysts projects a drop of 1 million barrels in crude oil stocks, an increase of 2 million barrels in gasoline stocks and an increase of 1 million barrels in distillates stocks. The refinery utilization or run rate is expected to rise 6% to 78.3%.

Retail sales: Wal-Mart (WMT, Fortune 500), the biggest retailer in the world, reported that same-store sales - sales at stores open at least a year - rose 2.4% in September, coming in at the low end of what experts expected. Sales were boosted by purchases of essentials like food and clothing. A consensus of analysts compiled by Thomson Reuters had expected an increase of 2.5%. Wal-Mart had expected a jump ranging from 2% to 3%.

Discount retailer Costco Wholesale (COST, Fortune 500) reported a 7% jump in same-store sales, falling short of the 7.5% increase projected by a consensus of analysts compiled by Thomson Reuters. Costco also reported a 7% jump in fourth quarter profit to $398 million, or 90 cents per share. Still, that fell short of economist expectations of 93 cents per share. Sales jumped nearly 13% to $22.6 billion.

Other companies: Agricultural giant Monsanto (MON, Fortune 500) said that it lost $172 million in its fourth fiscal quarter, or 3 cents per share. That's less than the loss of 9 cents per share that was projected by Thomson FirstCall, in its consensus of analyst expectations. The company said that sales surged 35% to $2.05 billion, beating analyst expectations of $1.9 billion, according to consensus from Thomson FirstCall.

Oil and money: The U.S. dollar slipped versus the euro, the British pound and the yen. Oil prices edged up 14 cents a barrel to $90.20, recovering from larger losses earlier on as demand worries continue to weigh on sentiment. To top of page