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US STOCKS-Wall St set for flat open as Fed meeting concludes

Published 08/12/2009, 09:30 AM
Updated 08/12/2009, 09:33 AM
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* Investors cautious ahead of Fed announcement

* Macy's lower after gloomy forecast; Toll Bros higher

(Recasts, changes quote)

By Angela Moon

NEW YORK, Aug 12 (Reuters) - U.S. stocks were set to open flat on Wednesday as investors shied away from big bets ahead of Federal Reserve statements on the state of the economy.

The Fed's monetary policy committee wraps up its two-day meeting Wednesday. The central bank is expected to leave the key target interest rate unchanged, but investors will parse the Fed's policy comments for any changes in its outlook or its program to buy Treasury bonds.

The cautious mood ahead of the announcement scheduled for about 2:15 p.m. (1815 GMT) overshadowed a better-than-expected data on U.S. trade deficit.

"The data was just an icing on the cake. All eyes are on what the Fed has to say," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

"The market will be basically on equilibrium until the announcement which will set the tone or direction of how the market will move (from now)."

Macy's Inc shares fell 2.2 percent in premarket trading as the department store offered a full-year earnings outlook that could miss Wall Street estimates.

Shares of Liz Claiborne sank 13 percent to $3.50 before the bell after the company posted an adjusted second-quarter loss that was wider-than-expected.

Toll Brothers Inc shares, however, advanced in premarket trade, by 9.6 percent to $22.45, after the luxury home builder said its net signed contracts rose in the third quarter. But the firm said that it was expecting to report a 42 percent drop in homebuilding revenue next quarter, a further sign of a housing market still suffering from recession.

S&P 500 index futures shed 0.7 points and were in line with the fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 4 points, while Nasdaq 100 futures gained 0.50 points.

The Commerce Department said that the U.S. trade deficit widened less than forecast in June on exports gains which were spurred by a pick-up in global demand. The gap increased 4 percent to $27 billion from $26 billion in May.

U.S. stocks fell Tuesday after a prominent banking analyst questioned the sector's recent gains and industry fundamentals. An unexpectedly large drop in wholesale inventories also raised worries about a recovery, but the broader S&P 500 is still up 47 percent from its closing-low set on March 9.

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