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Pre-Market Primer: Stock Futures Rise as Fed Action Is On Tap


Positive developments at the G20 and a near certainty of some sort of monetary stimulus are both supporting stock prices.

MINYANVILLE ORIGINAL Index futures are up this morning as investors await the Fed's interest rate and market intervention decision.

All eyes are on the Fed today. The FOMC will release minutes of its meeting, which concludes today. Analysts expect the Fed to keep benchmark interest rates unchanged at 0.25%, but might adopt or extend another form of monetary stimulus. Credit Suisse (CS) sees a 60% chance that the Fed will extend Operation Twist. Goldman Sachs (GS) and others are looking forward to another round of quantitative easing.

The Bank of England narrowly voted against further monetary stimulus, but Governor Mervyn King was in the minority, raising hopes that the BOE would vote to ease in its next meeting.

US stock futures are in positive territory this morning. Futures on the Dow (^DJI) gained 0.14% to 12,780.00. S&P 500 (SPY) rose 0.18% to 1,353 and Nasdaq (^IXIC) futures rose 0.30% to 2,620.25.

As Greek political parties try to form a coalition, European leaders attending the G20 summit in Mexico resolved to use funds from the 500 billion euro European Stability Mechanism and the 250  billion euro European Financial Stability Facility to buy government bonds from Spain and Italy. Spanish bond yields already fell to 6.84% on the news.

The impact of Europe's troubles is being felt in Asia. Japan's trade deficit unexpectedly shot up to 907.3 billion yen ($11.47 billion) as Europe's debt crisis hurt demand for Japanese exports. Japan's first-ever trade deficit with the European Union slumped, but exports to the United states jumped 38%.

Apple (AAPL) will try to revive its patent lawsuit against Google's (GOOG) Motorola Mobility. The iPhone maker will argue that the sale of certain Motorola phones running on Android should be barred. Judge Richard Posner has previously cancelled this trial, saying that an injunction against Motorola would be "contrary to the public interest."

Procter & Gamble (PG) shares declined in the pre-market after the company cut its fourth quarter outlook, citing weak sales in developed markets.

Adobe (ADBE), the maker of Photoshop and the Creative Suite programs, forecast lower-than-expected earnings for its fiscal third quarter as the company introduces a subscription-based sales model.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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