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Pre-Market Primer: Stocks Fall Ahead of Fed Statement; China Trade Plunges


All eyes will be on the Fed this afternoon.

Stock futures turned south today as investors await the outcome of the Federal Reserve's latest meeting, and Chinese trade data unexpectedly declined.

The Fed will release the minutes of its latest policy meeting at 2:00 p.m.; a press conference with Chairman Bernanke will follow. As always, Wall Street will comb through the language in both the minutes and the speech for hints to when the central bank plans to begin the tapering of quantitative easing.

Stock futures are down slightly this morning after the main indices ended Tuesday higher. Dow (INDEXDJX:.DJI) futures slipped 0.05% to 15,215 while futures contracts on the S&P 500 (INDEXSP:.INX) fell 0.13% to 1,643.40 and Nasdaq (INDEXNASDAQ:.IXIC) futures ticked down 0.08% to 2,971.00. The 10-year Treasury yield is up 1 basis point to 2.63%. Oil futures also rallied 1.5% to over $105/barrel on concerns over Egypt's future.

Markets are skittish today after China posted disappointing trade data. China saw a 3.1% year-over-year fall in exports last month. This is the first month exports fell since October 2009. Exports to the EU fell 8.3% and the US took in 5.4% less. Demand for imports also fell for a second month, dropping 0.7%. The strengthening renminbi didn't help falling demand overseas.

Japan's Nikkei (INDEXNIKKEI:.NI225) index fell 0.39% today after consumer confidence unexpectedly fell 1.4% in June. This is the first time the index fell in over six months. On Thursday, the Bank of Japan will make a policy announcement.

German CPI rose 1.8% year-over-year in June, still below the central bank's target. Industrial output in eurozone countries did little to calm nerves. French factory output fell 0.4%, and in the Netherlands it fell 0.6%.

Italy reported a narrow 0.1% rise in industrial production, the first in four months. Last night Standard & Poor's downgraded Italy's sovereign debt to BBB from BBB+. Ten-year bond yields are up 7 basis points today at 4.48%.

Yum Brands (NYSE:YUM), the operator of KFC and Pizza Hut, will report earnings after the closing bell today. Analysts are expecting to see earnings fall to $0.54 per share from $0.67 a year ago. Revenue likely fell after a food safety scandal in China, where it gets the lion's share of its revenue. Analysts at Oppenheimer raised their target price for the company to $80 from $73.00, where the stock closed yesterday.

Hewlett-Packard (NYSE:HPQ) rose 2.8% in pre-market trading after Citigroup upgraded the tech company to buy from sell.

Family Dollar Stores (NYSE:FDO) reported earnings per share of $1.05, beating estimates by $0.02. Net sales rose 9%. Despite lowering full year profit expectations to $3.77-$3.82 per share, shares are up 2.4% ahead of the bell.

Twitter: @vincent_trivett
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