Wall Street to open higher as Fed decision looms

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks were set to rise at the open on Wednesday, with markets on tenterhooks ahead of the Federal Reserve's last policy announcement of the year, which might determine the immediate future of its 15-month long program to stimulate the economy.

Fed Chairman Ben Bernanke will follow the 2:00 p.m. EST (1900 GMT) announcement with his final press conference at the helm of the U.S. central bank at 2:30 p.m.

Many expect the Fed to continue its quantitative easing program at the current pace of $85 billion monthly asset purchases into next year. Still, sturdier recent economic data has led some to believe it is time to take the training wheels off the world's largest economy and to allow it to progress on its own.

 

"If they taper, the market might perceive this as 'the economy is good' and if they don't, everybody still likes the stimulus," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.

She said an unexpected move from the Fed could spark volatility, but at this point, bets are the taper "could go either way, so it's not a surprise event."

Data on Wednesday showed U.S. housing starts surged to their highest in nearly six years in November, a sign of strength in the housing market that could support a Fed decision to soon start cutting back its bond purchases.

The stimulus has kept a lid on borrowing costs and flooded markets with liquidity, boosting an equities rally. The S&P 500 <.SPX> closed at a record high on December 9.

S&P 500 futures rose 3 points and were above 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 rose 33 points and Nasdaq 100 futures added 5 points.

FedEx Corp's quarterly results missed Wall Street estimates as revenue declined at its biggest unit. Shares dropped 0.5 percent, paring an earlier loss of nearly 3 percent in premarket trading. The stock is up almost 52 percent in the year to date, while the benchmark S&P 500 has risen about 25 percent in the same time.

Jabil Circuit shares tumbled 18 percent in premarket trading a day after the contract electronics maker said it would sell its warranty repair business and forecast current-quarter results way below Wall Street estimates.

Shares of Lennar Corp rose 3.7 percent in premarket after the No. 3 U.S. homebuilder reported a 32 percent jump in fourth-quarter profit.

General Mills fell 2.7 percent in premarket trading after it reported lower-than-expected quarterly results and said full-year profit could come in at the lower end of its forecast.

(Editing by Bernadette Baum)