US STOCKS-Futures dip after budget deal on Fed stimulus worry

December 11, 2013

By Angela Moon

NEW YORK, Dec 11 (Reuters) - U.S. stock index futures edged lower on Wednesday as a provisional budget deal reached in Washington compounded expectations the Federal Reserve will start scaling back its stimulus program soon.

* A bipartisan budget deal announced in the U.S. Congress late Tuesday, though modest in spending cuts, would end three years of impasse and fiscal instability in Washington that culminated in October with a partial government shutdown.

* While the agreement removed a key uncertainty hanging over markets, it strengthened a view that the U.S. central bank may soon start to wind down its $85 billion-a-month stimulus program.

* Although the benchmark S&P 500 hit a record close earlier in the week, investors have hesitated to make big bets ahead of next week's Federal Reserve meeting, in the absence of market-moving economic data. The Federal Open Market Committee meeting is set for Dec. 17-18.

* S&P 500 futures fell 1.5 points were slightly below 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 fell 18 points and Nasdaq 100 futures lost 5 points.

* In company news, Costco Wholesale Corp shares slipped 1.7 percent in premarket trading after the retailer's first-quarter profit missed Wall Street estimates due to lower gasoline prices and weak foreign currencies.

* Home Depot Inc said it sees sales growth of approximately 5 percent in 2014.

* Economic data expected on Wednesday includes the Treasury Department's monthly budget data for November at 2:00 p.m. EST (1900 GMT).

* Despite retreating on Tuesday, the S&P 500 held above key technical indicators, including its 14-day moving average. Volume remained below average, even for a thinly traded month.