By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- U.S. stock market futures were pointing to a weak start for Wall Street Friday, as the market gets a first chance to react to a hike in the rate that the Federal Reserve charges banks for temporary loans, with commodity prices weak and the dollar higher.
News Hub: Fed Raises Discount Rate
The Fed raised the rate it charges banks for emergency loans by a quarter percentage point. WSJ's Justin Lahart breaks down what it means in an interview with Simon Constable.
Futures for the Dow Jones Industrial Average were down 47 points to 10,328, while those for the S&P 500 were down 7.5 points to 1,098.10. Futures for the Nasdaq 100 also fell 7.5 points, down to 1,813.25.
The Fed's move late Thursday could mark the end of a winning streak that has stretched three days for U.S. stocks.
Stocks rose in Thursday's session on an upbeat report on Philadelphia manufacturing, compensating for lackluster financial results reported by Wal-Mart Stores /quotes/comstock/13*!wmt/quotes/nls/wmt (WMT 53.47, -0.59, -1.09%) . The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 10,393, +83.66, +0.81%) rose 83.66 points, or 0.8%, to 10,392.9, while the S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,107, +7.24, +0.66%) added 7.24 points, or 0.7%, to 1,106.75 and the Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,242, +15.42, +0.69%) gained 15.42 points, or 0.7%, to 2,241.71.
Thirty minutes after the close of markets on Thursday, the Fed raised the rate it charges banks for emergency loans by a quarter percentage point, to 0.75% -- a move that came quicker than expected for most analysts. And few appeared to buy the Fed's accompanying statement, in which it tried to dissuade the impression that the move will lead to a change in overall monetary policy via adjustments in the federal funds rate.
"I think undoubtedly even though the Fed wanted to say this has no real implications for monetary policy it is a relatively clear signal that the Fed is scaling back quantitative easing and it's happening faster than perceived in the markets," said Lars Christensen, chief analyst at Danske Bank.
"With continued jitters over the global growth situation and the European debt situation, this is not a worry the markets would like to see," he said. "That will weigh on markets."
The Fed has been supporting the banking sector since the crisis with extremely low interest rates. "It's a wake-up call that easy money won't be around forever. That's not good news for the banking sector and the U.S. banking sector, especially," said Christensen.
Brown Brothers Harriman added in a report that the fact that the Fed didn't make the announcement at a Federal Open Market Committee meeting was key. "The decision to go between meetings is important," they said.
The view that a hike in the Fed's main policy rate could come sooner than expected helped rally the dollar across the board, with the euro slumping to $1.3495. That pushed commodity prices lower, with gold futures down more than $7 to $1.111.10 an ounce, while crude-oil prices fell back 83 cents to $78.21 a barrel.
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Economic data due out in the U.S. on Friday include January consumer prices, due at 8:30 a.m. Eastern time.
Shares of Dell /quotes/comstock/15*!dell/quotes/nls/dell (DELL 14.43, +0.32, +2.26%) were down nearly 6% in preopen trading, under pressure after it reported a dip in quarterly profit late Thursday. It said sales rose, with revenue for mobility and service units gaining on an annual basis.
Shares of Amerigroup Corp. /quotes/comstock/13*!agp/quotes/nls/agp (AGP 24.73, -1.17, -4.52%) could be active after it said fourth-quarter net income rose 12%, with earnings beating expectations.
European stocks traded weaker to close out the week, with banks and resource stocks particularly weak. Anglo American was a lead decliner in London, trading down on a sharp fall in net profit and a mixed look ahead.
Asian shares fell on the Fed's discount-rate hike, with Hong Kong shares bearing the brunt of losses, as shares tied to the economic cycle declined. Property developers fell on worries that Hong Kong's state interest rates may track U.S. rates higher.
The Russian central bank on Friday announced a cut in its main refinancing rate by 25 basis points, to 8.5%, and its repo rate by 25 basis points, to 7.5%. The bank said it made the decision to spur bank lending, adding that there are no risks of rising inflation in the economy. A strong ruble has been a driving concern for the bank.
On Thursday, the ruble rose to a 13-month high against a basket of the euro and U.S. dollar, and analysts said it appears the bank has adjusted its trading band for the first time since November, according to a Wall Street Journal report.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
