North American stock futures pointed lower Wednesday as markets await the U.S. Federal Reserve’s verdict on interest rates.

Investors are watching to see if the Fed follows up from last week’s 75 basis point cut with a reduction of 50 bps, as many analysts are predicting. The decision is due out at 14:15 p.m. ET.

In this morning’s economic news, the U.S. economy braked sharply in the fourth quarter of 2007 as the housing slump took a heavy toll.

U.S. gross domestic product rose at a seasonally adjusted 0.6% annual rate October through December, the U.S. Commerce Department said today in the first estimate of fourth-quarter GDP.

The Q4 GDP growth rate was much slower than the third-quarter’s 4.9%. Wall Street economists had called for 1.2% GDP growth during the fourth quarter.

The economy grew 2.2% in 2007, the lowest rate since 1.6% in 2002. GDP in 2006 had increased 2.9%.

Here at home, the Canadian dollar is trading above parity with the U.S. greenback. The loonie opened at US100.43¢, up almost two-fifths of a cent from Tuesday’s close.

In earnings news, Internet search giant Yahoo reported a 23% profit fall in the fourth quarter and said fiscal 2008 sales may be as much as 10% below average analyst forecasts.


In European banking news, UBS said its fourth-quarter write-downs will be US$14 billion — US$4 billion more than it previously predicted — which will contribute to the Swiss banking giant reporting a loss for the year.

BNP, France’s largest bank, said its fourth-quarter profit dropped 42% after a write-down of about US$850 million.

In other news, Suncor Energy Inc. announced approval of a $20.6 billion expansion project in its Alberta oilsands operation.

Overseas markets fell ahead of the U.S. rate decision.

In Tokyo, the Nikkei fell 0.99%.

In Europe, London’s FTSE 100 is down 0.58%, France’s CAC 40 lost 0.39% and Frankfurt’s DAX is down 0.58%.

Toronto stocks posted solid gains Tuesday as energy and financial issues strengthened.

The S&P/TSX composite index closed up 59.53 points, or 0.46%, to 13,046.43.

The junior S&P/TSX Venture composite index closed down 5.42 points, or 0.21%, at 2,552.38.

The Canadian dollar closed out at US$1.00, up 0.04 of a cent from yesterday’s close.

In New York, markets rallied hard late in the day in expectation of Wednesday’s interest announcement by the Fed..

The Dow Jones industrial average jumped 96.41 points, or 0.78%, to 12,480.30. The S&P 500 gained 8.34 points, or 0.62%, ending at 1,362.30.

The tech-heavy Nasdaq composite index added 8.15 points, or 0.35%, to 2,358.06.