Wall Street to open flat after Fed leaves rates unchanged

By Yashaswini Swamynathan

REUTERS - Wall Street was set to open flat on Thursday after the Federal Reserve decided to keep interest rates unchanged, but left the door open for a possible increase in the coming months.

The Fed said on Wednesday that the U.S. economy had expanded at a moderate rate and the near-term risks to its outlook had diminished.

Traders have priced in an 18 percent chance of a rate hike in September and a near 40 percent chance in December. Those odds do not go significantly higher even until July next year, according to CME Group's FedWatch tool.

Strong economic data has put Wall Street on a record-setting rally in the past weeks, with the S&P 500 breaking its all-time high six times in 13 days.

"The market has been going steadily higher and so analysts expect it to go down," said Sal Recco, chief operating officer at Gravity Partners. "It is like flipping a coin. If it's heads 10 times in a row, you would expect tails on the 11th."

Dow e-minis were down 9 points, or 0.05 percent at 8:29 a.m. ET (1229 GMT), with 20,151 contracts changing hands.

S&P 500 e-minis were down 0.75 points, or 0.03 percent, with 195,818 contracts traded.

Nasdaq 100 e-minis were down 4.75 points, or 0.1 percent, on volume of 22,701 contracts.

Facebook shares rose 4 percent to $128.21 premarket and were set to open at an all-time high in regular trading, after the company reported second-quarter results that handily beat analysts' estimates on Wednesday.

The stock was also the top percentage gainer among S&P 500 components.

A set of better-than-expected results this week from key companies including Apple and Boeing have improved the prospects for corporate earnings in the latest quarter.

Earnings of S&P 500 companies are expected to fall 3 percent, compared with the 5 percent decline estimated at the start of the earnings season, according to Thomson Reuters I/B/E/S.

Google parent Alphabet and online retailer Amazon.com are expected to report results after the bell. Shares of the two companies were up about 0.8 percent in thin premarket trading.

A report by the U.S. Labor Department showed that unemployment numbers rose more than expected to 266,000 for the week ended July 22. Analysts had expected a rise to 260,000.

NetSuite soared 18.3 percent to $108.35 after Oracle agreed to buy the company for about $9.3 billion. Oracle was up 1.8 percent.

MasterCard rose about 2 percent to $96.60 after the company reported a 6.7 percent rise in quarterly profit.

Ford dropped 7.3 percent after it posted a disappointing second-quarter profit.

Raytheon rose 2.4 percent to $138.60 after it reported better-than-expected quarterly revenue.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)