By Steve Goldstein, MarketWatch
LONDON (MarketWatch) -- U.S. stock futures weakened Thursday as the Federal Reserve's explanation of why rates need to be low for an extended period continued to dampen sentiment.
S&P 500 futures fell four-tenths of a point to 1,046.60 and Nasdaq 100 futures fell 4 points to 1,682.70. Futures on the Dow Jones Industrial Average slipped 3 points.
U.S. stocks finished relatively unmoved Wednesday but well off the high levels of the day, with the Dow Jones Industrial Average rising 30 points and the S&P 500 adding 1 point while the Nasdaq Composite slipped 2 points.
The Fed "think the output gap is large and see no imminent inflationary dangers. We can't help but wonder whether these justifications would have been needed two weeks ago but the fact that they've put them in shows that they want to leave the market with little doubt about the sustained extraordinary low rate environment," said Jim Reid, a strategist at Deutsche Bank.
The move by the Fed represented a double-edged sword for markets: relief that easy policy would be kept for some time, but concern that the central bank believes the economy will be in a tough spot for awhile.
A week of central bank decisions continues as the Bank of England weighs whether to expand its quantitative easing program. Expectations range from no expansion at all to an increase of 50 billion pounds. The decision is due at 7 a.m. Eastern.
"Fine tuning an economy is difficult at the best of times but getting it right when the forces are so big involves a lot of guess work," Reid said.
Also on tap are releases on weekly jobless claims, nonfarm productivity for the third quarter, a European Central Bank rate decision and October same-store sales data.
On the corporate front, Cisco Systems (TICKER:CSCO) rose 3% in Frankfurt after reporting a stronger-than-forecast fiscal first-quarter profit.
"Cisco is clearly seeing an upturn in its business with orders and revenues returning to normal pattern," said William Choi, an analyst at Jefferies.
Toyota Motor Corp. (TICKER:TM) grew more confident about its fiscal year, lifting its sales outlook and slicing its loss estimate after reporting a $242 million fiscal second-quarter profit, though that was 84% lower than the same period last year.
Other companies reporting include Cigna (CI 29.78, +1.47, +5.19%) , Dynegy (DYN 1.87, -0.10, -5.08%) , and after the close, CBS (CBS 11.90, -0.07, -0.58%) .
International stocks were generally weaker, with South Korea's Kospi sliding 1.7% and Germany's DAX slipping 0.3%.
Oil futures traded below $80 a barrel, while gold futures were perched near record highs.
Yields on 10-year Treasury bonds fell 2 basis points to 3.51%, and the dollar dropped sharply vs. the Japanese yen. The dollar's drop against the yen and declining bond yields are typically signs of diminished appetite by traders for risky positions.
