Stocks were set to dip at the open on Wednesday as investors turned cautious before the Federal Reserve's policy decision, tempering optimism from a report that IBM
A day after the U.S. stock market made another advance following the 12-year lows reached earlier this month, there were also concerns about the fallout from the mounting furor over bonuses paid to executives of embattled insurer American International Group
Sun Micro shares jumped more than 60 percent to $8.31 before the bell after the Wall Street Journal reported that International Business Machines Corp, a Dow component, could buy the company for at least $6.5 billion.
IBM shares declined 3.1 percent to $90 before the bell.
Tech has pretty much outperformed the market. Anytime you see M&A it's usually a good sign, said Andre Bakhos, president of Princeton Financial Group in New Brunswick, New Jersey.
It's a positive that somebody is finding value, but at the same time the negative is that somebody is going to lose their job.
S&P 500 futures were off 5.60 points and were 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 shed 64 points, and Nasdaq 100 futures shed 3 points.
In Washington, AIG's chief executive is due to testify before a Congressional panel on Wednesday. The Obama administration has turned up the heat on AIG, saying the insurer will be forced to repay U.S. taxpayers before it gets another bailout of $30 billion.
Given that the AIG bonus situation has caused a political stir, it appears the administration is losing focus on the real problem which is getting the economy back on track, said Bakhos.
Also heading lower before the bell was Morgan Stanley
On the policy front, Wednesday marks the conclusion of the Federal Reserve's 2-day policy-setting meeting. With the U.S. central bank having cut interest rates close to zero, investors' focus will be on whether it would commit itself to buy long-dated government debt as an additional measure to revive the economy.
The Fed's statement on the meeting is due around 2:15 p.m. EDT
(Editing by Chizu Nomiyama)