Dow Jones Flat Ahead of Fed Meeting and Housing Starts

LONDON -- Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average may open up by 0.07% this morning, while the S&P 500 may open 0.1% lower.

No decision has yet been made on the final terms of the Cypriot bailout, but reports this morning suggest that savers with deposits of less than 20,000 euros may end up being exempt from the bank levy. Any decision has to be voted on in Cyprus' parliament, and as yet policymakers have not agreed upon an acceptable deal.

At home, today's economic reports may provide more detail on the housing-market recovery. At 8:30 a.m. EDT, housing starts in February are expected to have risen slightly to 913,000, up from 890,000 in January. Similarly, an increase in housing permits to 925,000 is expected, up from 904,000 in January. The Federal Reserve's Federal Open Market Committee begins a two-day meeting today but is not expected to change its current commitment to monetary easing.

In corporate news, Adobe Systems is due to report earnings after the closing bell tonight, while shoe retailer DSW is expected to report fourth-quarter earnings of $0.72 per share on sales of $601.9 million before markets open this morning. Other stocks that could be actively traded include Electronic Arts after the video game maker announced that its CEO, John Riccitiello, has resigned and will leave the company on March 30. EA also announced that earnings for the current quarter are likely to be "at the lower end of, or slightly below" its previous guidance, which suggested earnings of between $0.92 and $1.12 for the current quarter on revenue of $1.12 billion to $1.23 billion. A poll of analysts by Thomson Reuters suggested that EA's earnings may now be as low as $0.65 on revenue of $1.08 billion. EA shares are 0.75% higher in premarket trading.

European markets
European markets drifted lower this morning, but there were no dramatic sell-offs despite the ongoing uncertainty in Cyprus, which has extended Monday's bank holiday until Wednesday to prevent the risk of a bank run. Although there are fears that a similar solution could be applied in Spain or Greece, the situation in Cyprus is slightly different because the tiny nation's banking system is eight times annual GDP and has almost no debt -- it is entirely funded by deposits. This means that a haircut for bondholders would not raise sufficient funds to meet the bailout requirements.

At 7:40 a.m. EST, the DAX was down 0.3%, the CAC 40 was down 0.59%, the FTSE MIB was down 0.32%, and the IBEX 35 was down 0.62%. In London, the FTSE 100 was down 0.09% as mining stocks fell heavily due to a combination of broker downgrades and lower iron-ore price forecasts from key players such as Rio Tinto. Smartphone chip designer ARM Holdings was also lower, down 3.3% after announcing the retirement of its CEO, Warren East.

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