Thu, November 05, 2009
U.S. stock futures reversed an early slide and moved slightly higher Thursday ahead of more data on consumer spending and jobs, two of the market's biggest concerns.
Overseas, Asian markets fell overnight, while European shares were slightly lower in afternoon trading there after central banks left their interest rates unchanged. The Bank of England also said it would pump more money into the economy after news last week that the country remains in recession.
The Federal Reserve on Wednesday said it would keep its own interest rates low for "an extended period." The statement accompanying the central bank's rate decision noted that housing activity has picked up in recent months and that consumer spending appears to be growing, albeit slowly.
October sales reports from major retailers on Thursday are expected to show some recovery in spending. Early reports though are mixed.
Later Thursday morning, the Labor Department will issue its weekly report on the number of workers filing for unemployment benefits for the first time. That report will come a day ahead of the department's key report on monthly job losses. Investors are worried that so long as unemployment remains high, consumer spending will be sluggish and lead to slower economic growth.
Ahead of the market's open, Dow Jones industrial average futures rose 13, or 0.1 percent, to 9,798. Standard & Poor's 500 index futures rose 1.80, or 0.2 percent, to 1,048.80, while Nasdaq 100 index futures rose 2.25, or 0.1 percent, to 1,689.
In European trading, Britain's FTSE 100 fell 0.4 percent, Germany's DAX index lost 0.2 percent, and France's CAC-40 fell 0.1 percent. Earlier Thursday, Japan's Nikkei stock average fell 1.3 percent, while Hong Kong's Hang Seng index slipped 0.6 percent.
Among the early sales reports, Costco Wholesale Corp. posted a 5 percent jump in sales at stores open at least a year, a key gauge of a retailer's health. Limited Brands Inc., however, reported a bigger-than-expected sales decline.
Mixed data have made it difficult for investors to come to a conclusive decision on where the economy is headed. Areas like manufacturing and housing have shown improvements, but consumer spending continues to lag as job losses remain high. The fear is that government stimulus programs have become a crutch for the economy and that the 3.5 percent growth in the third quarter won't be sustainable once those stimulus measures are removed.
The uncertainty in the market has made trading increasingly choppy. While the market is able to move higher on good news, it has become more difficult for the gains to stick. Swings between positive and negative territory have become the norm.
On Wednesday, investors initially cheered the Fed's assessment of the economy, which followed earlier reports on service industries and employment that seemed to ease some of investors' ongoing concerns. But stocks failed to hold on to their big gains. The Dow ended up about 30 points, after rising as much as 156 points after the Fed announcement.
In earnings news, Cisco Systems Inc. said late Wednesday it expects revenue to grow for the first time in a year during the period ending in January, but warned that the pace of new sales is still slow. Shares added 70 cents, or 3 percent, to $23.99 in premarket trading.
In other trading, bond prices were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, held steady at 3.53 percent.
The dollar was slightly higher against other major currencies. Gold prices rose added $2 to $1,089 an ounce.
Light, sweet crude fell 30 cents to $80.10 a barrel in electronic premarket trading on the New York Mercantile Exchange.
(Agencies)
