MarketWatch.com - Pre-Market Indications

Thursday, October 14, 2010

Indications: U.S. stock futures slip as dollar drops

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By Simon Kennedy and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures reversed early gains to post a modest decline Thursday after economic data pointed to higher jobless claims and inflation.

The government’s count of Americans filing initial claims for unemployment benefits rose by 13,000 to 462,000 last week, an unexpected increase that indicates ongoing trouble in the labor market.

A separate report had wholesale-level inflation edging up 0.4% in September, while the so-called core producer price index, which excludes energy and food costs, up 0.1%.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 10,993, -51.00, -0.46%)  fell 15 points to 11,029. and S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,165, -9.80, -0.83%)  dipped 1.8 points to 1,172.5.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\z10 (NDZ10 2,045, -11.00, -0.54%)  lost 1.75 points to 2,054.25.

U.S. markets posted their fourth successive rise Wednesday, following upbeat reports from several industry giants. The Dow industrials /quotes/comstock/10w!i:dji/delayed (DJIA 11,030, -66.22, -0.60%)  closed up nearly 76 points, or 0.7%.

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The biggest earnings news Thursday will come from Internet-search giant Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 538.43, -4.87, -0.90%)  after markets close.

Rival Yahoo Inc. /quotes/comstock/15*!yhoo/quotes/nls/yhoo (YHOO 15.82, +0.57, +3.75%)  rallied 13% in premarket trading after The Wall Street Journal reported that AOL Inc. /quotes/comstock/13*!aol/quotes/nls/aol (AOL 24.78, -0.34, -1.35%)  and several private-equity firms are considering a possible takeover bid.

The potential deal could involve Yahoo selling its roughly 40% stake in Chinese Internet giant Alibaba and other assets, the report said. See story on the possible move for Yahoo.

Other companies set to announce results include Advanced Micro Devices Inc. /quotes/comstock/13*!amd/quotes/nls/amd (AMD 7.04, -0.18, -2.49%) , also after the closing bell.

The dollar fell sharply amid growing expectations that more quantitative easing from the Federal Reserve is just around the corner. The latest decline follows surprise tightening measures from the Monetary Authority of Singapore.

“Momentum remains one-sided against the dollar as a new wave of selling overnight triggered by [Singapore] pushed the greenback through key support levels,” said Lloyds TSB economist Kenneth Broux in a note to clients.

“Asset markets in general are transfixed by what the Fed will do next and until we hear from [Ben] Bernanke directly tomorrow in his speech on monetary policy, we see no imminent turnaround in positive risk trends as U.S. corporates make a promising start to third-quarter earnings,” he added.

Gold extended gains, with the December futures contract rising as high as $1,388.10 an ounce in electronic trading.

Meanwhile, shares in Apollo Group Inc. /quotes/comstock/15*!apol/quotes/nls/apol (APOL 36.84, -12.66, -25.58%)  are set to come under pressure after the company said late Wednesday that it was withdrawing its business outlook for 2011.

European stocks were mixed, while Asian markets finished with strong gains. The French CAC 40 index /quotes/comstock/30t!i:px1 (FR:PX1 3,819, -9.17, -0.24%)  slipped 0.1%, and Japan’s Nikkei 225 Average closed up 1.9%.

Simon Kennedy is the City correspondent for MarketWatch in London. Kate Gibson is a reporter for MarketWatch, based in New York.

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