Tuesday, June 8, 2010

Indications: Futures focus on Bernanke comments, U.K.

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By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- U.S. stock market futures moved higher, overcoming earlier jitters after Fitch Ratings warned on the U.K.'s difficult financial position, and drawing support from Federal Reserve Chairman Ben Bernanke who said he didn't expect to see a double-dip recession in the U.S.

Futures for the Dow Jones Industrial Average rose 26 points at 9,820, while those for the S&P 500 rose 2.8 points to 1,050.80. Futures for the Nasdaq 100 rose 4 points to 1,799.25.

U.S. stocks took a beating on Monday, with the Dow industrials slumping below the lows they hit during last month's "flash crash," as worries about the euro and global growth kept markets volatile. A report that consumer credit jumped also weighed on stocks.

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The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 9,816, -115.48, -1.16%) fell 115.48 points, or 1.2%, to end at 9,816.49, below the blue-chip average's May 6 low of 9,869. The S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,050, -14.41, -1.35%) fell 14.41 points, or 1.4%, to 1,050.47, weighed down by a 2% drop in financials and a 1.9% drop in the technology sector.

The Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,174, -45.27, -2.04%) dropped 45.27 points, or 2%, to 2,173.90.

In an interview with ABC News reporter Sam Donaldson at a dinner on Monday, Bernanke said, "My best guess is we'll have a continued recovery [but] it won't feel terrific," said the Fed chief. "We've seen consumer coming back. We've seen firms spending more. There are some signs the private sector is picking up the baton and moving the economy forward."

There is no economic data scheduled for the U.S. on Tuesday.

Shares of Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 250.94, -5.03, -1.96%) may be in focus with shares edging higher late Monday as investors considered the latest version of its iPhone device. The company also warned of a wider quarterly loss. See story on Apple

Shares of New York & Co. /quotes/comstock/13*!nwy/quotes/nls/nwy (NWY 3.28, -0.16, -4.65%) could be in focus after late losses Monday on a warning from retailer over an expected widening of its second-quarter loss.

Europe and U.K. stocks gave up earlier gains to turn weaker, after a strong warning from Fitch Ratings over the U.K.'s finances rattled markets. The agency said Britain's fiscal challenge is "formidable" and warrants a faster pace of deficit reduction than was outlined in the April 2010 budget issued by the previous Labour government.

The agency praised the new Conservative-Liberal Democrat coalition for acting "very quickly" to make fiscal consolidation a top priority, but said it was "not completely obvious from policy statements that the new government will adopt lower deficit forecasts throughout the medium term." See Fitch warns U.K.

The Swiss franc leapt to a new record high against the euro Tuesday, with no sign yet of intervention by the Swiss National Bank to push it back down. The euro hit CHF1.3785 in London trading hours, below its previous record low of CHF1.3850 seen in New York Monday.

Most Asian markets arrested sharp recent declines to clinch modest gains Tuesday as investors looked for bargains in selective stocks in the resource and exporting industries, with sentiment getting a lift from Bernanke's comments.

Crude oil futures rose 21 cents to $71.65 a barrel, while gold prices were up $8.50 to $1,249.30 an ounce.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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