Stock futures inch lower on bad news from Japan
by Associated Press
Published: August 16,2010
NEW YORK — Stock futures inched lower after Japan became the latest country to report slowing growth, adding to concerns about the pace of a global economic recovery.
Japan reported its economy grew just 0.1 percent in the second quarter, well below the 1.2 percent growth in the first quarter and short of expectations. The report follows signs last week that both the U.S. and Chinese economies are not growing as quickly as earlier in the year.
There are a few economic reports due out this week that should provide more direction on the pace of recovery. The Federal Reserve Bank of New York is expected to say today that the manufacturing activity in the state rebounded this month after the pace of growth slowed sharply in July.
Economists polled by Thomson Reuters predict the Empire State Manufacturing index rose to 8 from 5.08 in July.
Investors will also get reports on housing starts, inflation at the consumer level, industrial production and weekly claims for unemployment benefits later this week. A big jump in unemployment claims last week added to stock losses.
The Dow Jones industrial average fell nearly 400 points over the past four trading days after the Federal Reserve took a more cautious tone about the pace of recovery and said it would start buying Treasury bonds to try and stimulate growth. Major retailers like J.C. Penney Co. also warned that profits the rest of the year would not be as big as previously estimated because shoppers are cutting back on spending.
Investors continued to snap up Treasurys today, driving interest rates lower. The drop came because of continued concerns that the global economy will slow and strong corporate earnings reported in the second quarter will not be able to hold up.
Ahead of the opening bell, Dow Jones industrial average futures fell 22, or 0.2 percent, to 10,244. Standard & Poor’s 500 index futures fell 3.00, or 0.3 percent, to 1,073.10, while Nasdaq 100 index futures fell 0.25, or less than 0.1 percent, to 1,815.00.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.64 percent from 2.68 percent late today. Its yield is often used to help set interest rates on mortgages and consumer loans.
The yield on the 10-year note is near the level last hit in March 2009 when stocks fell to a 12-year low.
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