Stock futures rise moderately following prior day’s sell-off as dollar resumes its decline

Stock futures rise after sell-off as dollar falls

NEW YORK — Stock futures are indicating a higher open on Wall Street Wednesday, recovering from the previous day’s losses as the dollar resumes its decline.

The gains in U.S. stock futures follow a sharp sell-off in shares on Tuesday that carried over into Asia overnight as concerns about foreign debt loads escalated and Japan said its economy grew at a lower rate than originally expected in the third quarter.

Stock futures got a boost Wednesday from the weaker dollar, which retreated after rising the day before to its highest level against the euro since early November on worries about spiraling debt loads.

The dollar has fallen steadily since March as investors take advantage of cheap financing to invest in riskier, higher-yielding assets like stocks and commodities. But in recent weeks, investors have been shuttling between stocks and the dollar as they try to determine the strength of the economic recovery and where they will be able to make the biggest returns.

While investors want to see the economy grow, they also know that the Federal Reserve could raise interest rates and remove its stimulus measures once the economy appears to be on solid footing. Higher rates could make stocks look less appealing as returns for other investments improve, potentially upsetting a nine-month advance in stocks that has lifted the Standard & Poor’s 500 index up 61.4 percent.

Ahead of the market’s open, Dow Jones industrial average futures rose 40, or 0.4 percent, to 10,311. Standard & Poor’s 500 index futures gained 5.30, or 0.5 percent, to 1,095.30, while Nasdaq 100 index futures rose 9.25, or 0.5 percent, to 1,775.75.

On Tuesday, investors bought safe havens like the dollar and Treasurys and sold stocks after Moody’s Investor Service, a major rating agency, warned that the U.S. and Britain are at risk of having their ratings downgraded if they don’t get their public finances under control. Fitch, another ratings agency, downgraded its rating on Greece.

Foreign debt problems and a potential downgrade to the U.S. triple-A credit rating could make it much more difficult for the government to finance its stimulus programs and put the nascent economic recovery in jeopardy. The Dow Jones industrial average fell 104 points Tuesday.

As the year winds to a close, investors are mindful of holding on to the big gains they’ve made this year, and many have been adding safe-haven assets like the dollar and Treasurys to their portfolios to protect themselves from potential losses. The market’s uncertainty, combined with light trading volume, has made for choppy trading, which analysts expect to continue through the rest of the year.

Later Wednesday morning, the Commerce Department will release data on wholesale trade inventories for October.

Analysts expect businesses reduced wholesale inventories for a record 14th consecutive month in October, but are looking for sales to grow. Rising sales will eventually encourage businesses to restock shelves and boost production, which would help boost the broader economy.

In corporate news, better earnings and revenue guidance from Texas Instruments Inc. helped offset the disappointing corporate reports from 3M Co. and McDonald’s Corp. earlier this week. However, the chipmaker’s outlook fell short of some expectations and its shares fell 56 cents, or 2.1 percent, to $25.77 in premarket trading.

The ICE Futures US dollar index, which tracks the dollar against other major currencies, fell 0.3 percent.

Treasurys, also considered safe-haven assets, retreated along with the dollar. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.41 percent from 3.39 percent late Tuesday.

Commodities prices rose as the weaker dollar made them more attractive to foreign buyers. Silver and copper prices rose, while gold hovered at $1,143 an ounce. Oil prices rose 87 cents to $73.49 a barrel in electronic premarket trading on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 1.3 percent and Hong Kong’s Hang Seng index fell 1.4 percent. In afternoon trading, Britain’s FTSE 100 inched up 0.2 percent, Germany’s DAX index rose 0.2 percent, and France’s CAC-40 rose 0.1 percent.