Stock futures slip to end quarter as traders await reports on jobs, GDP

By Stephen Bernard, AP
Thursday, September 30, 2010

Stock futures slip on last day of quarter

NEW YORK — Stock futures slipped Thursday as investors entered the last day of the quarter cautiously.

An upcoming report on first-time claims for unemployment benefits and a final reading on second-quarter gross domestic product kept traders from making any big moves.

Stocks are set to end the third quarter with big gains primarily due to a surge over the past month. The Dow Jones industrial average has risen 10.9 percent during the quarter, including an 8.2 percent gain in September. That puts the index on pace for its best September performance since 1939.

Traders could extend the rally if the weekly report on unemployment claims comes in better than expected. Investors have bid up stocks throughout the month as reports topped modest growth expectations and fears about the economy falling back into recession dissipated.

Economists polled by Thomson Reuters predict first-time claims fell by 5,000 last week to 460,000. That number still indicates employers aren’t adding many jobs and growth is sluggish, but it also means employers aren’t cutting jobs either.

The final reading on second-quarter GDP, the broadest measure of economic activity, is expected to show growth was an anemic 1.6 percent, down from 3.7 percent in the first quarter.

Consumers have cut back on spending throughout the year because they are concerned about continued high unemployment. Businesses have kept activity in check because of uncertainty surrounding potential tax changes and costs associated with recently passed health care and financial regulatory reforms.

In corporate news, American International Group Inc. said it has reached a deal to repay billions of dollars it received from the government during the credit crisis. AIG was the largest recipient of bailout money during the crisis.

Ahead of the opening bell, Dow Jones industrial average futures fell 17, or 0.2 percent, to 10,763. Standard & Poor’s 500 index futures fell 2.20, or 0.2 percent, to 1,138.70, while Nasdaq 100 index futures fell 3.75, or 0.2 percent, to 2,005.25.

Despite the recent big gains in stocks, many traders are not convinced about the health of the economy and are pouring money into safer alternatives like Treasurys.

Bond prices rose Thursday driving interest rates lower. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.47 percent from 2.50 percent late Wednesday.

Its yield is often used to set interest rates on mortgages and other loans.

Gold, considered another safe alternative to riskier assets, also rose. Gold jumped to a new record of $1,316.20 an ounce earlier in the day before moving back to $1,314.70 an ounce.

AIG shares rose 59 cents to $38.04 in pre-opening trading.

European markets fell after Spain’s credit rating was slashed by Moody’s Investors Service, adding to concerns about the health of the continent’s economy as many countries struggle with high debt.

Overseas, Britain’s FTSE 100 fell 0.2 percent, Germany’s DAX index dropped 0.3 percent, and France’s CAC-40 fell 0.9 percent.

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