Stock futures point to lower open as dollar rises

[December 07, 2009]  NEW YORK (AP) -- U.S. stock futures are slightly lower and the dollar is rising Monday as investors bet that the Federal Reserve may raise interest rates sooner than expected.

The dollar jumped to a five-week high against the euro, sending commodities prices tumbling. Treasurys, meanwhile, bounced back from a sharp sell-off last week, pushing yields lower. Overseas markets were mixed.

The dollar strengthened ahead of comments from Federal Reserve Chairman Ben Bernanke, who will speak before the Economic Club of Washington. As the economy improves, investors believe the Fed might start to raise rates and withdraw some of its support measures.

Low interest rates and the resulting decline in the dollar have helped fuel the stock market's nine-month rally. The weak dollar has encouraged investors to buy stocks, commodities and other higher-yielding assets. If the Fed were to raise rates, that would be a good sign that the economy is strengthening. However, investors could curb their buying of stocks and look for ways to make more money elsewhere as rates rise.

Concerns about the Fed's next move have heightened since Friday, when investors got one of the best indications yet that the economy is strengthening. The Labor Department said employers cut fewer jobs in November than at any time since the recession began in late 2007 and the unemployment rate dropped to 10 percent from 10.2 percent.

Ahead of the market's open, Dow Jones industrial average futures fell 36, or 0.4 percent, to 10,364. Standard & Poor's 500 index futures fell 4.40, or 0.4 percent, to 1,103.70, while Nasdaq 100 index futures fell 6.50, or 0.4 percent, to 1,788.50.

The ICE Futures US dollar index inched up 0.1 percent. As the dollar strengthened, gold prices dropped $25 to $1,143 an ounce. Oil prices lost 58 cents to $74.89 a barrel in electronic premarket trading on the New York Mercantile Exchange.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.44 percent from 3.48 percent late Friday.

Overseas, Japan's Nikkei stock average rose 1.5 percent, while Hong Kong's Hang Seng index slipped 0.8 percent. Britain's FTSE 100 fell 0.6 percent, Germany's DAX index fell 0.7 percent, and France's CAC-40 gained 0.9 percent.

[Associated Press; By SARA LEPRO]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.