Weaker dollar boosts US stock futures

[December 10, 2009]  NEW YORK (AP) -- A weaker dollar and hopes for more good news on employment are lifting stock futures.

Following a now-familiar pattern, stock futures rose Thursday as the dollar slipped against other major currencies. A weaker dollar makes commodities cheaper for foreign buyers and boosts profits at U.S. companies that do business overseas.

Investors were also awaiting the Labor Department's weekly report on the number of newly unemployed workers seeking jobless benefits. Analysts expect initial claims for unemployment insurance to have risen last week after dropping for five straight weeks. Initial claims are considered a good gauge of the pace of layoffs and an indication of companies' willingness to hire.

High unemployment has been seen as one of the economy's biggest obstacles to sustained growth. Last week, the Labor Department said employers cut just 11,000 jobs in November, far better than expected and the fewest monthly job losses since the recession began in late 2007.

That news renewed investors' belief that the economy was indeed improving. But it also stirred concerns that the Federal Reserve will raise interest rates sooner than expected, which would strengthen the dollar and potentially upend a nine-month rally in stocks. Since then, investors have been adding dollars to their portfolio, betting that interest rates will rise.

For much of this year, low interest rates and the resulting decline in the dollar have led investors to buy assets like stocks and commodities that can earn better returns than cash. If rates were to rise, the dollar would look more attractive again.

Also Thursday morning, the Commerce Department will release international trade data for October.

Ahead of the market's open, Dow Jones industrial average futures rose 30, or 0.3 percent, to 10,360. Standard & Poor's 500 index futures gained 4.20, or 0.4 percent, to 1,099.80, while Nasdaq 100 index futures rose 3.75, or 0.2 percent, to 1,796.25.

Stocks rose moderately Wednesday, giving the Dow Jones industrial average a 51 point gain after a more than 100-point drop the day before. Analyst upgrades of a handful of big-name companies helped offset lingering concerns about rising government debt levels in Spain, Greece and other countries.

As the end of the year approaches, investors have become more cautious in their trading, not wanting to lose the big gains they've made since the market's rally began in March. At the same time, they are trying to determine how best to position their portfolios for the new year, balancing issues like unemployment and foreign debt problems with the prospects of a rate hike.

In other trading Thursday, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.46 percent from 3.44 percent late Wednesday.

Commodities prices were mostly higher as the dollar slipped against other major currencies. The price of gold rose $4 to $1,125, breaking a four-day slide, while oil prices added 33 cents to $71 a barrel in electronic premarket trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average dropped 1.4 percent and Hong Kong's Hang Seng index gave up 0.2 percent. In late morning trading in Europe, Britain's FTSE 100 was up 0.5 percent, Germany's DAX index rose 0.7 percent, and France's CAC-40 was down 0.7 percent.

[Associated Press; By SARA LEPRO]

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