Stocks point lower ahead of employment report

[January 09, 2009]  NEW YORK (AP) -- Investors showed nervousness Friday ahead of the government's monthly employment report, sending stock futures moderately lower.

The report is expected to show that employers cut additional jobs in December, leading to concern that further reductions will erode consumer spending and push the country deeper into recession. Consumer spending accounts for more than two-thirds of U.S. economic activity.

The Labor Department report is due out at 8:30 a.m. EST.

The unemployment rate is expected to jump to 7 percent in December from 6.7 percent in November, according to economists polled by Thomson Reuters. A 7 percent unemployment rate would be the highest in 15-1/2 years.

Economists forecast employers cut another 550,000 jobs last month, which would bring the net number of jobs lost in 2008 to 2.46 million. Some believe December job cuts could be even higher, possibly approaching 700,000.

If the 2.46 million estimate of net payroll reductions for 2008 proves correct, it would mark the first annual job loss since the previous recession in 2001.

A month ago, the government's report showed unemployment was far higher than expected, which sent stocks sharply lower at the open. But, investors eventually shrugged off the report as simply another sign the economy remained weak, and stocks finished the day higher.

Investors also are awaiting a reading Friday on November wholesale inventory levels. Inventories likely dropped by 0.8 percent in November, compared with a 1.1 percent decline in October, according to Wall Street economists.

Economists are worried that big cutbacks in inventories will translate into further reductions in production and more job layoffs. The Commerce Department is scheduled to release the report at 10 a.m. EST.

Ahead of the reports, Dow Jones industrial average futures fell 33, or 0.38 percent, to 8,663. Standard & Poor's 500 index futures declined 3.70, or 0.41 percent, to 903.00, while Nasdaq 100 index futures fell 9.00, or 0.72 percent, to 1,240.50.

On Thursday, the Dow fell 0.31 percent, though stocks mostly advanced.

Bond prices mostly declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.42 percent from 2.44 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, was flat at 0.08 percent compared with late Thursday.

The dollar declined against other major currencies, while gold prices fell.

Oil prices fell 69 cents to $41.01 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 0.45 percent. In afternoon trading, Britain's FTSE 100 declined 0.43 percent, Germany's DAX index rose 0.03 percent, and France's CAC-40 fell 0.32 percent.

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[Associated Press; By STEPHEN BERNARD]

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