Stock futures point higher ahead of stress tests

[May 07, 2009]  NEW YORK (AP) -- Wall Street headed to a higher open Thursday as investors anticipate the formal release of the government's stress tests of banks and fresh economic data on retail sales and unemployment claims.

The tests, designed to determine which banks would need more capital to offset loan losses if the economy weakens further, are at the crux of the Obama administration's plan to fortify the financial system. The market has been rather buoyant this week ahead of the results, despite some initial concerns that the tests could show more pain in the industry.

On Wednesday, stocks bounded higher, led by big gains in the financial sector as media reports indicated that some major banks are healthier than previously thought. Investors bought up shares of most banks, even those expected to have to raise more money.

Also Thursday, investors will look to a swath of sales reports from major retailers for insight into whether consumers' willingness to spend increased in April. Consumer spending accounts for more than two-thirds of economic activity, so the health of retailers is critical for a turnaround.

The Labor Department will release its weekly jobless claims report later Thursday morning, a day ahead of the government's closely watched report on monthly job losses.

Ahead of the market's open, Dow Jones industrial average futures rose 66, or 0.8 percent, to 8,537. Standard & Poor's 500 index futures rose 6.20, or 0.7 percent, to 923.40, while Nasdaq 100 index futures added 2.25, or 0.2 percent, to 1,432.

On Wednesday, the Dow added 101 points to close above the 8,500 level for the first time in four months, leaving the average down only 3 percent for the year. The Standard & Poor's 500 index, which rose 15 points, jumped into the black for 2009 on Monday. The market indicators are up more than 25 percent since hitting new lows on March 9.

Bond prices dropped as demand for government debt waned. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.24 percent from 3.16 percent late Wednesday.

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

Light, sweet crude rose $1.49 to $57.83 in electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average jumped 4.6 percent and Hong Kong's Hang Seng index added 2.3 percent. In late morning trading, Britain's FTSE 100 was up 2.5 percent, Germany's DAX index was up 1.6 percent, and France's CAC-40 was up 1.7 percent.

[Associated Press; By SARA LEPRO]

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