Stocks set to extend slide, jobs report looms

[February 05, 2010]  NEW YORK (AP) -- Stocks are set to extend their slide Friday as markets overseas tumble on fresh worries about the strength of a global economic recovery. Stock futures are sharply lower.

Investors want to examine the Labor Department's monthly employment report for signs that fourth-quarter growth has carried into the new year. High unemployment -- the jobless rate was 10 percent in December -- has been the biggest obstacle to a strong, sustained recovery.

Economists predict employers added 5,000 jobs last month, but expect the unemployment rate crept up to 10.1 percent, according to Thomson Reuters.

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

The Labor Department said Thursday that first-time claims for unemployment benefits rose for the fourth time in five weeks, painting a grimmer picture heading into the monthly employment report. Investors had been expecting a drop.

Major indexes have pulled back sharply over the past three weeks after hitting their highest levels in more than a year. The retreat from riskier assets has come as doubts arise about chances for a strong global economic recovery.

The government said last week the economy grew at a torrid 5.7 percent during the fourth quarter. However, most of that growth came from areas that provide only a temporary boost to the economy, like companies restocking low inventories.

Investors are looking for signs that the rebound can be sustained. An improving jobs market would provide such relief.

Ahead of the opening bell, Dow Jones industrial average futures fell 63, or 0.6 percent, to 9,916. Standard & Poor's 500 index futures dropped 7.80, or 0.7 percent, to 1,053.90, while Nasdaq 100 index futures fell 4.75, or 0.3 percent, to 1,730.00.

The latest drop in stocks reflects concerns three members of the euro currency bloc -- Greece, Spain and Portugal -- will have trouble tightening budget controls to manage mounting deficits, helping to derail a recovery in Europe.

Stocks initially declined last month after China said it would rein in loose bank lending standards to cool its economy and avoid speculative bubbles. President Barack Obama's calls for tighter regulations on U.S. banks then added to investors' concerns.

Overseas markets all sold off following the sharp declines in the U.S. on Thursday. The Dow Jones industrial average fell 2.6 percent and briefly dropped below the 10,000 level for the first time in three months. The Dow has fallen 6.7 percent since it hit a 15-month high on Jan. 19.

The broader Standard & Poor's 500 index fell 3.1 percent Thursday, while the Nasdaq composite index dropped 3 percent.

With stocks tumbling, demand for safer investments has risen. The dollar strengthened Friday and Treasury bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.58 percent from 3.61 percent late Thursday.

Gold prices fell. Oil dropped 20 cents to $72.94 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 2.9 percent, while Hong Kong's Hang Seng tumbled 3.3. Britain's FTSE 100 fell 1.6 percent, Germany's DAX index dropped 1.2 percent, and France's CAC-40 tumbled 2.3 percent.

[Associated Press; By STEPHEN BERNARD]

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