Stocks narrowly mixed ahead of economic reports

[February 04, 2010]  NEW YORK (AP) -- Stock futures were narrowly mixed Thursday as investors avoid making big bets before new economic reports on jobless claims, retail sales and business inventories.

Overseas markets rallied as investors became more comfortable with China's recent moves to tighten monetary policy. Economists say China is making the moves, such as forcing banks to hold more reserves, to discourage excess lending and the country will not cut back on stimulus spending or raise benchmark interest rates.

In the U.S., investors will get fresh readings on the economy that will provide more evidence of a growing rebound. The Federal Reserve provided a boost to Wall Street on Wednesday, saying in its Beige Book report on regional trends that the recovery was spreading geographically.

The Labor Department releases its weekly jobless claims data at 8:30 a.m. EST. The report is expected to show first-time requests for unemployment insurance rose by 3,000 to a seasonally adjusted 437,000, according to economists polled by Thomson Reuters. Despite the weekly uptick in new claims, economists expect the number of people continuing to collect unemployment benefits declined by 30,000 to about 4.8 million.

The Commerce Department is expected to say more people were out shopping during the holiday season last month. Economists predict retail sales likely rose 0.5 percent in December, after rising 1.3 percent in November.

A steady increase in retail sales is considered vital to a recovery because consumer spending accounts for more than two-thirds of all economic activity.

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

Ahead of the opening bell, Dow Jones industrial average futures fell 4, or less than 0.1 percent, to 10,624. Standard & Poor's 500 index futures declined 0.60, or 0.1 percent, to 1,141.00, while Nasdaq 100 index futures fell 3.50, or 0.2 percent, to 1,879.00.

Shortly after the market opens, traders will get a reading on business inventories. After companies cut inventories for more than a year during the recession, it is expected they added to stockpiles for the second straight month in November.

If retail spending continues to increase, it is expected businesses will start to add to their inventories to keep up with growing demand, further fueling a recovery.

Economists expect inventories rose 0.2 percent in November. The Commerce Department releases the information at 10 a.m. EST.

Stocks rose Wednesday, led by financial stocks after the appearance by bank CEOs on Capitol Hill did not dissuade investors from jumping into the sector. The executives testified before Financial Crisis Inquiry Commission, which is investigating the near collapse of the financial system and credit markets in the fall of 2008.

The panel will be meeting with regulators on the topic on Thursday.

Meanwhile bond prices rose, a day after the government easily sold $21 billion in 10-year notes. The yield on the benchmark 10-year note, which moves opposite its price, fell to 3.78 percent from 3.80 percent late Wednesday.

The dollar mostly rose. Gold also rose modestly.

Overseas, Japan's Nikkei stock average rose 1.6 percent. Britain's FTSE 100 gained 0.6 percent, Germany's DAX index rose 0.6 percent, and France's CAC-40 gained 0.5 percent.

[Associated Press; By STEPHEN BERNARD]

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