Stock futures fall as volatility remains

[May 11, 2010]  NEW YORK (AP) -- The stock market's turbulent ride is set to continue. Stock futures fell sharply Tuesday, a day after major indexes posted their biggest gains in more than a year.

Excitement over the European Union's nearly $1 trillion rescue program to support debt-burdened countries faded. Investors have begun to again focus on the health of the global economy.

While the European bailout provided assurances that the euro would remain intact and countries would have access to loans, debt-burdened nations like Greece still have to significantly scale back spending and programs. That means any European economic recovery could be slow and still drag down a global rebound. Major European indexes all fell.

Asian markets retreated after a report showed inflation in China accelerated last month. Continued high inflation might force the Chinese government to further clamp down on credit to prevent speculative bubbles. The country in recent months has forced banks to increase their reserves in an effort to slow a surging real estate market. China might eventually be forced to raise interest rates to fight inflation, which could slow the economy and imports.

Global economic indicators, such as the U.S. government's monthly jobs report, had been overshadowed recently as investors feared debt problems in Greece would spread throughout Europe and hurt a recovery. Traders were also concerned about whether European debt woes could potentially destroy the euro, the currency used by 16 European countries.

There are few domestic economic indicators due out in the next couple of days before a flood of data late in the week. A report on March wholesale inventories and sales is the lone report investors will get Tuesday.

The Commerce Department's report is expected to show inventories rose 0.5 percent in March, while wholesale sales rose 1.1 percent, according to economists polled by Thomson Reuters. That would mark the 12th consecutive month sales rose, a positive sign that the U.S. economy is on the mend as demand picks up for goods. The report is due out at 10 a.m. EDT.

Ahead of the opening bell, Dow Jones industrial average futures fell 92, or 0.9 percent, to 10,649. Standard & Poor's 500 index futures dropped 12.90, or 1.1 percent, to 1,143.70, while Nasdaq 100 index futures fell 19.75, or 1 percent, to 1,919.75.

The Dow rose 404.71, or 3.9 percent, on Monday. The S&P 500 surged 4.4 percent, while the Nasdaq composite index jumped 4.8 percent. The relief rally -- the market's biggest jump since March 2009 -- came after stocks tumbled late last week.

Meanwhile, safe-haven investments all rose Tuesday. U.S. Treasurys, gold and the dollar all gained as investors moved away from risky investments like stocks and oil.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.48 percent from 3.54 percent late Monday.

The dollar gained back some of the ground it lost Monday against the euro. The dollar is hovering near its strongest levels in 14 months against the shared European currency.

Britain's FTSE 100 fell 1.8 percent, Germany's DAX index dropped 1.2 percent, and France's CAC-40 tumbled 2.2 percent. Japan's Nikkei stock average fell 1.1 percent.

[Associated Press; By STEPHEN BERNARD]

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