Stock futures edge higher ahead of opening

[May 18, 2010]  NEW YORK (AP) -- Stock futures rose Tuesday as investors kept a close eye on the movement of the euro, which also climbed.

The euro has been the primary driver of trading in recent days because it is now seen as a proxy for confidence in Europe's economy. Investors are concerned that austerity measures being implemented in countries like Greece, Spain and Portugal will be a drag on a global economic recovery. That worry sent the euro to a four-year low Monday and has added volatility to markets around the world in recent weeks.

The Dow Jones industrial average closed Monday about six points higher after the euro bounced off its lows. The Dow had been down as much as 184 early in the day.

European markets rose Tuesday as finance ministers from across the continent meet to hammer out further details on a nearly $1 trillion rescue package agreed to last week. The bailout will provide countries like Greece that are facing mounting debt with access to cheap loans so they can avoid defaulting. The meetings could provide reassurance to investors that the 16 European countries using the euro have contained their debt problems.

While so much attention has been focused on Europe, investors have largely ignored signs of U.S. economic growth. Those looking for a recovery domestically will get reports that are expected to show the housing market is healing and inflation remains tame.

Dow component Home Depot Inc. also reported a better-than-expected quarterly profit Tuesday.

Ahead of the opening bell, Dow Jones industrial average futures rose 40, or 0.4 percent, to 10,639. Standard & Poor's 500 index futures rose 5.70, or 0.5 percent, to 1,140.20, while Nasdaq 100 index futures rose 6.50, or 0.3 percent, to 1,920.00.

The Commerce Department is expected to say that housing construction rose by 3.8 percent to a seasonally adjusted annual rate of 650,000 units in April, according to economists polled by Thomson Reuters. It would mark the fourth consecutive month of growth, providing a further sign that the battered housing market is now adding to the recovery.

The report, due out at 8:30 a.m. EDT, is also expected to show applications for new building permits dipped less than 1 percent to an annual rate of 680,000 last month. Permits are considered a good gauge of future activity.

The housing market has been battered in recent years and helped push the economy into recession. However, there are some signs of improvement. An index that tracks industry confidence rose this month to its highest level since 2007.

A separate report is expected to show that inflation at the wholesale level remained in check. Economists predict the Producer Price Index rose 0.1 percent in April. The index, which measures price increases before goods reach the consumer, jumped 0.7 percent in March because of rising energy and food costs.

The report from the Labor Department is due out at 8:30 a.m. EDT.

Low inflation allows the Federal Reserve to keep interest rates at historic lows. The low-rate policy in place in recent years has been used to help stimulate the economy.

Meanwhile, bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.48 percent from 3.50 percent late Monday.

Gold fell, while oil prices rose.

Overseas, Britain's FTSE 100 index rose 0.5 percent, Germany's DAX index gained 1 percent, and France's CAC-40 rose 1 percent. Japan's Nikkei stock average rose 0.1 percent.

[Associated Press; By STEPHEN BERNARD]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.