Stock futures slip on last day of quarter

[September 30, 2010]  NEW YORK (AP) -- Stock futures slipped Thursday as investors entered the last day of the quarter cautiously.

An upcoming report on first-time claims for unemployment benefits and a final reading on second-quarter gross domestic product kept traders from making any big moves.

Stocks are set to end the third quarter with big gains primarily due to a surge over the past month. The Dow Jones industrial average has risen 10.9 percent during the quarter, including an 8.2 percent gain in September. That puts the index on pace for its best September performance since 1939.

Traders could extend the monthlong rally if the weekly report on unemployment claims comes in better than expected. Investors have bid up stocks throughout the month as reports topped modest growth expectations and fears about the economy falling back into recession dissipated.

Economists polled by Thomson Reuters predict first-time claims fell by 5,000 last week to 460,000. That number still indicates employers aren't adding many jobs and growth is sluggish, but it also means employers aren't cutting jobs either.

The final reading on second-quarter GDP, the broadest measure of economic activity, is expected to show growth was an anemic 1.6 percent, down from 3.7 percent in the first quarter.

Consumers have cut back on spending throughout the year because they are concerned about continued high unemployment. Businesses have kept activity in check because of uncertainty surrounding potential tax changes and costs associated with recently passed health care and financial regulatory reforms.

Ahead of the opening bell, Dow Jones industrial average futures fell 21, or 0.2 percent, to 10,759. Standard & Poor's 500 index futures fell 3.10, or 0.3 percent, to 1,137.80, while Nasdaq 100 index futures fell 1.25, or 0.1 percent, to 2,007.75.

Despite the recent big gains in stocks, many traders are not convinced about the health of the economy and are pouring money into safer alternatives like Treasurys.

Bond prices rose Thursday driving interest rates lower. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.47 percent from 2.50 percent late Wednesday.

Its yield is often used to set interest rates on mortgages and other loans.

Gold, considered another safe alternative to riskier assets, also rose. Gold jumped to a new record of $1,316.20 an ounce earlier in the day before moving back to $1,315.50 an ounce.

European markets fell after Spain's credit rating was slashed by Moody's Investors Service, adding to concerns about the health of the continent's economy as many countries struggle with high debt.

Overseas, Britain's FTSE 100 fell 0.1 percent, Germany's DAX index dropped 0.3 percent, and France's CAC-40 fell 0.8 percent.

[Associated Press; By STEPHEN BERNARD]

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