Wall Street set for modestly lower open

[May 14, 2009]  NEW YORK (AP) -- Wall Street is continuing its sell off Thursday ahead of a key report on unemployment. Stock futures are trading modestly lower.

Investors have abandoned a nearly two-month rally this week, and are instead selling shares as new data suggests the economy might not bounce back as quickly as hoped.

The Labor Department's weekly jobless claims report will provide the latest sign of how the economy is faring. The report, due out at 8:30 a.m. EDT, is expected to show new claims for unemployment benefits rose to 610,000 last week from 601,000 a week earlier.

The number of people overall seeking unemployment benefits is also likely to grow, increasing to 6.4 million from 6.35 million. Any increase would be the highest total on records dating back to 1967 and set a 15th straight record.

Ahead of the report, Dow Jones industrial average futures declined 19, or 0.23 percent, to 8,275. Standard & Poor's 500 index futures fell 1.60, or 0.18 percent, to 883.70, while Nasdaq 100 index futures declined 0.75, or 0.06 percent, to 1,343.50.

Investors will also get a report on inflation at the wholesale level when the Commerce Department releases its producer price index for April. Economists project producer prices increased 0.1 percent in April after plunging 1.2 percent in March.

The market was battered Wednesday by a worse-than-expected report on monthly sales for April. Economists had been expecting sales to remain flat in April, but they instead fell 1.2 percent. March figures were also revised lower.

Also, department store chain Macy's Inc. reported its first-quarter loss widened from the year-ago period, a further sign consumer spending is not rebounding. Consumer spending accounts for about two-thirds of U.S. economic activity, so a rebound in sales is a key indicator that the economy might be strengthening.

The Dow fell 184.22, or 2.2 percent, to 8,284.89 on Wednesday. The S&P 500 fell 24.43, or 2.7 percent, to 883.92, while the Nasdaq declined 51.73, or 3 percent, to 1,664.19.

During the market's recent two-month surge, investors welcomed data indicating that the economy, while not growing, was at least bottoming out. This week worse-than-expected data has put a halt to that optimism.

Further insight into consumer spending will come Thursday as retailer Wal-Mart Stores Inc. reports its first-quarter results. Analysts expect Wal-Mart earned 77 cents per share.

Meanwhile, bond prices were mixed after rising a day earlier. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.11 percent from 3.12 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.17 percent from 0.16 percent late Wednesday.

The dollar fell against other major currencies, while gold prices fell.

Overseas, Japan's Nikkei stock average fell 2.6 percent. In afternoon trading, Britain's FTSE 100 declined 2.1 percent, Germany's DAX index dropped 2.6 percent, and France's CAC-40 slipped 2.4 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com/

Nasdaq Stock Market: http://www.nasdaq.com/

[Associated Press; By STEPHEN BERNARD]

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