U.S. Stock Futures Hold Losses

By Dow Jones Business News, 
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By Tomi Kilgore

U.S. stock futures held slight losses, though the release of data showing wholesale inflation declined unexpectedly.

About 55 minutes ahead of the open, Dow Jones Industrial Average futures fell 24 points, or 0.1%, to 16654. Just before the release of the data, Dow futures were down 20 points.

S&P 500 index futures slipped three points, or 0.2%, to 1920 and Nasdaq-100 futures eased two points, or 0.1%, to 3763. Changes in stock futures don't always accurately predict stock moves after the opening bell.

The producer-price index for May declined 0.2% on the month, missing forecasts for a 0.2% rise. Excluding volatile food and energy components, core PPI was flat, versus expectations of a 0.1% increase.

After the open, the preliminary Thomson-Reuters/University of Michigan consumer sentiment index for June is expected to rise to 83.0 from the final May reading of 81.9.

The yield on the 10-year Treasury note ticked up to 2.608% from 2.586% late Thursday.

The early slight losses, which followed a two-day drop of 212 points for the Dow, came as worries about an escalation of violence in Iraq overshadowed an upbeat outlook from Dow component Intel.

On Thursday, the Dow fell 110 points, or 0.7%, to suffer the biggest back-to-back point and percentage decline in four weeks. The declines set the Dow up to suffer the first weekly loss in four weeks.

The S&P 500 fell 0.7% on Thursday to suffer a third-straight decline, the longest losing streak since the three-day stretch ending April 7.

With the Iraqi government girding to protect the capital from advancing insurgents, President Barack Obama and his administration have signaled that they are weighing possible airstrikes to lend support.

Fears of further violence have pushed oil prices higher. Crude-oil futures climbed 0.3% to $106.83 a barrel, after surging 2% on Thursday, the biggest one-day percentage gain in over two months.

The yield on the 10-year Treasury note ticked up to 2.616% from 2.586% late Thursday. Yields rise and bond prices decline. Gold futures slipped 0.1% to $1,272.30 an ounce, after settling higher for a fourth-straight session Thursday, the longest winning streak in three months.

Charles Sweeney, director of equity trading at JMP Securities, said while Iraq is certainly on investors' minds, he's encouraged by how orderly the recent declines have been. Overall volume has remained below the year-to-date daily average for nearly four weeks.

"I wouldn't point to any one specific thing" for the market's recent weakness, Mr. Sweeney said. "We're not seeing a massive derisking by any stretch, just a little profit-taking after a month-long rally."

He said while the market could pull back a bit further over the short term, he believes any weakness will remain relatively shallow and short-lived. Barring a sudden slowdown in the economy, he expects investors who have been reluctant to buy into a rising market will be more willing to step in on dips.

"What we've seen over the past year, when you don't have any real driving macroeconomic data to move the market lower, these selloffs have been bought," Mr. Sweeney said.

He added that while investors are mostly positive on stocks, "there's a general concern among institutional investors of being too committed. There is still a good number of investors who are hesitant to put a lot of money to work at these levels."

On the bright side, Dow component Intel ran up 6.8% in premarket trading after the semiconductor maker raised its revenue outlook for the current quarter and for the year late Thursday, citing stronger-than-expected demand for business PCs.

After the open, the preliminary Thomson-Reuters/University of Michigan consumer sentiment index for June is expected to rise to 83.0 from the final May reading of 81.9.

European markets were broadly lower as worries about Iraq and possible rate increases in the U.K. weighed on sentiment. The Stoxx Europe 600 shed 0.7%, and was headed for the first weekly loss in nine weeks.

Late Thursday, Bank of England Governor Mark Carney said interest rates in the U.K. could rise sooner than the market is anticipating, as economic growth has been stronger than the central bank expected.

The U.K.'sFTSE 100 index dropped 1.1%. Elsewhere, Germany's DAX 30 lost 0.8% and France's CAC 40 gave up 0.8%. The dollar fell against the U.K. pound, but edged higher against the euro and the yen.

Asian markets showed some strength, with China's Shanghai Composite rising 0.9% after data showing bank lending surged in May. Japan's Nikkei Stock Average climbed 0.8%.

In other corporate news, Finisar Corp. tumbled 21% after the fiber optics components maker reported late Thursday fiscal fourth-quarter adjusted profit that missed estimates, and provided a disappointing outlook for the current quarter.

Express surged 25% after private-equity firm Sycamore Partners reported a 9.9% stake in the retailer and said it was interested in looking into a possible buyout.

Write to Tomi Kilgore at tomi.kilgore@wsj.com


  (END) Dow Jones Newswires
  06-13-140857ET
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This article appears in: US Markets , Economy , International

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