Stock futures fall after euro hits new 4-year low
June 4, 2010 Futures had been trading in a narrow range as investors avoided
making any big bets before the jobs report. However, after concerns
resurfaced about the health of European banks, the euro fell
quickly to a new four-year low. The drop in the euro helped push
U.S. stock futures and major European indexes lower.
The euro, which is used by 16 countries in Europe, fell as low
as $1.2051 before climbing back to $1.2057. The euro has become an
indicator for investors' confidence in Europe's economy. It has
also consistently driven trading in Europe and the U.S. for the
past month.
Investors are concerned that mounting debt problems in countries
such as Greece, Spain and Portugal will upend an economic recovery
on the continent and slow a rebound globally.
Dow Jones industrial average futures fell 74, or 0.7 percent, to
10,184. Standard & Poor's 500 index futures fell 9.10, or 0.8
percent, to 1,094.50, while Nasdaq 100 index futures dropped 15.50,
or 0.8 percent, to 1,882.25.
The big move also comes ahead of the U.S. Labor Department's
monthly report on employment. Typically, there is little movement
in futures before the jobs report.
Traders will be looking to see if employers further ramped up
their hiring last month as the economy continues to recover.
Economists expect employers added more workers than any month since
September 1983, but those numbers were probably inflated by
temporary government jobs tied to the census.
The unemployment rate likely dipped to 9.8 percent in May from
9.9 percent a month earlier, according to economists polled by
Thomson Reuters. However, that number could creep higher again in
the coming months as more people try to find work as the economy
slowly improves.
Economists forecast the country added 513,000 jobs last month, a
big jump from the 290,000 in April. But as many as 400,000 of those
jobs could come from government hiring of census workers.
That temporary hiring means traders will likely look beyond the
headline number to see how many jobs private employers added during
the month. A report from payroll company ADP on Thursday said
private companies added 55,000 jobs in May.
Because of the influx of temporary workers, economists forecasts
for job growth vary widely. Among those polled by Thomson Reuters,
predictions range from 175,000 jobs added last month to as many as
750,000.
The Labor Department's monthly employment report, which is due
out at 8:30 a.m. EDT, is considered the biggest economic indicators
on the calendar each month because unemployment is one of the
biggest obstacles to a strong, sustained recovery.
More people working, even temporarily, means consumer spending
will likely rise in the coming months. Consumer spending is the
primary driver of economic activity in the country.
U.S. Treasury prices rose as investors sought safety of
government bonds. The yield on the benchmark 10-year Treasury note,
which moves opposite its price, fell to 3.35 percent from 3.37
percent late Thursday.
Overseas, Britain's FTSE 100 fell 0.8 percent, Germany's DAX
index fell 0.5 percent, and France's CAC-40 dropped 1.1 percent.
All three indexes had been trading higher earlier in the day.