US Stocks Head for Higher Open after Jobs Data

August 1, 2008 7:14:03 AM PDT
Stocks headed for a higher open Friday after the government said the economy shed jobs for the seventh straight month in July, but at a slower-than-expected rate. The Labor Department said payrolls shrank by 51,000, less than in June and less than the 72,000 economists predicted. Still, the unemployment rate rose to 5.7 percent from 5.5 percent - higher than the forecast of 5.6 percent.

This year, the economy has lost about 463,000 jobs. When people lose their jobs, they spend less - a disturbing prospect for investors, as consumer spending accounts for more than 70 percent of U.S. economic activity.

Wall Street was also cautious after General Motors Corp.'s second-quarter results. GM posted a $15.5 billion loss, or $27.33 per share - the third-worst in the automaker's history. The loss was wider than analysts had anticipated. GM shares dropped more than 8 percent to $11.07 in pre-market trading.

Ahead of the market's open, Dow Jones industrial average futures rose 41, or 0.36 percent, to 11,400, pushing further into positive territory after the jobs data. Standard & Poor's 500 index futures rose 4.60, or 0.36 percent, 1,271.70, while Nasdaq 100 index futures fell 4.50, or 0.24 percent, to 1,858.25.

Bond prices slipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.96 percent to 3.95 percent late Thursday. The dollar rose against most other major currencies, while gold prices fell.

Light, sweet crude fell $1.08 to $123 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Investors are also awaiting a reading on the manufacturing sector. Economists predict the Institute for Supply Management, a trade group of purchasing executives, will report that its manufacturing index fell to 49.2 in July from 50.2 in June. A reading above 50 signals expansion while a figure below 50 indicates contraction. In June, the index signaled growth for the first time in four months.

In other earnings data, Chevron Corp. said its second-quarter profit rose 11 percent from a year ago to $5.98 billion, but the rise was smaller than expected. Chevron shares slipped 56 cents to $84 in pre-market trading. On Thursday, Exxon Mobil Corp. posted a profit of more than $11 billion, the highest-ever earnings for a company in a single quarter.

Overseas, Japan's Nikkei stock average fell 0.14 percent. In afternoon trading, Britain's FTSE 100 fell 0.18 percent, Germany's DAX index declined 0.23 percent, and France's CAC-40 fell 0.49 percent.