Stocks point lower ahead of inflation reading

July 16, 2008 6:00:50 AM PDT
U.S. stocks headed for a moderately lower open Wednesday as oil prices fell and investors awaited a key reading on inflation.The decline in stock futures comes a day after Wall Street closed mostly lower on continuing worries about the financial sector. The Dow Jones industrial average logged its first close below 11,000 since July 2006.

Stock futures pared their losses Wednesday as oil prices pulled back for a second straight day on concerns that a slowing economy will dampen demand. Light, sweet crude fell $2.22 to $136.52 in premarket electronic trading on the New York Mercantile Exchange.

Weekly government figures on domestic inventories are due during the session.

But despite somewhat cheaper oil, investors remain worried about the economy and specifically the financial sector. This week has brought fresh attention to potential trouble spots in the mortgage market. Fannie Mae and Freddie Mac, the government-chartered mortgage giants, remain a concern, as do regional banks that have could have a large amount of bad mortgage debt on their books.

Investors will be looking ahead of the opening bell at the Labor Department's Consumer Price Index. Wall Street expects the government's primary inflation measure to show a 0.8 percent gain from May, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR. The data are due at 8:30 a.m.


Figures are due on industrial production and minutes are also expected from the last meeting of the Federal Open Market Committee, the arm of the Federal Reserve that sets interest rates.

The Fed broke a string of reductions by leaving rates unchanged at its last meeting, a recognition that lower rates had weighed on the dollar and led to increases in commodities such as oil and food.

Dow futures fell 22, or 0.20 percent, to 10,896. Standard & Poor's 500 index futures fell 4.50, or 0.37 percent, to 1,207.00, and Nasdaq 100 index futures declined 2.90, or 0.24 percent, to 1,208.60.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.81 percent from 3.82 percent late Tuesday.

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

Overseas, Japan's Nikkei stock average rose 0.05 percent. In morning trading, Britain's FTSE 100 fell 1.17 percent, Germany's DAX index declined 0.95 percent, and France's CAC-40 fell 0.98 percent.

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