US stocks look to start 3Q on high note

NEW YORK — U.S. stock futures are extending early gains after a report that private sector job losses slowed last month.

The ADP National Employment Report said Wednesday that private sector employment fell by 473,000 in June, less than the 532,000 jobs that were shed in May.

Job losses are a key focus while investors try to determine whether the economy is pulling out of the recession. The ADP report comes a day ahead of the Labor Department’s key monthly jobs report.

Stock futures initially gave up some ground after the report was released and Treasury bonds sold off, but prices stabilized shortly afterward.

Ahead of the market’s open, Dow Jones industrial average futures are up 32, or 0.4 percent, at 8,426. Standard & Poor’s 500 index futures are up 3.30, or 0.4 percent, at 918.80, and Nasdaq 100 index futures are up 9.75, or 0.7 percent, at 1,486.

Later Wednesday morning, investors will get reports on manufacturing, construction spending and pending home sales.

Despite falling sharply Tuesday on a disappointing report on consumer confidence, stocks ended the second quarter with significant gains. The benchmark Standard & Poor’s 500 index had its best quarter in a decade.

Stock futures were also boosted by gains in European markets, which rose after upbeat reports on manufacturing activity in both Britain and the 16 countries that share the euro currency.

The Institute for Supply Management issues its reading on the manufacturing sector at 10 a.m. Eastern time. Economists expect manufacturing activity in the U.S. to have declined in June for the 17th straight month, but at the slowest pace since last August.

In corporate news, Citigroup Inc. sold NikkoCiti Trust and Banking Corp., part of its Japanese business, to Nomura Trust and Banking Co. for $196 million. The New York bank, which has received $45 billion in government aid, has been selling assets and trying to streamline operations in an effort to return to profitability.

And in an upbeat earnings report, General Mills Inc. said its fiscal fourth-quarter profit nearly doubled. The maker of Cheerios cereal and Yoplait yogurt also offered earnings guidance for 2010 above analysts’ expectations. Shares jumped $1.23, or 2.2 percent, to $57.25 in pre-market trading.

Analysts say earnings reports coming in the next few weeks will largely determine which way the market heads in the third quarter. Investors are especially eager to hear what companies have to say about business prospects in the second half of the year.

Markets have pulled a stunning recovery since hitting 12-year lows in early March. All the major indexes rose by double-digit percentage points in the second quarter, while the S&P 500 index and the Nasdaq composite index finished higher for the first six months of 2009.

Still, the major indexes have pulled back from multi-month highs in mid-June amid growing doubts about the strength of the economy’s recovery. Since June 12, the Dow is down 4 percent, the S&P 500 down 2.8 percent and the Nasdaq, 1.5 percent.

Bond prices slipped ahead of the economic data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.58 percent from 3.54 percent late Tuesday.

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

Light, sweet crude rose $1.23 to $71.12 a barrel in electronic trading on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 0.2 percent. In afternoon trading, Britain’s FTSE 100 rose 1.2 percent, Germany’s DAX index was up 1.2 percent, and France’s CAC-40 jumped 1.4 percent.