US stock futures drift lower as dollar strengthens
NEW YORK — U.S. stock futures are slightly lower Friday amid a strengthening dollar after the market’s strong performance this week.
Asian markets rallied overnight, led by a big gain in Chinese stocks. China had been on a weeklong holiday during which global stocks surged and traders sent shares higher in that market as they tried to catch up. Major indexes in Europe, however, fell in morning trading there.
Investors are keeping a close watch on the U.S. dollar, which recovered some of its recent losses after Federal Reserve chairman Ben Bernanke reassured markets that the U.S. central bank will be able to rein in its extraordinary stimulus measures when the time is right. The comments calmed some of investors’ fears about inflation, which can be triggered by a falling dollar.
Record low interest rates and massive government spending have weakened the dollar considerably this year, sending the U.S. dollar index, which tracks the greenback against other currencies, down nearly 15 percent since early March when the stock market’s rally began.
The weak dollar has been a boon to stocks and commodities as investors go in search of higher yielding assets. The drop in the dollar also boosts corporate profits by making U.S. goods cheaper to overseas buyers.
The dip in futures comes at the end of a strong week for stocks. The major indexes are on track for their best weekly gain since early July after two losing weeks. Investors have cheered more signs the economy is healing, including growth in the service sector, a surprisingly good profit report from aluminum maker Alcoa Inc. and the first gain in retail sales in over a year.
Ahead of the market’s open, Dow Jones industrial average futures fell 9, or 0.1 percent, to 9,738. Standard & Poor’s 500 index futures lost 1.50, or 0.1 percent, to 1,062.30, while Nasdaq 100 index futures fell 6.75, or 0.4 percent, to 1,709.75.
Overseas, Shanghai’s main index climbed 4.8 percent, while Japan’s Nikkei stock average rose 1.9 percent. In late morning trading, Britain’s FTSE 100 fell 0.1 percent, Germany’s DAX index lost 0.1 percent, and France’s CAC-40 was down 0.2 percent.
The U.S. dollar index rose 0.4 percent in early trading.
Though the Fed has said it will keep interest rates low for some time, Bernanke’s comments raised expectations that the central bank may hike rates sooner than anticipated to support the dollar.
Australia surprised global markets earlier this week by becoming the first major economy to raise interest rates this year, a sign the country is more confident about its economic prospects. On Thursday, both the European Central Bank and the Bank of England left their interest rates unchanged.
Oil prices lost 33 cents to $71.36 a barrel in electronic trading on the New York Mercantile Exchange. Gold prices also slipped.
Bond prices mostly fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.27 percent from 3.25 percent late Thursday.
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