Stock futures slip after global reports

The ECB President speaks of ongoing downside risks to the eurozone's economic outlook as the central bank cuts rates. China slashes its interest rates again. ADP reports that US job creation grew by 176,000. Jobless claims fall.

By TheStreet Staff Jul 5, 2012 9:07AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock) Updated at 9:06 a.m. ET


By Andrea Tse


Stock futures were slipping Thursday as the markets digested a spate of global economic reports.


Futures for the Dow Jones Industrial Average ($INDU) were down by 45 points at 12,822. S&P 500 ($INX) futures were down by 3 points at 1,365. Futures for the Nasdaq ($COMPX) 100 were falling by 8.5 points to 2,633.


The European Central Bank reduced interest rates to a record low as it tries to prevent the eurozone economy from worsening. ECB President Mario Draghi said in a press conference after the release that risks to the continent's economic outlook are still on the downside.


The ECB's main refinancing rate will be cut by 25 basis points to 0.75%.


The interest rate on the marginal lending facility will be decreased by 25 basis points to 1.5% and the interest rate on the deposit facility will be decreased by 25 basis points to 0%.


Meanwhile, the Bank of England, in an effort to boost the United Kingdom's sagging economy, announced it is raising its asset purchase target to 375 billion pounds, while maintaining its benchmark interest rate at 0.5%, and implying that more stimulus measures are possible in the future.


While it's been widely expected that China would cut interest rates again, the timing of the latest reduction was a surprise to the markets. The country's central bank reduced its one-year deposit rate 0.25 percentage points and one-year lending rate 0.31 percentage points.


The People's Bank of China is allowing banks to lend 30% below the lending rate floor.


Ahead of Friday's big nonfarm payrolls report, Automatic Data Processing reported that employment in the U.S. nonfarm private business sector increased by 176,000 in June from May on a seasonally adjusted basis, which was better than the addition of 105,000 jobs to the U.S. economy that economists surveyed by Thomson Reuters were expecting.


The estimated gain in May from April was revised up slightly to 136,000 from 133,000 initially.


Employment in the private, service-providing sector rose 160,000 in June, according to ADP.


Meantime, the Labor Department reported that initial jobless claims for the week ended June 30 fell 14,000 to 374,000 from the previous week's upwardly revised figure of 388,000. Economists on average expected a fall to 385,000.


The four-week moving average was 385,750, a decrease of 1,500 from the previous week's average of 387,250.


Continuing claims for the week ended June 23 was 3.306 million, an increase of 4,000 from the preceding week's level of 3.302 million.


The Institute for Supply Management posts its June non-manufacturing index at 10 a.m., and the reading is expected to come in at 53 compared with 53.7 in May.


The FTSE in London was rising 0.31% and the DAX in Germany was up 0.17%. Hong Kong's Hang Seng Stock index finished up 0.5%. The Nikkei in Japan closed lower by 0.27%.


August crude oil futures were up 50 cents to $88.16 a barrel. August gold futures were slipping $3.50 to $1,618.30 an ounce.


The benchmark 10-year Treasury was up 8/32, diluting the yield to 1.593%, while the dollar was rising 0.58%, according to the dollar index.


The major U.S. equity indices finished Tuesday's holiday-shortened session with solid gains after data on factory orders in May came in slightly better than expected and June vehicle sales were strong.

 


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113Comments
Jul 5, 2012 10:49AM
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I'm far from a 1%er,and I think the Republican way is far better than the Democrat way.My Daugher was a Democrat until she got a job in the private sector,she was a Captain in the Airforce prior,I would joke around dems vs. repubs and she would get furious with me.Now she finally gets it,she wants to protect what she makes,lower taxes,less government,what a change. I'm a proud daddy.

Jul 5, 2012 12:25PM
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DLH, there is no such thing as idol cash.  Cash is kept where?  In banks for bankers to make sound loans.   

With FED policy basically replacing depositors, by flooding the banks with money, depositors (and thus capital formation) are not needed.  The FED will just print up money for banks to loan.  In effect the government is making the loans.  

We don't need more debt.  We need a natural de-leveraging.  More debt, and spending on projects of dubious value (witness 5.7 trillion over the last 3.5 years done with borrowed money) is not the answer.   These idiots would say gee, if we had only spend 5 trillion more we would have Spent our way to prosperity...  

Deficit spending destroys demand.   VF opinions to the contrary will not change that fact.
Jul 5, 2012 12:18PM
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VF - putting money to some kind of productive purpose instead of none.

 

Here is the problem. One person's productive purpose is another person's idea of a wasteful purpose. We as a nation at this time can not agree on "productive purpose".

 

It seems like we could all agree that reducing the deficit for future generations of Americans is a worthwhile goal............ Heck MG....... give us a 100 year payment number....... or even more.... as long as everyone could say........ Sure, lets do it.

Jul 5, 2012 1:10PM
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Well, that ratio could even be a goal for deficit reduction that even more people could buy into. If everyone agrees we have to do something and the direction is the same ......... no reason not to move forward.........

 

Hell......... I'm starting to sound like clownshoes.......... LMAO

Jul 5, 2012 12:18PM
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Re-tog--V.O. water touch of seven up tall please! And keep them coming

Jul 5, 2012 11:16AM
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Brutus,for the last 30 years I've been listening to politicians telling us its only 6 million for this pork project to his or her district ,5 million for this one and so on and so on.I suppose now with Trillion dollar deficits a billion is the old million.

Jul 5, 2012 1:46PM
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LOE, how about Obama's slogans....

A few more sloagans Obamajust unveiled today:

 

"Guns for drug Mexican Drug Lords, they deserve the best we can buy them"!

Vote for Obama, Opaque  instead of transparent!

Vote for Obama, the God of Stupidity! 

Obama for President! Obama will steal from the middle class to give to his special interest groups! 

"Unions are the most cherished people, unlike humans"! 

"Unemployment you can count on"!

"Deficits to infinity and beyond"!

"The government sector is hurting, ask the GSA!"

"All my F*** Ups are W's fault!"

Jul 5, 2012 10:57AM
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Dih,Totally agree raise taxes on ALL OF US,cut spending on EVERYTHING and pay down the deficit.
Jul 5, 2012 10:19AM
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I missed my spot to short the Euro - coulda, shoulda, woulda pulled the trigger, but didn't.
Jul 5, 2012 11:10AM
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DLH, we must slash spending....   We spend 3.8 trillion and take in 2.4 trillion (record tax receipts).  This means we need first to get rid of all 800 billion in Obama's new pork for his special interest groups spending.   Then we need to slash defense spending 200 Billion.   Then we need to cut 400 billion more across the board (this is where W left us).  This will balance the budget.

Then we need to raise taxes to begin paying down the debt.  If we paid off 500 Billion/year for the next 32 years (6,500 per family in extra taxes each year) we could pay off the debt.   That is what it will take.  Obama boosted the debt by  over 50%.   Did you get your fair share of the ((16T-10.2T)/308M * 4)  of the 75,000 he spent for you?  

Obama is fiscally incompetent, lazy, stupid and CORRUPT....     He has to go...
Jul 5, 2012 11:11AM
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It doesn't make much sense to give the gov more money, until they prove they can be responsible with the tax dollars they already get.  Speaking of which, the HHS dept has been busy spending our tax dollars....

"With the Supreme Court giving President Obama's new health care law a green light, federal and state officials are turning to implementation of the law -- a lengthy and massive undertaking still in its early stages, but already costing money and expanding the government.

The Health and Human Services Department "was given a billion dollars implementation money," Republican Rep. Denny Rehberg of Montana said. "That money is gone already on additional bureaucrats and IT programs, computerization for the implementation.""


"The IRS, Health and Human Services and many other agencies will now write thousands of pages of regulations -- an effort well under way:  

"There's already 13,000 pages of regulations, and they're not even done yet," Rehberg said.

"It's a delegation of extensive authority from Congress to the Department of Health and Human Services and a lot of boards and commissions and bureaus throughout the bureaucracy," Matt Spalding of the Heritage Foundation said. "We counted about 180 or so.""

Jul 5, 2012 12:56PM
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VF - 5PM:  Actually.. not paying it off is an idea that's gained a lot of steam.  Treasury bonds are a valuable investment product, and they go *poof* without a national debt.  Public projects need funding in most times.  Targeting a lower debt to GDP ratio, certainly.  That ratio ever being 0.. no.

 

VF you must have a number or ratio or something in your head concerning when too much deficit becomes detrimental...... Can you share your thought on that?

 

Thanks....... for real.

Jul 5, 2012 10:04AM
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Once again the number was revised upward.   Last weeks headline should have read first time claims rise slightly.  Instead of first time claims drop slightly.  Now they want us to believe the 14K number is good?   This is now 57 weeks in a row where the number has been revised upwards.  I am betting next weeks number will be above 388K and not come in at 372K...   Any takers?

And I bet this weeks number will be revised upward quietly next week as well...


Jul 5, 2012 1:37PM
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CL says -
The  vote is in,By a margin of 6-3 People believe you are under medicated.
 
Don't worry LOE...... so you won't be out too much money on the meds use
www..... dot........ mayberatpoison.......... dot.......... commie

Jul 5, 2012 11:50AM
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Gigantathon...   I believe the retirement age should remain the same...  a 67 year old cannot do the same work someone 45 can.   What needs to be done is the tax supporting Social Security and Medicare must be raised to cover the life expectancy and costs for these programs.  Social security taxes must also be raised every year to account for COLA's.

Common sense tells us this...  Obama guts the taxes that support these programs, when he should be raising them, idiotic...


Jul 5, 2012 10:53AM
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With our deficit I think we need to be talking about raising taxes. I think it could be done if the Federal Government would spend the money responsibly......... that is the challenge. I believe it was MG that suggested raise taxes but all the additional tax revenue MUST got towards paying down the deficit and they MUST pass a balance budget requirement. This would make sense because we can not agree on the quality of the expenditures the Federal Government is making now.
Jul 5, 2012 12:01PM
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Mirage,didn't really want to go an extra two years,but I will if it gets our deficits down for our children and grandchildren.

Jul 5, 2012 10:15AM
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now filling out 401K mutual funds...  going with the conservative 3% interest rate with some of the cash, then semi-agressive with several mutual funds.  don't need THIS money for 20 years i'm guessing. 
Jul 5, 2012 9:39AM
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On a positive note I paid $3.06 for gas today.....
Jul 5, 2012 12:22PM
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Guess I should shake the tree and see if Fatty Cakes wants to come out and play on us, with a few words of wisdom...

Actually me and my BB gun can get him out of the tree with one shot......

 

We "don't need no stinkin firemen....."

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