Stock futures point to higher open to start week
NEW YORK – Stock futures rose Tuesday as investors try to recover some of the big losses that piled up in recent weeks following a string of disappointing economic reports.
The jump in futures comes ahead of a report that is expected to show the service sector expanded last month, but not quite as fast as in May. The services industry accounts for 80 percent of all employment, so growth in the sector could help assuage worries about high unemployment following Friday's disappointing government employment report.
Economic reports have routinely fallen short of economists' forecasts in recent months. That has investors worried that the growth is not coming as quickly as expected and any expansion will be slow for a prolonged period.
Investors will closely be watching the Institute for Supply Management's service-sector index report for any signs of improvement. Economists polled by Thomson Reuters expect the index likely dipped to 55 in June from 55.4 a month earlier. Any reading above 50 indicates the sector is growing. The report is due out at 10 a.m. EDT.
A better-than-expected report could provide investors with hope that private employers will start to increase the pace of hiring in the coming months, which would boost consumer confidence and likely spending as well. Consumer spending is the biggest driver of economic activity. Retailers report their monthly sales figures Thursday.
Overseas markets all rose as investors found stock prices more reasonable after the recent sell-off and Australia's central bank provided a positive forecast for the country's economy.
Ahead of the opening bell, Dow Jones industrial average futures rose 90, or 0.9 percent, to 9,686. Standard & Poor's 500 index futures rose 10.50, or 1 percent, to 1,024.80, while Nasdaq 100 index futures jumped 25.25, or 1.5 percent, to 1,746.50.
The Dow is looking to recover after being pummeled for the past two weeks. It dropped 7.3 percent over that period, pushing it to its lowest closing level since early October.
Stocks retreated Friday, the last trading day before the Independence Day holiday following a report that showed employers did not ramp up hiring as much as economists had forecast. It was the second straight month hiring by private employers failed to meet expectations.
Meanwhile, bond prices traded in a narrow range Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 2.97 percent from 2.98 percent late Friday.
Overseas, markets all rose as investors see prices at bargain levels after dropping sharply in recent weeks. An upbeat assessment of Australia's economy by its central bank helped boost shares. Australia's economy is heavily reliant on China importing raw materials from the country, so strength in Australia means China is likely to continue to grow.
Britain's FTSE 100 rose 2.2 percent, Germany's DAX index gained 2.2 percent, and France's CAC-40 jumped 2.8 percent. Japan's Nikkei stock average rose 0.8 percent.