* Weekly jobless claims on tap due to Thursday holiday
* Futures off: S&P 2.1 pts, Dow 13 pts, Nasdaq 2.75 pts
* For up-to-the-minute market news see [STXNEWS/US]
(Updates market activity)
By Edward Krudy
NEW YORK, Nov 10 Concerns over the effects of
the U.S. Federal Reserve's asset purchases and European
sovereign debt kept the lid on stock index futures on
Wednesday, while a stronger dollar and weaker commodity prices
weighed on global equities.
Gold and silver exchange-traded funds gained in premarket
action as cautious investors were attracted to perceived
safe-haven precious metals. The silver ETF (SLV) rose 3.6
percent to $27.10 while the gold ETF (GLD) gained 0.6 percent
Equities have stalled this week after a two-month run-up in
stock prices before the Fed's decision to purchase $600 billion
in Treasury debt in a bid to spur a sluggish economy. Since the
end of August the S&P 500 has advanced 16 percent.
With the Fed's move and midterm elections in the rearview
mirror, investors have been trying to assess the wider impact
of the so-called quantitative easing, while revisiting concerns
about European debt and the economy.
Rick Meckler, president of investment firm LibertyView
Capital Management in New York, said investors were struggling
to understand the Fed's action and even seeing it as a "shell
"You have a government that is deeply in debt, using a
governmental arm to buy back debt in the marketplace," he said.
"It's something that is not easily understood by investors,
particularly international investors."
European stocks fell slightly in morning trade, tracking
losses in commodity prices that were sparked by weak Chinese
import data and strength in the U.S. dollar. The combination
has been a strong headwind for U.S. stocks in the absence of
other catalysts. For details, see [ID:nTOE6A903Y]
The dollar rose 0.4 percent against a basket of major
currencies .DXY to hit its highest levels since late October
as the euro extended losses over worries about euro zone
sovereign debt. In the latest developments, Ireland's central
bank said it would take a closer look at banks' residential
S&P 500 futures SPc1 declined 2.1 points and were below
fair value, a formula that evaluates pricing by taking into
account interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures DJc1 fell 13
points, and Nasdaq 100 futures NDc1 dipped 2.75 points.
The S&P 500 is at overbought levels. Its relative strength
index (RSI) is at over 80, the upper end of the scale. The
index is also running into resistance at around 1,228, the
closely followed Fibonacci 61.8 percent retracement of the
decline between highs in 2007 and a 12-year low in March 2009.
Oil fell for a second day in a row as a result of a dollar
rally, reining in the bullish effect of a surprise drop in U.S.
Weekly jobless claims were due Wednesday morning, coming a
day early because of the U.S. Veterans Day holiday. Initial
jobless claims are expected to have fallen to 450,000 in the
latest week, economists predicted.
China's central bank also rattled investors by ordering
banks to boost reserve requirements by 0.5 of a percentage
point in an apparent move to curb rapid credit growth, three
sources told Reuters. [ID:nSGE6A9091]
(Reporting by Edward Krudy; editing by Jeffrey Benkoe)