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US STOCKS-Futures point to lower open after weak payrolls data

Published 07/02/2009, 09:08 AM
Updated 07/02/2009, 09:17 AM
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* June payrolls data worse than expected

* Commodities ease as U.S. dollar rises

* Light volumes expected ahead of three-day weekend

* Futures off: S&P 13.1 pts, Dow 107 pts, Nasdaq 11.25 pts

(Updates to early morning)

By Edward Krudy

NEW YORK, July 2 (Reuters) - U.S. stock index futures pointed to a sharply lower open on Thursday after payrolls data showed more Americans than expected lost their jobs in June, dampening hopes that the economy may be heading out of recession quickly.

U.S. employers cut 467,000 jobs in June, far more than the 363,000 forecast by a Reuters survey, while the unemployment rate rose to 9.5 percent, the government said on Thursday in a report that showed a labor market continuing to struggle.

"Unemployment to me is a telling indicator, it tells me the economy is still in shambles," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "So people have to come back down to earth and realize where we are."

Thursday is the last trading day of the week as U.S. markets shut down for the Independence Day holiday. Analysts say lower holiday volumes could lead to increased volatility.

Commodity prices eased, with crude oil falling more than 2 percent to under $68 a barrel, threatening to dent shares in energy companies. Crude prices fell in the previous session when data showed a bigger-than-expected rise in U.S. gasoline stocks, which dampened hopes of demand-led recovery.

Crude prices were helped lower by a stronger U.S. dollar, which moved 0.6 percent higher against a basket of major currencies after hitting a three-week low on Wednesday. The dollar has been volatile in recent weeks, in part because of a continued debate over its position as a global reserve currency.

S&P 500 futures fell 13.10 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 fell 107 points, and Nasdaq 100 futures lost 11.25 points.

In merger news, U.S. healthcare company Johnson & Johnson said it would buy substantially all of the assets and rights of Elan Corp plc related to the Irish company's Alzheimer's program.

J&J said it would invest $1 billion in Elan in return for newly issued American depositary receipts, sending Elan's U.S traded shares up 20 percent before the bell. J&J's shares fell 0.6 percent.

Exelon Corp raised its hostile takeover bid for independent power producer NRG Energy Inc to $7.45 billion, citing newly identified cost savings and NRG's recent acquisition of Reliant Energy's retail business. NRG's shares fell 0.8 percent to $26.61 before the bell.

The S&P 500 rose 15.2 percent in the second quarter, its best quarterly performance in a decade, after rallying as much as 40 percent since a 12-year closing low on March 9.

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