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US STOCKS-Index futures flat as investors cautious

Published 11/10/2010, 07:40 AM
Updated 11/10/2010, 07:44 AM

* Weekly jobless claims on tap due to Thursday holiday

* Futures: S&P off 0.3 pt, Dow up 4, Nasdaq off 0.25 pt

By Edward Krudy

NEW YORK, Nov 10 (Reuters) - U.S. stock index futures were little changed on Wednesday as investors chewed over the Federal Reserve's asset purchases and European sovereign debt worries, while a stronger dollar and firmer commodity prices weighed on world markets.

* 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 left trying to assess the wider impact of the so-called quantitative easing, while revisiting old 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 game."

* "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 imports 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.

* The dollar rose 0.5 percent against a basket of major currencies to hit its highest levels since late October as the euro extended losses over worries about euro zone sovereign debt.

* S&P 500 futures declined 0.3 point and 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 rose 4 points, and Nasdaq 100 futures dipped 0.25 point.

* 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. inventories.

* 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 previous week, economists predicted.

* The U.S. stock markets are open on Thursday.

* 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.

* In a letter obtained by Reuters, U.S. President Barack Obama told the G20 summit in Seoul that a strong economy is the most important contribution the United States can make to the global recovery. Leaders at the summit are struggling to cool global currency tensions.

* On the earnings front, Cisco Systems Inc, Macy's Inc and Polo Ralph Lauren Corp are due to report quarterly results.

* Wall Street fell for a second day on Tuesday as selling accelerated into the close, led by sharp losses in bank and metal stocks.

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