NEW YORK (CNNMoney) -- U.S. stocks were headed for a lower open Wednesday, as investors digested another interest rate hike in China, and remained on edge ahead of key jobs data due later in the week.
Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were down prior to the opening bell. Futures measure current index values against perceived future performance.
China's central bank lifted interest rates Wednesday for the fifth time since October in an effort to combat inflation. The People's Bank of China said Tuesday that it will raise its one-year lending rate by a quarter percentage point to 6.56%.
China's incremental tightening has sparked fears that the government could squelch growth too much, causing the economy to crash land.
"Once again, the concern is that China is walking a delicate balance between attempting to control inflation and threatening their expansion, which would have blowback consequences on the global economy," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
He said China's move to boost rates Wednesday was especially unexpected, following Premier Wen Jiabao's op-ed piece last month in the Financial Times that said the country's efforts to stem inflation have worked.
"The markets were encouraged after the premier said China was in the later stages of tightening, and that the economy would continue to grow fast. Yet another rate hike is a bit surprising," Luschini said.
He added that investors will also remain cautious head of the U.S. government's release of the June jobs report on Friday.
Economists surveyed by CNNMoney are expecting the report to show 120,000 jobs added to payrolls. Typically, the economy needs to add about 150,000 just to keep pace with population growth.
U.S. stocks ended little changed Tuesday, as investors took a step back after last week's stellar gains and remain wary about Europe's financial future. The Dow and S&P snapped a five-day winning streak.
Moody's Investors Service downgraded the government debt of Portugal on Tuesday, saying it's another European nation that could require a bailout.
Economy: The number of planned job cuts rose 11.6% in June to 41,432 from May's 37,135, according to outplacement consulting firm Challenger, Gray & Christmas.
The Institute for Supply Management will put out its June services index after trading begins. Economists are looking for the ISM services index to fall to 54, from 54.6 in May -- a level which would still indicate expansion in the sector.
World markets: The Chinese rate hike and uncertainty over Europe's debt problems prompted weakness in global markets.
European stocks were lower in afternoon trading. Britain's FTSE 100 slipped 0.6%, France's CAC 40 shed 0.6%, and the DAX in Germany fell 0.3%.
Asian markets ended mixed. The Shanghai Composite fell 0.2% and the Hang Seng in Hong Kong dropped 1%. Japan's Nikkei gained 1.1% -- ending at its highest level since March 11, when the country was struck with a devastating earthquake.
Currencies and commodities: The dollar rose against the euro and the British pound, and was flat versus Japanese yen.
Oil for August delivery slipped 75 cents to $96.13 a barrel.
Gold futures for August delivery dropped $1.60 to $1,511.10 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 3.1% from 3.14% late Tuesday.
Index | Last | Change | % Change |
---|---|---|---|
Dow | 32,627.97 | -234.33 | -0.71% |
Nasdaq | 13,215.24 | 99.07 | 0.76% |
S&P 500 | 3,913.10 | -2.36 | -0.06% |
Treasuries | 1.73 | 0.00 | 0.12% |
Company | Price | Change | % Change |
---|---|---|---|
Ford Motor Co | 8.29 | 0.05 | 0.61% |
Advanced Micro Devic... | 54.59 | 0.70 | 1.30% |
Cisco Systems Inc | 47.49 | -2.44 | -4.89% |
General Electric Co | 13.00 | -0.16 | -1.22% |
Kraft Heinz Co | 27.84 | -2.20 | -7.32% |
Overnight Avg Rate | Latest | Change | Last Week |
---|---|---|---|
30 yr fixed | 3.80% | 3.88% | |
15 yr fixed | 3.20% | 3.23% | |
5/1 ARM | 3.84% | 3.88% | |
30 yr refi | 3.82% | 3.93% | |
15 yr refi | 3.20% | 3.23% |
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