NEW YORK (AP) — Stocks are headed for a moderate decline Friday, erasing some of the big gains of a day earlier when a government report showed the economy grew more than expected in the third quarter.
Overseas markets were mixed.
Investors welcomed the report that the economy grew at 3.5 percent in the third quarter, but much of that growth was driven by government stimulus programs. With those programs winding down, the economy might not be able to sustain such rapid improvement after the economy shrank for four straight quarters.
A Labor Department report Friday showed personal spending dipped 0.5 percent in September, in line with economists expectations. Spending had jumped 1.3 percent in August, fueled by the government’s Cash for Clunkers auto program.
The strength of consumers is considered vital to a recovery because their spending accounts for more than two-thirds of all U.S. economic activity. Without government incentives and stimulus programs, it is widely expected consumer spending will have to rise significantly to extend the economic recovery.
Personal income was flat in September compared with the previous month, also in line with economists’ average forecast, according to Thomson Reuters.
A lack of income growth is due, in part, to ongoing high unemployment rates. With jobs scarce, employers face little pressure to raise pay. The Labor Department said the cost of wages, health care and other benefits increased by 1.5 percent in the year ending Sept. 30. It was the smallest increase since records began in June 1982.
Ahead of the opening bell, Dow Jones industrial average futures fell 24, or 0.2 percent, to 9,879. Standard & Poor’s 500 index futures fell 3.20, or 0.3 percent, to 1,058.40, while Nasdaq 100 index futures declined 4.25, or 0.3 percent, to 1,703.25.
Stocks surged Thursday on the gross domestic product report, posting their best day in three months. The Dow rallied nearly 200 points, or 2.1 percent, after recording triple-digit losses in three of the four previous sessions.
The S&P; rallied 2.3 percent on Thursday, while the Nasdaq jumped 1.8 percent.
Meanwhile, bond prices mostly rose Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.45 percent from 3.50 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.06 percent from 0.05 percent.
The dollar mostly rose against other major currencies, while gold prices fell.
Overseas, Japan’s Nikkei stock average rose 1.5 percent. In afternoon trading, Britain’s FTSE 100 gained 0.2 percent, Germany’s DAX index fell 0.5 percent, and France’s CAC-40 declined 0.3 percent.
Business
<img src=" http://www.joplinglobeonline.com/images/zope/friday.gif" border=0> Stock futures point to modestly lower opening
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