Futures Fall After Jobless Claims, Inflation News

U.S. stock index futures slumped after the government reported jobless claims rose to 462,000 last week, while the Producer Price Index rose 0.4 percent.

Earlier, futures had been higher as global commodities and commodity-related stocks rose, helped by another decline in the dollar.

Weekly jobless claims rose13,000 for the week ending Oct. 9 to 462,000, according to the U.S. Department of Labor. Analysts had expected a rise of only 5,000 claims, according to Briefing.com. Continuing claims fell to 4.4 million from 4.5 million.

The overall producer price index rose 0.4 percent in September, while core PPI, which excludes volatile food and energy prices, rose 0.1 percent. The rise was more than expected by economists polled by Reuters, who expected overall prices to rise 0.2 percent.

Also reported was the August trade deficit, which widened significantly to $46.35 billion, up from 42.58 billion in July.

"Today is a snapshot of what we should be concerned about," said Lawrence Creatura, a portfolio manager at Federated Investors.

"We’re getting moves in pricing without any signs of a parallel move in wages, our employment market is just stuck," Creatura said. "That doesn’t necessarily imply good things for future standards of living, or the future purchasing power of consumers."

European shares made modest gains with mining stocks leading the advance. Asian stocks were mostly higher, but India gave back some of its gains from the previous session.

The dollar index hit a low for the year, pushed down by Singapore widening its trading band. The greenback was also close to parity with the Australian dollar and the euro crossed 1.40 against the U.S. currency, where it has not been since Jan. 28

Volatility has all but evaporated from the market. The CBOE Volatility Index has traded below 20 all week for the first time since April.

Private equity firms have approached News Corp , AOL and other media companies to gauge interest in buying out Yahoo, according to various media reports. Yahoo shares jumped 14 percent in premarket trading.

Most attention will be on tech earnings after the bell, with Advanced Micro Devices and Google reporting their latest numbers. American Apparel and Safeway will be among the companies releasing results ahead of trading.

Looking to Federal Reserve, Minneapolis Fed President Narayana Kocherlakota will discuss the tools the Federal Open Market Committee has at its disposal, during a speech in Bloomington, Minnesota at 5 p.m.

On Wednesday, Richmond Fed President Jeffrey Lacker said he wouldn't support further monetary easing.

The Energy Information Administration will release its weekly report on oil and gasoline inventories at 11 a.m. The report was delayed a day because of the Columbus Day holiday.

Coming Up This Week:

THURSDAY:Oil inventories; 30-year bond auction; Minnesota Fed Pres Kocherlakota speaks; OPEC meeting; Earnings from Google and AMD
FRIDAY: Atlanta Fed Pres Lockhart speaks; Bernanke speaks; CPI; retail sales; Empire State mfg survey; consumer sentiment; credit card default rates reported; Earnings from GE and Mattel

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