Futures Pressured by High Oil Prices

Stock index futures fell before the open Tuesday as the market struggled to move past recent highs.

On Monday, the market eked out modest gains, although the Dow hit its highest level since June 2008. The Nasdaq, however, fell slightly.

One concern for investors are persistently high oil prices. London Brent crude rose to near 2 1/2-year highs, with continuing violence in the Middle East and North Africa supporting prices, while U.S. light crude traded above $108 a barrel.

In Europe, Moody's Investor's Service downgraded Portugal'ssovereign debt by one notch, reigniting fears that the country will need to seek a bailout.

Concerns over global growth were also fueled by a survey published in the Nikkei business newspaper which showed economists expect the Japanese economy to contract by 0.6 percent for the January-March quarter and by 2.6 percent in the three months to the end of June.

They expect growth quarter in the world’s third-largest economy to return in the July to September, the survey found.

Also, investors were digesting comments made by Federal Reserve President Ben Bernanke Monday evening which suggested the Fed is not yet ready to start tightening monetary policy despite an improving economy.

Bernanke said a recent rise in prices was driven by a spike in global commodity prices and was unlikely to persist.

The Fed releases the minutes of the latest Federal Reserve Open Market Committee meeting at 2 p.m. The report could offer further clues on whether the Fed is likely to raise rates in the near term.

Portfolio managers may need to reconfigure their holdings Tuesday after news the Nasdaq OMX will rebalance the Nasdaq-100 stock indexon May 2, bringing the weighting of Apple down from about 20 percent to 12 percent.

Apple shares slumped more than 1 percent in pre-market trading, after dropping more than 3 percent earlier. The index is widely followed by hundreds of funds, including PowerShares QQQ exchange-traded fund.

Also, traders will be reacting to news that struck a $6.5 billion deal to buy . National Semiconductor shares soared 73.4 percent in pre-market trade Tuesday, and shares of rival semiconductors rose as well.

KB Home sank more than 9 percent after the homebuilder posted a wider quarter loss than expected as housing revenue sank 25 percent, and orders fell 32 percent.

The March ISM Non-Manufacturing Index is due at 10 a.m. Economists surveyed by Reuters fell to 59.5 in March from 59.7 in February.

On Tap This Week:

TUESDAY: ISM non-manufacturing index, FOMC Minutes; Lockhart speaks, Kocherlakota speaks, Plosser speaks; earnings from KB Home before-the-bell.
WEDNESDAY: Weekly mortgage applications oil inventories, Treasury STRIPS; Earnings from Monsanto before-the-bell and Bed Bath & Beyond after-the-bell.
THURSDAY: Monthly chain-store sales, Bank of England Announcement, European Central Bank announcement, jobless claims, consumer credit, money supply; Lacker speaks; earnings from Constellation Brands before-the-bell and Rite Aid after-the-bell.
FRIDAY: Wholesale trade.

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