Stocks Face More Weakness

Bond yields and gold prices remain high, while oil eases.
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Updated from 7:01 a.m. EDT

Stocks were poised for another early swoon Friday amid stubborn dollar weakness, as investors' sudden sensitivity to rising energy and commodity prices kept buyers shackled.

Index futures recently showed the

S&P 500

trading 3.5 points below fair value, while the Nasdaq 100 was set for a 9-point decline. The yield on the 10-year Treasury bond held near a four-year high at 5.16%, while the dollar fell to an eight-month low against the yen and a year low against the euro.

Gold firmed, adding $8.50 to $730 an ounce, while oil, which is up 5% in three sessions, eased, losing 57 cents to $72.75 a barrel in electronic Nymex trading.

The dollar could face further pressure if data on the U.S. trade deficit comes in worse than expected. On average, economists expect the 8:30 a.m. EDT report to show the trade gap widened to $67.5 billion in March, compared with $65.7 billion in February.

U.S. markets had their worst day in four months Thursday, as rallies in gold and energy markets convinced traders the

Federal Reserve

has more work to do in reining in prices. On Wednesday, the Fed said "some further policy firming may yet be needed" in coming months to address inflation.

For Thursday's session, the

Dow

plunged 142 points, or 1.2%, to 11,500, while the S&P 500 fell 17 points, or 1.3%, to 1306. The Dow, which had been threatening an all-time high on Tuesday and Wednesday, moved more than 220 points below that mark, which was set in January 2000.

The

Nasdaq Composite

, stung by a 10% hammering in

JDSU

(JDSU)

, tumbled 48 points, or 2.1%, to 2273.

The weakness lingered into overseas sessions. London's FTSE was recently down 1.5% to 5951, while Germany's Xetra DAX fell 1.5% to 5962. In Asia, Japan's Nikkei also fell 1.5% overnight to 16,602, while Hong Kong's Hang Seng fell 1.4% to 16,902.

To view Ana Dane's video take on today's premarket action, click here

.

In corporate news,

Yahoo!

(YHOO)

CEO Terry Semel says his company

rebuffed an overture from

Microsoft

(MSFT) - Get Report

to buy a stake in the search firm. Semel says the prospect of an outright takeover of Yahoo! "never came up" in the companies' discussions.

Nvidia's

(NVDA) - Get Report

first-quarter earnings rose 41%, boosted by strong demand for its graphics chips in computers, televisions and game consoles. Adjusted earnings of 29 cents a share were a penny ahead of estimates.

Expedia

(EXPE) - Get Report

said first-quarter profits fell 51% to $23.3 million, or 6 cents a share, while adjusted net of 15 cents were 7 cents light. The company spent more to build growth but didn't collect enough offsetting revenue.

Kohl's

(KSS) - Get Report

reported a stronger-than-expected 34% rise in first-quarter earnings, to $167.2 million, or 48 cents a share. Sales at the department store operator rose 7% to $3.18 billion, also topping estimates. Kohl's guided its year in line.