Retreating commodity prices set to hit Wall Street
Wall Street was set to open lower on Friday as commodity prices fell and investors looked ahead to key consumer confidence data for insight into the prospects for the recession easing.
U.S. crude oil futures dropped nearly 2 percent, helped by a stronger U.S. dollar, after a three-day rally lifted the price over $72 per barrel. Gold hit a 3-week low as the dollar rose almost 1 percent against a basket of currencies <.DXY>.
Shares in natural resource companies headed lower, with Freeport-McMoRan Copper & Gold Inc
A rally this week in commodity prices helped underpin stock prices, but investors said much higher prices could hurt an economic recovery by increasing costs for consumers and businesses.
There is no doubt that the rally has coincided with weakness in the dollar and a rise in commodity prices, and today we're seeing a rally in the dollar and weakness in commodity prices, said Peter Boockvar, an equity strategist at Miller Tabak & Co.
The rally started with a resurgence in the financial sector back in March, then that baton was handed to the reflation trade over the last couple of months, and that's taking a breather this morning.
S&P 500 futures fell 3.70 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones Industrial Average futures dropped 20 points, while Nasdaq 100 futures were off 6 points.
The Reuters/University of Michigan index of consumer sentiment, due at 9:55 a.m. EDT, will be closely watched as consumers account for two-thirds of economic activity.
Banc of America-Merrill Lynch cut its earnings estimates for several big banks, including Goldman Sachs Group Inc
U.S. stocks racked up gains across a wide array of sectors on Thursday, aided by rising commodity prices and jobless data that showed improving labor market conditions.
(Writing by Edward Krudy; editing by Jeffrey Benkoe)
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