U.S. Stocks To Open Mixed As Yields Fall

NEW YORK (MarketWatch) -- U.S. stocks were set for a mixed open on Thursday, as investors remain concerned about bond yields, which yesterday led the Dow Jones Industrial Average to stumble nearly 150 points.

Futures for the Dow Jones Industrial Average rose 0.5 points to 13,616, while those for the S&P 500 index gained 0.50 points to 1,527.

Nasdaq 100 futures lost 3.25 points to 1,944.

Yields back in focus

News that U.S. jobless claims reached their highest level since April, rising 10,000 to 324,000 in line with expectations, did little to move the bond market, which has been the focus of investor attention in recent weeks.

The benchmark 10-year Treasury bond was last up 3/32 at 95 4/32, sending its yield down to 5.13%.

That helped ease pressure on stocks in pre-opening action, after the market tumbled when yields rose on Wednesday.

Investors are focusing more and more on possible inflationary pressures coming from the labor market, which might prevent the Federal Reserve from cutting interest rates this year and, according to some, might lead the Fed to raise rates.

Bonds, which lose value when inflation rises, have been under pressure for several weeks amid signs of rising inflation globally. U.S. bond yields, which move inversely to price, have topped 5%, offering a risk-free alternative to stocks and lifting borrowing costs for consumers and businesses.

Phily Fed

The market will next focus on the release of the Philadelphia Federal Reserve's June index of regional business activity, which is expected to rise to a reading of 8.0 from 4.2 in May.

"I suspect that today's Philly Fed expectations are too low, in light of what we saw from the Empire State Index," said Marc Pado, market strategist at Cantor Fitzgerald.

Should the Phily Fed index top expectations, yields may rise and pressure the stock market further.

Stock movers

Of companies in focus, the board of Dow Jones said it was taking over negotiations with News Corp over a proposed $5 billion buyout from the Bancroft family that holds a controlling stake in the publisher of The Wall Street Journal. Separately, MySpace founder Brad Greenspan said he's willing to pay $1.25 billion for 25% of Dow Jones shares in a tender offer, with Greenspan saying he could boost traffic to Dow Jones Internet properties. Dow Jones is the owner of MarketWatch, the publisher of this report.

Luxottica agreed to buy Oakley for $2.1 billion, or $29.30 a share, an 18% premium to Wednesday's close.

H&R Block reported a loss and forecast current year earnings per share to be below analyst expectations.

Handset maker Nokia fell 1.3% in pre-open trade after it was downgraded to neutral from buy at Goldman Sachs, citing a more balanced risk/reward following a recent strong run.

By Nick Godt