US stock futures extend early losses after trade deficit narrows; overseas trading mixed

US stock futures lower after trade report

NEW YORK — U.S. stock futures are extending early losses after data showing the U.S. trade deficit unexpectedly narrowed.

The Commerce Department says the trade deficit declined 3.5 percent to $30.7 billion in August, as imports fell on lower oil demand. Economists had been expecting the deficit to rise.

Stock futures had been falling ahead of the report amid mixed trading overseas and a strengthening dollar.

Ahead of the market’s open, Dow Jones industrial average futures are down 32 at 9,715. Standard & Poor’s 500 index futures are down 4 at 1,059, while Nasdaq 100 index futures are down 8 at 1,708.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — U.S. stock futures are little changed Friday at the end of a strong week for the market as the dollar edged up against other currencies.

Overseas markets were mixed. Asian markets rallied, led by a big gain in Chinese stocks. China had been on a weeklong holiday during which global stocks surged and traders sent shares higher in that market as they tried to catch up. But major indexes in Europe fell in morning trading there.

Investors are keeping a close watch on the U.S. dollar, which recovered some of its recent losses after Federal Reserve Chairman Ben Bernanke reassured markets that the U.S. central bank will be able to rein in its extraordinary stimulus measures when the time is right. The comments Thursday night calmed some of investors’ fears about inflation, which can be triggered by a falling dollar.

The market is also awaiting data on the U.S. trade deficit, which is expected to have widened in August. Economists surveyed by Thomson Reuters expect the deficit rose to $33 billion, a 3.3 percent increase from the July level, which was the highest in six months.

Economists saw the increase in the July deficit as a sign the recession was easing. The Commerce Department is scheduled to release the August report at 8:30 a.m. Eastern time.

The stock market’s seven-month rally was put firmly back on track this week, with the major indexes headed for their best weekly gain since early July after two losing weeks. Investors have cheered more signs the economy is healing, including growth in the service sector, a surprisingly good profit report from aluminum maker Alcoa Inc. and the first gain in retail sales in over a year.

But there are still concerns about how the rest of earnings season will go, as well as how movements in the dollar and commodities could impact the market.

Ahead of the market’s open, Dow Jones industrial average futures fell 6, or 0.1 percent, to 9,741. Standard & Poor’s 500 index futures lost 1.00, or 0.1 percent, to 1,062.80, while Nasdaq 100 index futures fell 5.00, or 0.3 percent, to 1,711.50.

Overseas, Shanghai’s main index climbed 4.8 percent, while Japan’s Nikkei stock average rose 1.9 percent. In late morning trading, Britain’s FTSE 100 and Germany’s DAX index each lost 0.1 percent and France’s CAC-40 fell 0.2 percent.

The U.S. dollar index, which tracks the greenback against other currencies, edged up 0.2 percent in early trading.

Record low interest rates and massive government spending have weakened the dollar considerably this year, sending the U.S. dollar index down nearly 15 percent since early March when the stock market’s rally began.

The weak dollar has been a boon to stocks and commodities as investors go in search of higher yielding assets. The drop in the dollar also boosts corporate profits by making U.S. goods cheaper to overseas buyers.

Though the Fed has said it will keep interest rates low for some time, Bernanke’s comments raised expectations that the central bank may hike rates sooner than anticipated to support the dollar.

Australia surprised global markets earlier this week by becoming the first major economy to raise interest rates this year, a sign the country is more confident about its economic prospects. On Thursday, both the European Central Bank and the Bank of England left their interest rates unchanged.

Oil prices lost 30 cents to $71.39 a barrel in electronic trading on the New York Mercantile Exchange. Gold prices also slipped after touching a fresh high of $1,062.70 on Thursday.

Bond prices extended their losses from Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.28 percent from 3.25 percent late Thursday.