NEW YORK - U.S. stock index futures pointed to a nearly 1 percent drop at the open on Friday as U.S. unemployment reached a more than 26-year high and topped the psychologically important 10 percent level. U.S. employers cut a deeper-than-expected 190,000 jobs in October, the government said, and the unemployment rate rose more than forecast to 10.2 percent, the highest since April 1983.
“The headline number looks pretty good, relatively, but the 10.2 percent unemployment will be a shock for the market to digest,” said Dan Cook, senior market analyst at IG Markets in Chicago.
Cook said 10 percent is mostly a psychological barrier, but “no recovery is possible until we get jobs back.”
“I think it will lead to some selling pressure. However, the initial reaction will be a selloff, Then by the end of the day we’ll see little change,” he said.
S&P 500 futures fell 7.5 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 tumbled 71 points and Nasdaq 100 futures lost 10.50 points.
Shares of bailed-out insurer American International Group Inc dropped 10 percent to $35.40 in early trading after it said its main insurance business remained weak, even as it posted a second straight quarterly profit.
Shares of General Electric Co and online retailer Amazon.com Inc both rose premarket trading after Bernstein upgraded both the stocks.
