Stocks slip as investors await signs on economy

NEW YORK -- Stock futures were trading slightly lower Friday morning, pointing to a modest decline at the market opening as investors weigh recent signs of economic recovery and potential concern about inflation.

Investors get a new reading on consumer sentiment Friday morning. Growing consumer confidence is important to a recovery because their spending accounts for more than two-thirds of economic activity.

Overseas stock trading offered mixed signals, as European stocks were modestly lower at midday while Asian markets finished higher.

On Thursday, investors welcomed a better-than-expected report on jobless claims and data showing growth in retail sales. Strong results from a 30-year Treasury bond auction also supported the market, after weak Treasury sales earlier in the week stoked fears of rising interest rates and inflation.

Stocks closed modestly higher Thursday, an indication the market's three-month rally is slowing. The S&P has gained 39.7% and the Dow has jumped 34% since the market bottomed in early March.

Joe Clark, managing partner of Financial Enhancement Group, said the market is like a sponge. During the recent run-up in prices, investors absorbed all the good news they could take in to push stocks higher. Eventually the sponge becomes saturated and can't absorb any more information, he said.

"The sponge seems to be full," Clark said. He added that the same situation occurred with the absorption of bad news earlier in the year, leading to the market bottoming in early March.

The stock market showed little movement earlier in the week as investors are concerned that rising interest rates and weakening demand for government debt could derail a potential recovery in the economy. If Washington has to raise rates to attract buyers, that could hurt the economy by boosting borrowing costs for consumers.

A rally this week in commodity prices helped underpin stock prices, but some investors say much higher prices could hurt an economic recovery by increasing costs to consumers and businesses.