- Pre-Market Indications

Thursday, January 7, 2010

Indications: U.S. stock futures remain off after jobless data

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By Barbara Kollmeyer & Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures on Thursday retained modest losses in offering only limited reaction to slightly better-than-anticipated weekly jobless claims data and December sales results from a slew of retailers.

Futures for the Dow Jones Industrial Average fell 24 points to 10,492, while those for the Nasdaq 100 fell 2 points to 1,876.5. Futures for the S&P 500 dropped 2.4 points to 1,130.60.

The Labor Department reported initial claims for state unemployment benefits last week rose 1,000 to 434,000, less than expected. The report comes ahead of Friday's key nonfarm payrolls and unemployment data for December.

"While the firing trends remain subdued, more people are still claiming benefits because they haven't found new jobs yet," said Peter Bookvar, equity strategist at Miller Tabak.

The ADP employment report released Wednesday revealed a loss of 84,000 jobs in the private sector in December, the 23rd decline in a row, but the fewest jobs lost since March 2008.


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Economists surveyed by MarketWatch are looking for the government report to say payrolls rose 15,000, the first gain in two years.

Analysts are expecting last-minute shopping and post-holiday bargain hunting will result in positive surprises for U.S. retailers on Thursday. A clutch of retailers released December same-store results ahead of the market open. Among those, Target Corp. /quotes/comstock/13*!tgt/quotes/nls/tgt (TGT 49.66, +0.93, +1.91%) said December sales at same-stores open at least a year rose 1.8%, better than the 0.2% fall expected by analysts. Costco Wholesale /quotes/comstock/15*!cost/quotes/nls/cost (COST 60.00, +0.77, +1.30%) , said December same-store sales rose 9%; Limited Brands /quotes/comstock/13*!ltd/quotes/nls/ltd (LTD 19.07, +0.39, +2.09%) , said sales fell 2%; Pier 1 Imports /quotes/comstock/13*!pir/quotes/nls/pir (PIR 5.48, -0.07, -1.26%) said sales rose 8.6% and Stage Stores /quotes/comstock/13*!ssi/quotes/nls/ssi (SSI 12.26, -0.17, -1.37%) said sales fell 2.2%.

"Bargain-hungry consumers that had postponed shopping [hoping] for deals returned to the stores" and also surfaced online, said Morgan Stanley analyst Michelle Clark. They "realized the widespread discounting that characterized 2008 holiday was not to be in 2009. Waiting was no longer an option."

Staying on the retail theme, shares of Bed Bath & Beyond /quotes/comstock/15*!bbby/quotes/nls/bbby (BBBY 39.23, +0.56, +1.45%) were up 8.3% in preopen. The company said late Wednesday that profit for the fiscal third quarter jumped 71%, with earnings handily beating estimates.

Shares of Lennar Corp. /quotes/comstock/13*!len/quotes/nls/len (LEN 13.70, +0.15, +1.11%) were up 7.2% in preopen. The builder said it swung to a fiscal fourth-quarter profit of $35.6 million from a loss of $811 million in the prior-year quarter.

Shares of Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 16.39, +0.19, +1.17%) rose 1.8% in preopen trade after it was lifted to outperform from neutral by Credit Suisse which said current risk/reward is attractive, as it's the cheapest large-cap bank.

Alcoa /quotes/comstock/13*!aa/quotes/nls/aa (AA 16.97, +0.84, +5.21%) however fell 1.9% after it was cut to hold from buy at Citi which kept its $17 a share target on the aluminum producer.

In Europe, telecommunications and firms and German retailers were dragging Europe stocks lower in midday trade. Meanwhile, the Bank of England kept interest rates at historically low levels and didn't adjust its bond-buying program at its meeting Thursday.

Asia markets fell, with China's Shanghai Composite finishing down nearly 2% after the People's Bank of China made a move that raised fears interest rate rises could come sooner than expected.

The dollar rose 0.8% against the yen to 93.07 yen, lifted by comments from Japan's newly appointed top finance minister, Naoto Kan, aimed at talking down the Japanese currency. The dollar was also higher against then euro and the British pound.

Commodities futures were mostly lower, with crude oil futures down 45 cents to $82.73 a barrel, while gold was down $4.9 to $1,131.60 an ounce.

U.S. stocks nearly stalled at the finish on Wednesday after minutes from the Federal Reserve's last policy-setting meeting pointed to continuing concern about the housing market. The Fed minutes also indicated that recent signs of an improving economy haven't swayed member opinion that recovery will be gradual and inflation will remain tame.

The Dow Jones Industrial Average gained 1.66 points, while the S&P 500 added less than a point, while the Nasdaq Composite fell 7.62 points.

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Kate Gibson is a reporter for MarketWatch, based in New York.

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