NEW YORK (MarketWatch) -- U.S. stock futures mostly erased earlier gains Thursday as an unexpected spike in weekly jobless claims overshadowed Intel Corp.'s $7.7 billion deal for security-software McAfee Inc.
Stock index futures had tallied modest gains before the Labor Department reported that initial claims for unemployment benefits rose 12,000 to 500,000 last week. The third consecutive weekly climb pushed claims to their highest level since late 2009. Read more about jobless-claims data.
"The labor market still remains lame as we move through another jobless recovery," noted Peter Boockvar, equity strategist at Miller Tabak & Co., in a note.
Up 50 points before the report, futures on the Dow Jones Industrial Average were lately off 1 point to 10,351. S&P 500 futures fell fractionally to 1,086.5.
Nasdaq 100 futures retained a small gain, up 3.50 points to 1,840.25.
Helping temper the bearish data was the acquisition of McAfee announced by chip giant Intel, a component of the Dow industrials. Read about Intel's deal for McAfee.
Overseas, Germany's Bundesbank lifted its domestic gross-domestic-product growth forecast for the year and said it saw little chance of a double-dip recession in the U.S.TODAY'S TOP MARKET STORIES
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GDP will increase by about 3% in 2010, the Bundesbank said in its monthly bulletin. In June, it predicted a 1.9% increase. Read about Germany's economy.
"The major drive this morning is definitely the Bundesbank raising their GDP forecast. It's the kind of news that the market has been looking for, for a long time," said Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank.
U.S. stocks closed modestly higher Wednesday, helped by optimism in the retail sector after Target Corp. /quotes/comstock/13*!tgt/quotes/nls/tgt (TGT 51.93, -0.02, -0.04%) hinted it could meet Wall Street's expectations for the rest of the year.
Just before the close, General Motors Co. filed for its long-awaited initial public offering. See story on GM's filing
The retail sector will be in the spotlight again Thursday.
Sears Holdings Corp. /quotes/comstock/15*!shld/quotes/nls/shld (SHLD 61.90, -5.35, -7.96%) said its second-quarter loss shrank to 35 cents a share from 79 cents a share in the year-earlier quarter. Its adjusted loss of 19 cents a share was a touch worse than the 17 cents analysts had expected.
Staples Inc. /quotes/comstock/15*!spls/quotes/nls/spls (SPLS 18.99, -0.66, -3.36%) reported earnings of 18 cents a share, but warned a change in tax rate would cut 2010 earnings by around 6 cents a share.
Gap Inc. /quotes/comstock/13*!gps/quotes/nls/gps (GPS 17.72, -0.26, -1.43%) and Foot Locker Inc. /quotes/comstock/13*!fl/quotes/nls/fl (FL 12.90, -0.24, -1.83%) are also due to release results later in the day.
Investors are also awaiting some key earnings reports in the technology sector from Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 12.04, -0.16, -1.27%) and Hewlett-Packard Co. /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 40.56, -0.80, -1.93%) .Powered By iWebRSS.com