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Thursday, September 23, 2010

Indications: U.S. stock futures fall as jobless claims rise

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By Polya Lesova and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures fell further Thursday after the government’s weekly data on jobless claims showed an increase in those applying for benefits.

The Labor Department reported the number of those filing new claims for unemployment benefits rose last week after two weekly declines, increasing 12,000 to 465,000. The four-week average dipped 3,250 to 463,250.

“The jobless-claims data is looking to dance once again with 500,000, and this has tremendous negative implications on the equity market,” Todd Schoenberger, managing director at LandColt Trading, wrote in a note.

“The returns we received so far this month may quickly evaporate by the weekend,” Schoenberger added, pointing to expectations of a weakening in final domestic growth figures for the second quarter, due next week.

Futures on the Dow Jones Industrial Average /quotes/comstock/19*!dy10z (DJZ10 10,674, -26.00, -0.24%)  dropped 81 points to 10,592, and S&P 500 futures /quotes/comstock/21m!f1:sp\z10 (SPZ10 1,130, +0.40, +0.04%)  slipped 10.30 points to 1,119.4.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\z10 (NDZ10 1,996, +16.50, +0.83%)  declined 14 points to 1,965.5.

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Wall Street finished lower Wednesday, with the blue-chip Dow index /quotes/comstock/10w!i:dji/delayed (DJIA 10,747, +7.61, +0.07%)  off 0.2%.

“The talk about quantitative-easing two is not really helping,” said Mike Lenhoff, chief strategist at Brewin Dolphin in London, referring to growing expectations that the Federal Reserve may implement further quantitative-easing measures. “What they [the Fed] are acknowledging is that there is a risk still to the recovery.”

In Europe, the Markit euro-zone composite output index fell from 56.2 in August to 53.8 in September, marking the largest decline since November 2008. See story on euro-zone PMI data

A reading above 50 indicates growth in activity, but the data also signaled that euro-zone growth slowed sharply at the end of the quarter.

European stock markets turned lower after the report, with the Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:SXXP 260.81, -0.38, -0.15%)  falling 0.5%. Read more about Europe Markets

“Technically, some of these markets were looking overbought,” Lenhoff said. “The figures provided the excuse to take profits.”

The U.S. jobs data will be followed at 10 a.m. Eastern by leading indicators and existing-home sales for August.

In Europe, sovereign-debt worries resurfaced, with the cost of insuring government debt against default once again soaring, particularly for Ireland, Spain, Portugal and Greece.

Data showed that Ireland’s economy contracted by 1.2% in the second quarter from the preceding three months, highlighting the depth of the nation’s economic crisis. See Irish GDP story

On the corporate front, fast-food giant McDonald’s Corp. /quotes/comstock/13*!mcd/quotes/nls/mcd (MCD 75.18, +0.05, +0.06%)  announced it will raise its quarterly cash dividend by 11% to 61 cents a share.

Shares of Bed Bath & Beyond Inc. /quotes/comstock/15*!bbby/quotes/nls/bbby (BBBY 43.69, +1.64, +3.90%)  rose in premarket trading after the company reported increases in quarterly profit and revenue.

Red Hat Inc. /quotes/comstock/13*!rht/quotes/nls/rht (RHT 40.77, +4.02, +10.94%)  gained after the provider of open-source services posted a 20% increase in quarterly revenue.

Blockbuster Inc. /quotes/comstock/11i!bloka (BLOKA 0.04, -0.01, -25.27%)   /quotes/comstock/11i!blokb (BLOKB 0.02, -0.01, -27.00%)  said it has initiated Chapter 11 bankruptcy proceedings as part of a plan to recapitalize the company.

Gold futures were little changed at $1,292.20 an ounce, taking a break from their recent record-shattering run.

The dollar recovered some ground against major rivals, with the dollar index /quotes/comstock/11j!i:dxy0 (DXY 79.93, +0.10, +0.13%)  trading up 0.2% to 80.026.

Polya Lesova is reporter for MarketWatch, based in Frankfurt. Kate Gibson is a reporter for MarketWatch, based in New York.

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