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Thursday, January 20, 2011

Indications: U.S. futures pare decline after jobless claims

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By Barbara Kollmeyer and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures scaled back losses Thursday after the government’s weekly tally of initial claims for jobless benefits fell more than economists had expected.

“The story, or song, remains the same in that the pace of firings continues to trend lower, albeit slowly, while the level of hirings relative to the monthly rise in the labor force continues to be below historical recoveries,” wrote Peter Boockvar, equity strategist at Miller Tabak.

Down more than 30 points before the employment-related data, Dow Jones Industrial Average futures /quotes/comstock/21b!f:dj\h11 (DJH11 11,718, -68.00, -0.58%)  more recently slipped 10 points to 11,776. S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,270, -8.50, -0.66%)  fell half a point to 1,278, while Nasdaq 100 futures /quotes/comstock/21m!f:nd\h11 (NDH11 2,270, -24.50, -1.07%)  added a quarter of a point to 2,294.75.

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First-time applications for jobless benefits fell 37,000 to 404,000 last week, the Labor Department said. Read more about jobless claims.

More economic reports are still to come after the opening bell, with existing-home sales and leading indicators for December due at 10 a.m. Eastern, along with the Philly Fed index for January.

“Leading economic indicators and Philly Fed â€" those are the two that could be the market movers of today,” said Peter Cardillo, chief market economist at Avalon Partners Inc.

“For the most part, the market is already discounting the fact this is going to be a super earnings season in terms of both top and bottom line,” he said. “I think you’re going to see a bit more of yesterday’s action: selling. Unless we get some real good economic news, it’s mostly technical. The market needs to step through resistance levels â€" 12,000 on the Dow and 1,300 on the S&P before they start firming up.”

Before the opening bell, Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 28.41, +0.66, +2.38%)  reported fourth-quarter earnings of 41 cents a share, narrowly beating forecasts of 40 cents a share. Read more about Morgan Stanley’s results.

Also on the move, shares of Wendy’s/Arby’s /quotes/comstock/13*!wen/quotes/nls/wen (WEN 4.85, +0.38, +8.50%)  jumped 8.5% in premarket trade after the company said it may sell Arby’s Restaurant Group Inc. to concentrate on a “pure-play Wendy’s.”

Shares of eBay Inc. /quotes/comstock/15*!ebay/quotes/nls/ebay (EBAY 30.11, +1.01, +3.47%)  rose 2.7% before the bell after reporting late Wednesday a 17% rise in fourth-quarter earnings, beating Wall Street estimates. See more on eBay.

After the market close, Internet search giant Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 627.25, -4.50, -0.71%)  is due to report fourth-quarter earnings.

China’s fourth-quarter gross domestic product rose a stronger-than-expected 9.8% year over year, reinforcing fears that Beijing will move to further tighten monetary policy in an effort to cap inflationary pressure. Read more about China’s data.

Shanghai led Asian stock markets lower Thursday on the heels of the data. European equities also fell, with mining, energy and auto stocks under pressure.

Commodity prices start to hurt

Rising commodity prices might well reflect growing global demand as the recovery gets under way. But inflation in emerging markets is forcing central banks to slam on the brakes, while, in the developed world, it's acting like a tax on consumers.

“The focus is currently squarely on inflationary pressures in China, and while consumer prices did decelerate somewhat in December, the growth in economic activity suggests that the country will do more to hinder the economy from overheating,” said Saxo Bank equity analyst Peter Garnry. “That means more interest-rate hikes and reserve-requirement increases this year.”

China reported that consumer inflation hit 4.6% year on year in December, slightly below forecasts.

U.S. equities declined Wednesday in the wake of disappointing revenue figures from Goldman Sachs Group Inc. /quotes/comstock/13*!gs/quotes/nls/gs (GS 165.46, -1.03, -0.62%)  and a weaker-than-expected earnings forecast from credit-card firm American Express Co. /quotes/comstock/13*!axp/quotes/nls/axp (AXP 45.01, -0.23, -0.51%) /quotes/comstock/13*!axp/quotes/nls/axp (AXP 45.01, -0.23, -0.51%) . See Market Snapshot from Wednesday.

/quotes/comstock/13*!axp/quotes/nls/axp (AXP 45.01, -0.23, -0.51%) /quotes/comstock/13*!axp/quotes/nls/axp (AXP 45.01, -0.23, -0.51%) The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,782, -43.17, -0.37%)  fell 12.64 points to close at 11,825.29 Wednesday. On Tuesday, the index closed at its highest level since June 2008.

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

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