Futures Jump After Inflation, Jobless Reports

Futures popped higher Thursday after a tame inflation report and lower-than-expected reading on weekly jobless claims.

Consumer prices were unchanged in September from the prior month as energy costs fell; excluding volatile food and energy prices, core CPI ticked up 0.1 percent. Both numbers were one-tenth of a percent better than expected. Meanwhile, weekly jobless claims fell by 16,000 to 461,000, much lower than the 475,000 expected. Continuing claims, however, came in at 3.71 million, which was higher than expected.

The reports were a welcome reprieve after a slew of dismal reports, coupled with comments from Fed officials, stoked fears of recession, sending the market down more than 700 points.

Still to come today is a reading on national industrial production as well as a report from the Philadelphia Fed on manufacturing activity in the region.

(Video: What to expect from today's market action, with Frederic Dickson, D.A. Davidson & Co. and Lakshman Achuthan, Economic Cycle Research Institute.)

Dow component Citigroup's loss including discontinued operations nearly matched market expectations, coming in at 71 cents a share in the third quarter, on big writedowns.

The results included $4.4 billion in net pre-tax write-downs in securities and banking, Citigroup said in a statement.

The net loss totaled $2.8 billion, or 60 cents per share, compared with a profit of $2.2 billion, or 44 cents, a year earlier.

Merrill Lynch reported a loss of $5.1 billion for the third quarter as the investment bank wrote down the value of collateralized debt obligations and real-estate assets and revenue tumbled from the year-ago period.

Bank of New York Mellon posted earnings per share of 26 cents versus expectations of 70 cents a share and from 67 cents a share a year ago.

In the tech sector, the world's largest handset maker Nokia missed market profit expectations as a global slowdown in consumer spending and increased competition hit the bottom line.

Elsewhere, fears of recession battered financial markets even as governments sought yet more action to pull the world economy from the doldrums. Japan's Prime Minister, Taro Aso, said Washington may need to push yet more cash into banks to restore investor confidence.

European Union leaders, meeting in Brussels, were to call for action to combat economic decline, including support for industry, according to media reports, while the two major Swiss banks needed emergency funding to weather the crisis.

Speculation is growing that the Federal Reserve will be forced to cut rates again as more data emerges that consumers are suffering because of the financial crisis.

Consumers plan to spend an average of $832.36 on holiday shopping this year, up just 1.9 percent from a year earlier the National Retail Federation's 2008 holiday survey showed. That would be the smallest rise since 2002, when the NRF began conducting the survey.

Hedge funds had their worst month ever in September, as all major categories of funds chalked up losses over the month, CNBC has learned. Emerging markets, long equity funds and distressed strategies had the worst results.

The declines came as investors withdrew $43 billion from hedge funds—almost seven times the previous monthly record for redemptions, according to TrimTabs Investment Research data.

Diversified manufacturer United Tech reported a 6 percent rise in profit, boosted by continued strong demand for helicopters and products used in commercial construction.

And the Securities and Exchange Commission extended a temporary short sale disclosure rule until Aug.1, 2009, to give it time to solicit public comment and fine tune details such as whether to publicly reveal the short positions.

Still to Come:

THURSDAY: Industrial production; Philly Fed survey; weekly natural-gas inventories; Earnings from Capital One, Google and IBM
FRIDAY: Housing starts; consumer sentiment; Earnings from Gannett, Honeywell and Sony Ericsson

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