Futures Hold Gains as Jobless Claims Drop
Futures held onto gains Thursday after an unexpected drop in initial jobless claims.
Initial jobless claims dropped by 13,000 to 623,000 from a slightly revised 636,000. Still, continuing claims rose to another record around 6.8 million.
Durable-goods orders rose 1.9 percent in April but enthusiasm for that gain was tempered by a sharply lower revision for March. That number was originally reported as a 0.8-percent drop, but was revised to show a decline of 2.1 percent.
However, the gains were muted after Dow component Procter & Gamble lowered its outlook, projecting 2010 net sales in a range of down 2 percent to up 1 percent. Shares of the company edged lower in premarket trading.
The dollar rose broadly on Thursday as yields on 10-year U.S. government bonds jumped more than 50 basis points in the last two weeks, drawing Japanese investors into overseas assets like global semi-conductor stocks, banks and U.S. junk bonds, according to Reuters.
The sharp rise in yields came despite strong demand at the two Treasury auctions this week, which soothed concern over the long-term U.S. credit ratings outlook.
The yield on the 10-Year Note slipped to 3.67 percent early Thursday.
Investors' focus will now turn to the third Treasury Note auction of the week later on Thursday, which is the sale of 7-year paper. (Read more about the Wednesday bond yield spike here).
Later in Thursday' session, attention will turn to weekly U.S. jobless numbers out at 8:30 am New York time. Analysts polled by Reuters forecast new claims at 625,000 for the week ended May 23. Last week, the Labor Department reported that initial jobless claims fell for the third time in four weeks.
At the same time, April durable goods data is expected out. And at 10 am New York time, new home sales figures for April are due. Also at 10 am, the Mortgage Bankers Association releases its mortgage delinquencies report for the first quarter.
Dallas Federal Reserve President Richard W. Fisher will talk at 6:20 pm New York time on the current economic crisis in Washington.
In corporate news, Costco Wholesale said its third-quarter profit was $209.6 million, or 48 cents per share, compared with $295.1 million, or 67 cents per share, a year earlier. Costco shares fell 2.7 percent in premarket trading.
Also in the retail sector, Toys R Us said late Wednesday it had acquired the FAO Schwarz brand for an undisclosed sum.
Time Warner is set to announce a separation of its AOL Internet division as soon as Thursday, the Wall Street Journal reported. The company's board are expected to meet and approve of the separation of AOL into an independent company.
On the General Motors saga, the deadline for the sale of its Opel unit to either Fiat or Magna International has been pushed to Friday, an EU executive told Reuters.
GM Wednesday failed to win approval for a crucial bond exchange proposal, moving it closer to filing the largest bankruptcy ever for a U.S. industrial company. GM shares gained less than 1 percent in premarket trading.
And adding to fears that a GM filing could cause a domino effect among suppliers, U.S. parts maker Visteon filed for Chapter 11 bankruptcy protection for its U.S. operations, Reuters reported.
The weekly oil inventory report — normally released on Wednesdays — is out this morning at 11 am New York time, delayed because of the Memorial Day holiday. The weekly natural gas inventory report is out at its usual Thursday time of 10:30 am.
Staying in oil, OPEC said it will keep output unchanged and instead focus on increased compliance. The organization also demanded that it not be referred to as a cartel anymore.
Elsewhere, shares of Chimera Investment Group dropped 5 percent after the company announced a common stock offering of 168 million shares priced at $3.22. The shares were by far the heaviest traded issues in premarket activity.
HJ Heinz will report earnings before the opening bell, while Dell post earnings after the closing bell. Analysts polled by Thomson Reuter expected earnings per share of 55 cents for Heinz and earnings per share of 23 cents for Dell.