Futures Decline After Jobless Claims Jump
Stock index futures sank further on Thursday after an unexpected jump in weekly jobless claims.
Weekly claims for unemployment benefits rose by 12,000 to 465,000last week, up from a revised 453,000. The rise in claims ended two weeks of declines. Most economists expected claims would hold steady at about 450,000.
"The jobless claims data is looking to dance, once again, with 500,000 and this has tremendous negative implications on the equity market," said Todd M. Schoenberger, managing director of LandColt Trading.
"Realizing that the final Q2 GDP print is out next Thursday, which is expected to be weaker than before, traders want to know where the top-line revenues are going to come from for Fortune 500 companies," Schoenberger said. "The returns we received so far this month may quickly evaporate by the weekend."
Futures were already lower after European PMI data showed the pace of growth in services and manufacturing slowed more than expected.
The market has racked up impressive gains for September, but the rally began to stallthis week after the Federal Reserve indicated on Tuesday it was prepared to support the U.S. economy if needed. The Fed also raised concerns about low inflation.
Investors will receive more information about the economy's health when existing home sales data are reported at 10 a.m. Analysts expected August sales were 4.1 million, up from 3.8 million in July.
Leading economic indicators are also expected at 10 a.m. The index is expected to be stable at 0.1 percent, according to Briefing.com.
In the markets, shares of McDonald's slipped in the premarket after the fast-food chain said it would increase its quarterly dividend by 11 percent.
Shares of Novell sank in the premarket on reports the auction of the company's Netware and identity management products are dragging, according to Reuters.
Netflix shares were higher in the premarket after rival Blockbuster filed for bankruptcy, citing a shift in consumer preferences to downloading movies from the Internet.
In earnings news, shares of Rite Aid plunged in premarket tradingafter the drug-store chain reported a wider-than-expected loss in the fiscal second quarter, and issued a bleak outlook for the rest of the year.
Scholastic rose in the premarket after the children's bookpublisher agreed to buy back up to $150 million shares in a modified Dutch auction.
Bed Bath & Beyond'sshares rose in the premarket after the home goods retailer said it beat quarterly profit and sales estimates as U.S. consumers spent more on their homes.
Shares of Red Hat were also higher after the company reported lower second-quarter profit, but the company still beat Wall Street forecasts as sales of its software rose sharply.
On Tap This Week:
THURSDAY:Existing home sales; leading indicators; Chicago Fed President Evans speaks; Volcker speaks; FCC meeting on opening up new airwaves; Earnings from Rite Aid and Nike.
FRIDAY: Durable goods orders; New home sales; Richmond Fed President Lacker speaks; Philadelphia Fed President Plosser speaks; NY Film Festival; Earnings from KB Home .
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