Futures gained Thursday after weekly jobless claims fell more than expected, but investors continue remain on edge ahead of a key vote on a bill to cut the U.S. deficit in Congress.
Republican House Speaker John Boehner’s plan faces a major roadblock with Senate Democrats, telling House Republicans they will not vote for the plan. Meanwhile, fears of a credit downgrade and even a default are intensifying.
The Treasury will outline plans in the next few days on how the government will run after August 2 if there is no debt deal.
Weekly jobless claims declined more than expected last week, dropping below the key 400,000 level for the first time since early April, according to the Labor Department.
Initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 398,000. Economists polled by Reuters had forecast claims falling to 415,000. The prior week's figure was revised up to 422,000 from the previously reported 418,000.
"If history is any gauge, the break below 400,000 will be short-lived [and] next week's revision will likely push us above this level," according to Todd Schoenberger, managing director of LandColt Trading.
"Traders realize, though, the timebomb for the markets is actually next Friday when the July nonfarm payrolls report is released. Buyer beware—proceed with caution," he added.
June pending home sales are reported at 10 am ET.
On the earnings front, Dow component Exxon Mobil fell after earnings rose 41 percent, but results still fell short of analyst expectations.
Royal Dutch Shell earnings shot up above expectationsas oil prices rocketed.
DuPont reported earnings above analyst forecasts and raised its 2011 guidance.
Visa edged higher after the credit-card issuer reported a profit gainon higher payment volumes on Wednesday afternoon.
Meanwhile, Credit Suisse said it would cut 2,000 jobs worldwide after its second quarter saw weak trading activity and was hurt by the strong Swiss franc. Sky News reported that rival HSBC may also announce it will cut thousands of jobs as it embarks on a cost-cutting drive.
European stocks declined for the fourth-straight session amid mounting worries over U.S. debt ceiling talks while a raft of mixed earnings sparked fears on the outlook for company profits.
On Tap This Week:
THURSDAY: Pending home sales, Kansas City Fed survey, Richmond Fed Lacker speaks, 7-yr note auction, San Francisco Fed Williams speaks, money supply; Earnings from Chesapeake Energy, MetLife, Motorola Mobility, Starbucks
FRIDAY: Employment cost index, GDP, Chicago PMI, consumer sentiment, farm prices; Earnings from Chevron, Merck
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