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Futures Shave Gains After Jobless Claims, GDP

CNBC.com and Reuters
Thursday, 31 May 2012 | 8:41 AM ET

U.S. stock index futures pared their early Thursday following a pair of weak jobs data and after news the economy grew at a slower pace than expected.

On the economic front, weekly jobless claims rose 10,000 to a seasonally adjusted 383,000, gaining for the fourth-straight week, according to the Labor Department. Economists polled by Reuters had forecast claims unchanged last week.

And the U.S. economy grew at a slower pace than expected in the first quarter with GDP increasing at a 1.9 percent annual rate, according to the Commerce Department. The reading was down from last month's 2.2 estimate. The economy grew at a 3.0 percent rate in the fourth quarter.

Private-sector jobs growth came in at a disappointingly weak 133,000from April to May, according to a report from ADP and Macroeconomic Advisors. Economists had expected the report to show jobs grew by 150,000.

The report comes a day ahead of the May government jobs.

Finally, at 9:45 a.m. the Chicago Purchase Managers Index for May is published, with analysts on briefing.com predicting a fall to 55 from 56.2 in April. PMI readings denote an improvement in business activity.

Morgan Stanley CEO James Gorman defended his bank’s performance as lead underwriter on Facebook’s public offering, despite waves of criticism from investors and a potential legal review of the deal’s marketing.

In addition, the investment bank plans to buy 14 percent more of Smith Barneyfrom Citi and will begin a 90-day process determine the fair market value of the additional stake.

Most retailers posted solid same-store sales gains in May, with chains such as Target , TJX , and Limited topping analysts' estimates for the month.

Meanwhile, Costco , Buckle and Wet Seal all fell short of expectations.

Striking workers at a Caterpillar plant in Illinois rejected the company's latest contract offer, an official with the International Association of Machinists and Aerospace Workers said.

What's Moving the Markets?
Discussing the best places to invest amid market uncertainty, and growing concerns in Greece, with Barry Knapp, Barclays Capital.

Billionaire investor Carl Icahn, who last year failed to get his nominees elected to the board of Forest Laboratories, plans to back another slate of directors at the drugmaker's next shareholder meeting, according to a regulatory filing.

Talbots skyrocketed almost 100 percent after private equity firm Sycamore Partners said it will acquire the women's clothing chain in a deal worth about $193 million in cash.

U.S. Airways Group and private equity firm TPG Capital may team up to bid for American Airlines' parent, AMR, people familiar with the discussions told Reuters.

Meanwhile, JetBlue gained after UBS raised its rating on the firm to "buy" from "neutral" and boosted its price target to $8 from $6.

TiVo reported a bigger-than-expected quarterly loss and forecast another loss for the current quarter, as the maker of television recorders fights costly legal battles to protect its patents.

Coming Up This Week:

THURSDAY: Fed's Pianalto speaks, corporate profits, Chicago PMI, oil inventories, Zipcar shareholders mtg
FRIDAY: Non-farm payrolls, personal income & outlays, ISM mfg index, construction spending, auto sales, Wal-Mart shareholders mtg

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