Stocks opened slightly higher Thursday after a report showed jobless claims fell last week but the gains were offset by the retail surprise: three-quarters of retailers reporting chain-store sales this morning missed their targets.
Initial jobless claims fell by 4,000last week, the third straight week of decline. Continuing claims fell to 6.735 million. It was the first time that continuing claims declined since early January, following 17 straight weeks of record highs.
Meanwhile, nonfarm productivity rose 1.6 percent in the first quarter, much higher than the initial estimate of 0.8 percent and the 0.6 percent drop in the fourth quarter.
But the mood was dragged down by May sales reports trickling out from the nation's largest retailers as 76 percent of retailers missed estimates.
For the first time, Wal-Mart will not release a monthly report, having said last month that henceforth, figures would only be issued quarterly.
What the discount giant did announce this morning was plans to hire 22,000 more employees at its namesake store.
Costco, Target and Hot Topic all reported drops more than analysts expected, while The Buckle and off-price chain TJX exceeded expectations.
Shares of financials were mostly higher, including Citigroup and Bank of America after the Bank of England and the European Central Bank both interest rates steady, as expected.
Goldman Sachs and Morgan Stanley rose after Bernstein raised its rating on the stocks to "outperform" as well as its price targets and earnings expectations.
GM Europe's president said he hopes that the automaker's German unit Opel will make a profit before 2013, a target set by its prospective buyer.
Meanwhile, Chrysler's dealer controversy should come to a head this morning, with a bankruptcy judge expected to rule on whether the automaker can go ahead with the planned shutdown of hundreds of dealerships as it proceeds through bankruptcy.
In energy, oil prices were staging a rebound from Wednesday's drop, gaining about $1 to more than $67 a barrel.
But shares of Valero fell after the company repriced its public offering of 40 million shares to $18, a slight discount to Wednesday's close but sharply below the original estimate. Also, BMO cut its rating of Valero to underperform from market perform as the company announced earlier this week it would be suspending its expansion of the Valero Port Arthur Refinery.
In tech land, shares of Wind River Systems soared after Intel agreed to buy the company, which makes software for cellphones and other gadgets, for $11.50 a share, or $884 million.
And Google shares rose after Citigroup raised its price target on the stock to $580 from $450, anticipating second-quarter results will meet expectations and higher earnings for next year.
Microsoft, which just launched rival search engine, Bing, saw its shares decline.
Yahoo shares fell after the Internet portal sued the NFL players association, claiming that it shouldn't have to pay royalties to use players' statistics, photos and other data in its fantasy-football game on the grounds that that information is already public.
Palm shares were higher after the gadget maker's answer to the iPhone, the Pre, got some positive reviews from tech columnists including Walt Mossberg of the Wall Street Journal and David Pogue of the New York Times.
Shares of rivals Apple and Research In Motion also rose.
- Peter Schacknow, senior producer, CNBC Breaking News Desk, contributed to this report.
Still to Come:
THURSDAY: NY Fed Pres. Dudley speaks; Chain-store sales
FRIDAY: May jobs report; consumer credit
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