Futures Hold Gains After Jobless Report


Futures indicated a rebound for Wall Street on Thursday as jobless claims dropped below a key level and Dow component Alcoa started the earnings season beating expectations.

Initial jobless claims plunged by 52,000last week to a much lower-than-expected 565,000. It was the lowest reading since January, and psychologically important because claims have finally dropped below 600,000.

Futures initially spiked on the number but pulled back to where they were before the report as investors dug into the report, learning that the headline number dropped mostly because of fewer-than-expected auto layoffs and continuing claims surged to another record — 6.883 million — tempering enthusiasm for the headline number.

Alcoa reported a smaller-than-expected second-quarter loss after the bell on Wednesday, sending shares up 5.4 percent in premarket trading.

As a result, the basic resource sector on the DJ Stoxx 60 index rose 4 percent, giving Asian and European stocks a boost. Energy stocks were also on the rise as oil gained nearly $1 to rise over $61 a barrel.

Costco Wholesale was the first chain store to report same-store sales for June. The discount retailer reported an in-line 6 percent fall in sales for the month, hit by a slide in demand for higher ticket items like cameras and mobile phones. Investors were enthusiastic about the results, sending shares up 2.2 percent premarket.

Elsewhere, Goldman Sachs shares gained more than 2 percent after Bank of America/Merrill Lynch raised the firm to buy from neutral.

A 30-year Treasury note auction will take place on Thursday, which traders are likely to follow closely after the unexpectedly strong auction of $19 billion in 10-year notes. The results for the auction will be released at 1 pm New York time.

Weekly jobless claims are reported at 8:30 am New York time. Economists are anticipating a total of 607,000 first-time claims, which would be a drop of 7,000 from the prior week.

Wholesale inventories for May are expected out at 10 am.

At 9 am New York time, Federal Reserve Governor Elizabeth Duke will speak at an FDIC conference in Chicago, and investors will be watching for any potential market-moving comments. Minneapolis Fed President Gary H. Stern will discuss the response to the economic crisis in Helena, Mt at 2:30 pm.

Most recent Fed speeches have centered around the idea that the economy should see growth during the year's second half, and that the Fed is formulating a strategy to eventually exit from the extraordinary measures currently in place to deal with the economic slump.

And at 2 pm New York time, the House of Financial Services Sub-Committee will hold a congressional hearing on the Federal Reserve as a systemic risk regulator, where Fed Vice-Chairman Donald Kohn will speak.

Finally, the Group of Eight summit continues in Italy for a second day.

- Written by Peter Schacknow, Senior Producer at CNBC.com