Futures Pare Losses After Economic Surprise

Futures were pressured by declines overseas Thursday but pared losses after the first rise in retail sales in seven months.

Retail sales rose 1 percentin January and if you strip out autos, sales increased 0.9 percent. Economists had expected both gauges to decline.

Meanwhile, initial jobless claims fell by 8,000 last week to 623,000 from an upwardly revised 631,000 in the prior week. Continuing claims, however, remained at a record level.

The market got a mild bounce Wednesday from news that the Senate had agreed on the plan to jump-start the economy, but Wall Street remained concerned about the larger picture.

In earnings, Viacom, the owner of MTV and Paramount movie studio, reported sharply lower quarterly profit of 28 cents a share, compared to 86 cents the previous year.

Premarket trading was light, but bank stocks were continuing their seesaw, dropping precipitously after disappointment over the bank rescue plan, then rebounding somewhat yesterday on bargain-hunting and optimism over the stimulus. Bank of America shares were off 3.8 percent.

Oil prices also continued to fall, putting pressure on Dow component Chevron , whose shares dropped 1.2 percent in premarket trading.

Markets in Europe were mostly lower, with London's FTSE-100 the hardest hit in morning trading. Big-name companies continued to report losses, while Spain became the latest country to officially enter a recession. Spain's economy contracted at the highest rate in 15 years.

Stocks in Asia also sank. Tokyo finished down 3 percent and the latest report on wholesale prices indicated Japan could be facing another round of deflation.

A lot of uncertainty in the market is coming from the debate over how effective the $789 billion stimulus bill will be. The package could pass today, but without much bipartisan support.

Still to Come:

THURSDAY: Business inventories
FRIDAY: G7 finance ministers meet in Rome; Consumer sentiment; Earnings from Pepsi

Send comments to cindy.perman@nbcuni.com.