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Futures Cut Gains After Economic Reports

US stock index futures pointed to a strong open Thursday as investors grew more comfortable with the government's plans for the nation's banking system.

But a pair of dismal economic reports made a slight dent in gains.

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  • New jobless claims jumped by 36,000 to 667,000, the highest since 1982, last week. Continuing claims popped over the 5 million mark to a record 5.11 million.

    And durable-goods orders dropped 5.2 percent to $163.8 billion in January, more than double of what was expected, and the prior month was revised sharply lower. Excluding volatile transportation components, orders fell just 2.5 percent.

    Still to come are January new home sales, due out at 10 a.m. ET, and the FDIC fourth-quarter banking profile, which gives an overall report card for the sector, due out at 2:30 pm.

    The two banks at the center of the government's focus saw their shares surge in premarket trading. Bank of America rose nearly 9 percent, while Citigroup gained 10.7 percent.

    The government may be on the verge of boosting its stake in Citigroup to as much as 40 percent, the Wall Street Journal reported citing people familiar with the situation.

    Stocks have whipsawed their way through a volatile week so far, with comments from Federal Reserve Chief Ben Bernanke and President Barack Obama lending support and caution in equal measure.

    On the downside,troubled auto maker General Motors. which submitted its road map for recovery to the US Treasury last week, reported a loss of more than $30 billion for 2008. The company said it expected auditors to cast doubt on whether GM can survive.

    GM shares fell more than 7 percent premarket.

    Meanwhile, insurance giant American International Group faces deep restructuring as it pushes on with discussions with US authorities. The group could be split into at least three government-controlled parts, the Financial Times reported citing people close to the situation.

    AIG shares surged more than 37 percent premarket.

    Other stocks moving futures including CNBC.com-parent General Electric , which gained about 2.5 percent, and UBS, which picked up more than 13 percent after it replaced CEO Marcel Rohner with Oswald J. Gruebel, formerly head of crosstown rival Credit Suisse.

    Investors kept one eye on the UK and its moves to stem the financial crisis. The country’s government launched a scheme designed to insure more than $712 billion of toxic assets. The scheme, which is an attempt to unclog the stalled lending market and boost the recession weary economy, boosted UK bank shares by between 10 percent and 30 percent.

    Also in the UK, Royal Bank of Scotland, which is 70 percent owned by the British taxpayer, reported a record loss of $34.2 billion for 2008. RBS, along with other UK banks, is expected to use the new toxic-asset insurance scheme.

    Still to Come:

    THURSDAY: New home sales; earnings from Dell, Gap, and Kohl's
    FRIDAY: GDP; consumer sentiment

    Send comments to cindy.perman@nbcuni.com.