Futures turned negative Thursday following ECB's President Jean-Claude Trichet's grim economic outlook at a news conference after the bank's Governing Council left its benchmark interest rate unchanged at 1.5 percent.
Futures were higher following the weekly jobless claims report and supported by news that Europe’s leaders are prepared to help the region's weakest banks and want to recapitalize lenders to calm investor fears.
However, the developments in the banking sector will most likely be overshadowed by the death of Apple co-founder Steve Jobs, who passed away on Wednesday.
All over the world company leaders, officials as well as ordinary people expressed their sadness at the death of Jobs, who was considered one of the greatest CEOs of his generation and a legendary visionary and entrepreneur.
On the economic front, weekly jobless claims gained less than expected last week, climbing 6,000 to a seasonally adjusted 401,000, according to the Labor Department from a revised 395,000 in the prior week. Economists had forecast claims rising to 410,000, according to a Reuters poll.
The jobless claims news comes ahead of the crucial government jobs report on Friday. Non-farm payrolls are expected to have increased 60,000 in September, according to a Reuters poll, after being flat in the month prior.
In Europe, the ECB held interest rates steadyat 1.5 percent as last month's rise in inflation offset pressure to respond to the euro zone's worsening debt crisis by easing borrowing costs.
"Ongoing tensions in financial markets and unfavorable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of the year," said Trichet in a news conference following the rate announcement. "The economic outlook remains subject to particularly high uncertainty and intensified downside risks."
ECB President Jean-Claude Trichet step down from his post at the end of the month and will hand over the duty to Mario Draghi, currently Italy's central bank governor.
The Belgian and French government are expected to finalize a rescue package for financial group Dexiaby Saturday.
Meanwhile the Luxembourg government—Dexia’s three main business units are in Belgium, France and Luxembourg—has said it will take a minority stake in the bank, adding that an investor is ready to buy a majority stake in Dexia’s Luxembourg arm.
The bank’s slide and subsequent rescue operation appear to have focused European leaders’ minds to offer broader support for the banking sector, but analysts have already expressed concerns over the cost of further aid to already heavily indebted EU governments.
Meanwhile, most U.S. retailers posted solid chain-store sales results for September, as consumers remained resilient despite weakening consumer confidence.
Target , Limited Brands and teen apparel store The Buckle were among the best performers, posting strong gains that beat estimates.
Constellation Brands jumped after the wine maker posted higher-than-expected earnings, thanks to price increases. The company also raised its full-year outlook.
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Coming Up This Week:
FRIDAY: Non-farm payroll, wholesale trade, consumer credit, Sprint's 4G plans unveiled