Market Analysis

The major U.S. index futures are pointing to a notably lower opening on Thursday after JP Morgan (JPM) said it suffered a $2 billion trading loss after an “egregious” failure at the Chief Investment Office that manages its synthetic credit portfolio. Disappointing economic data from China may also weigh on the markets.

After failing to sustain an early upward move, stocks showed a lack of direction over the course of the trading day on Thursday. The choppy trading on the day came on the heels of the downward trend seen over the past several sessions.

The major averages eventually ended the session mixed, with the Nasdaq edging down by 1.07 points or less than a tenth of a percent to 2,933.64, while the Dow crept up 19.98 points or 0.2 percent to 12,855.04 and the S&P 500 rose 3.41 points or 0.3 percent to 1,357.99.

The early strength on Wall Street came as some traders picked up stocks at reduced levels following the weakness seen in recent sessions. Buying interest was somewhat subdued, however, as traders continued to express concerns about the political uncertainty in Greece.

Disappointing news from Cisco Systems (CSCO) also generated some negative sentiment, with the networking giant falling by 10.5 percent after reporting better than expected third quarter earnings but forecasting fourth quarter results below analyst estimates.

Meanwhile, traders also digested a batch of key economic data, including a report from the Labor Department showing a slight drop in initial jobless claims in the week ended May 5th.

The report showed that initial jobless claims edged down to 367,000 from the previous week's revised figure of 368,000. Economists had expected jobless claims to inch up to 366,000 from the 365,000 originally reported for the previous week.

The Commerce Department also released a report showing that the U.S. trade deficit widened to $51.8 billion in March from a revised $45.4 billion in February. The trade deficit had been expected to widen to $49.5 billion from the $46.0 billion originally reported for the previous month.

A separate report from the Labor Department showed that import prices fell by more than expected in the month of April, with the drop largely due to lower fuel prices.

Currency, Commodity Markets

Crude oil futures are sliding $1.33 to $95.75 a barrel after edging up $0.27 to $97.08 a barrel on Thursday. Gold futures are falling $13.80 to $1,581.70 an ounce. In the previous session, gold rose $1.30 to $1,595.50 an ounce.

On the currency front, the U.S. dollar is trading at 79.85 yen compared to the 79.94 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2921 compared to yesterday’s $1.2937.

Asia

Stock markets across the Asia-Pacific region moved to the downside on Friday following the news from JP Morgan. Disappointing Chinese economic data also contributed to the weakness, raising fresh concerns about the health of the global economy.

Japan’s Nikkei 225 Index ended the day down by 56.34 points or 0.6 percent at 8,953.31, closing below the psychologically important 9,000 mark for the first time in three months. Leading electronic manufacturers such as Pioneer, Sharp and Sony posted notable losses on the day.

China's Shanghai Composite lost 0.6 percent to end below a key psychological support of 2,400, as the soft economic data increased the chances of a hard landing in the world's second largest economy. Hong Kong's Hang Seng index shed 1.3 percent.

Data out of China showed that industrial output growth in April slowed to the lowest level since May 2009, while retail sales growth also slowed more than expected in April.

Australian shares erased early gains to end modestly lower. The benchmark S&P/ASX 200 eased 0.2 percent, while the broader All Ordinaries index shed 0.3 percent.

Europe

The major European markets are also under pressure on the day amid the news from JP Morgan and the disappointing Chinese data. The French CAC 40 Index has tumbled by 1.7 percent, while the German DAX Index and the U.K.’s FTSE 100 Index are down by 0.9 percent and 0.8 percent, respectively.

The European Commission’s spring forecast said the Eurozone has entered a technical recession but a recovery is in sight. A gradual recovery is forecast to begin in the second half of the year and gather momentum in 2013. However, downside risks to the GDP forecast continue to prevail.

The economy is forecast to shrink 0.3 percent this year, in line with the February interim forecast but reflecting a downward revision from the autumn forecast of 0.5 percent growth. In 2013, the economy is expected to expand by 1 percent.

U.S. Economic Reports

With energy prices showing a notable decrease in the month of April, the Labor Department released a report showing an unexpected drop in producer prices for the month.

The Labor Department said its producer price index fell by 0.2 percent in April after coming in unchanged in March. Economists had expected the index to remain flat for the second straight month.

Excluding the sharp drop in energy prices as well as a modest increase in food prices, the core producer price index edged up by 0.2 percent in April. The modest increase in core prices, which compares to a 0.3 percent increase in the previous month, came in line with the expectations of economists.

Reuters and the University of Michigan are scheduled to release their preliminary report on consumer sentiment in the month of May at 9:55 am ET. Economists expect the consumer sentiment index to edge down to 76.2.

The consumer sentiment index for April came in at 76.4 compared to the mid-month reading of 75.7. Economists had been expecting a much more modest upward revision to a reading of 75.8.

With the much bigger than expected upward revision, the index came in above March's final reading of 76.2 and reached its highest level since February of 2011.

Stocks in Focus

Express Scripts Holding (ESRX) reported first quarter adjusted earnings of $0.73 per share and said it expects to report full year adjusted earnings between $3.36 and $3.66 per share, compared to the consensus estimate of $3.63.

Upscale department stores operator Nordstrom, Inc. (JWN) reported a modest 2.8 percent rise in first quarter profit, as costs to grow its e-commerce business partly offset a 13.7 percent increase in sales.

Application software maker CA Technologies (CA) said its fourth-quarter earnings increased from last year, helped mainly by lower income tax payments.

MBIA Inc. (MBI) reported first-quarter net income available to common shareholders of $10 million compared to a net loss of $1.3 billion for the first quarter of 2011, helped mainly by $303 million in pre-tax unrealized gains on insured credit derivatives.

McDermott International, Inc. (MDR) reported an 11 percent drop in first-quarter earnings, as revenue declined due to lower activity in the Asia Pacific region.

Dillard Inc. (DDS) reported a 24 percent increase in its profits for the first quarter on higher revenues and same-store sales.

American International Group, Inc. (AIG) announced that, due to his appointment as chief executive officer of Freddie Mac, Donald Layton had submitted his resignation from the board of directions of the company to be effective as of the commencement of AIG's 2012 annual shareholder meeting on May 16.

American Apparel (APP) raised its net sales outlook for the full year to $570 million-$590 million from its previously issued outlook of $552 million-$559 million.

A. M. Castle & Co. (CAS) announced the appointment of Scott Stephens as interim Chief Executive Officer, effective immediately, replacing Michael Goldberg in his role as President and CEO.