The major U.S. index futures are pointing to a lower opening on Thursday, with sentiment deteriorating following the release of a report showing an unexpected increase in jobless claims for the recent reporting week. At the same time, a separate Labor Department showed that productivity growth grew decently in the four quarter. Chain store sales results of the nation's retailers were mixed, clouding the consumer spending outlook further.
Globally, data from Asia showed that growth may slowing down in some parts of the Asia-Pacific region. Australia reported soft retail sales for December, while in New Zealand labor market conditions worsened. Across the Atlantic, the Bank of England as well as the European Central Banks decided to hold interest rates unchanged, in line with expectations.
Notwithstanding the release of a fairly encouraging jobs report, the major U.S. averages opened notably lower on Wednesday. Thereafter, stocks experienced a significant degree of volatility amid the release of the results of the Institute for Supply Management's services sector survey and showed a lack of direction for the better part of the session before closing on a mixed note.
While the Dow Industrials ended down 26.30 points or 0.26% to 10,271 and the S&P 500 Index receded 6.04 points or 0.55% to 1,097, the Nasdaq Composite gained 0.85 points or 0.04% to close marginally higher at 2,191.
Twenty-one of the thirty Dow components closed the session lower, with Merck (MRK), Verizon (VZ), Chevron (CVX), Pfizer (PFE) and Home Depot (HD) declining sharply in the session. However, Disney (DIS) rose 2.57%, McDonald's (MCD) climbed 1.84%, 3M Co. (MMM) advanced 1.33% and Wal-Mart (WMT) gained 1.46%.
Among the sector indexes, the Dow Jones Transportation Average fell 1.39%, the NYSE Arca Airline Index slipped 2.59% and the NYSE Arca Oil Index declined 1.06%. The KBW Bank Index moved down 2.35%, while the NYSE Arca Securities Broker/Dealer Index, the NYSE Arca Gold Bugs Index and the Dow Jones U.S. Basic Materials Average all lost about 1%. On the other hand, the NYSE Arca Computer Hardware Index rose 1.05%.
On the economic front, ADP's private sector employment report showed a loss of 22,000 jobs in January following a decrease of 61,000 jobs in December, with the latest month's reading representing the smallest decline in 2 years.
Meanwhile, the Institute for Supply Management's survey showed that activity in the services sector expanded at a slower than expected rate in January. The non-manufacturing index rose to 50.5 from 49.8 in the previous month, but came in below expectations for a reading of 51. The weakness was apparently due to soft construction and retail activity. The new orders index climbed 2.7 points to 54.7, marking the highest reading since October 2007, and the employment index was up 1 point to 44.6. However, the index of order backlogs fell 2.5 points to 45.5.
Commodity, Currency Markets
Crude oil futures are trading down $0.88 to $76.10 a barrel after moving down $0.45 to $76.98 a barrel in the previous session. On Wednesday, the price of oil was weighed down by a bearish oil inventory data showing a 2.3 million barrel increase in crude oil stockpiles to 329 million barrels in the week ended January 29th. Crude oil stockpiles remained above the upper limit of the average range.
Gasoline inventories decreased by 1.3 million barrels but remained above the upper limit of the average range. Distillate inventories also dropped, falling by 1 million barrels. Inventories of distillate fuel were above the upper boundary of the average range. Refinery capacity utilization averaged 79% over the four-weeks ended January 29th compared to 79.5% in the previous week.
Gold futures are currently trading at $1,104.20 an ounce, down $7.80 from the $1,112 an ounce at the New York's session close on Wednesday. In the previous session, the precious metal fell $6.
Among currencies, the U.S. dollar is trading at 90.51 yen compared to the 90.9795 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is currently valued at $1.3834.
Asia
The major Asian markets ended Thursday's session mostly lower, with the exception of the South Korean market, which edged up 0.09%. A pullback in commodity prices and uncertainty surrounding the economic outlook weighed on the averages in the region.
Japan's Nikkei 225 average opened higher, but it gave back its modest gains in early trading before receding into negative territory. Thereafter, the index languished in negative territory to close lower. At the close of trading, the index was down 48.35 points or 0.46% at 10,356.
Pharma and financial stocks saw notable weakness, while heavy machinery, auto, construction, technology, steel and resource stocks also lost ground in the session. Sony lost over 2% ahead of the release of its earnings. After the market closed, the consumer electronics giant reported a third quarter profit of 79.2 billion yen compared to a profit of 10.4 billion yen in the year-ago period, as revenues rose to 2.24 trillion yen from 2.16 trillion yen.
Toyota slid about 4% in reaction to its recall woes, which were compounded following reports of brake problems in its Prius hybrid vehicles. The company reported after the Japanese market close that its net profit for the December quarter was 153.2 bullion yen compared to a loss of 164.7 billion yen last year. The company said it estimates the recalls to cost the company up to about 180 billion yen. The company raised its fiscal year 2010 forecast to a profit of 80 billion yen from its earlier estimate for a loss of 200 billion yen.
Australia's All Ordinaries opened lower and declined steadily through the morning session amid the release of a bleak domestic retail sales report. The index consolidated in the afternoon, closing the session down 29.10 points or 0.62% at 4,644. Material stocks declined sharply, dragging the market lower.
On the economic front, the Australian Bureau of Statistics reported that retail sales were down a seasonally adjusted 0.7% month-over-month in December. This came in contrast to analyst expectations for a 0.2% increase after the upwardly revised 1.5% growth in the previous month.
The disappointing figures confirm fears that demand slowed through the Christmas shopping season as interest rate hikes and the waning impact of stimulus took their toll and justify the central bank's decision to hold interest rates this week.
Hong's Hang Seng Index opened notably lower and languished in negative territory throughout the session to close down 380.44 points or 1.84% at 20,342. A majority of the stocks declined in the session.
Europe
The major European averages are also receding on Thursday, with the major averages in the region turning lower after showing some strength in early trading. The French CAC Index and the German DAX Index are moving down 1.15% and 0.90%, respectively, while the U.K.'s FTSE 100 Index is declining 0.96%.
In economic news, a housing survey done by Lloyds Banking Group's Halifax division showed that house prices in the U.K. rose 0.6% month-over-month in January following a 0.8% increase in the previous month. Economists had estimated a 0.7% increase for the month. Annually, house prices climbed 3.6%, with the increase matching economists' expectations.
Among the duo of central bank decisions from the region, the Bank of England announced an unchanged stance in terms of its monetary policy following the end of its 2-day Monetary Policy Committee meeting. The previous change in Rate was a 0.5% percentage point reduction announced in March 2009. While maintaining the stock of asset purchases financed by the issuance of central bank reserves at 200 billion pounds, the central bank said the decision would help to keep inflation on track to meet its 2% inflation target over the medium term.
The European Central Bank also opted to leave interest rates unchanged at a record of 1% at its February meeting. The rate has been held at this level since May 2009. The decision was widely expected, with the region's inflation staying below the central bank's target of 2%.
U.S. Economic Reports
First time claims for unemployment benefits unexpectedly showed a modest increase in the week ended January 30th, according to a report released by the Labor Department, with the data likely to raise some concerns about the upcoming monthly employment report.
The report showed that initial jobless claims edged up to 480,000 from the previous week's revised figure of 472,000. Economists had been expecting jobless claims to fall to 455,000 from the 470,000 originally reported for the previous week.
First time claims for unemployment benefits showed a modest decrease in the week ended January 23rd, although economists had been expecting a more substantial decrease.
The report showed that initial jobless claims slipped to 470,000 from the previous week's revised figure of 478,000. Economists had been expecting jobless claims to fall to 450,000 from the 482,000 originally reported for the previous week.
A separate report released by the Labor Department showed that fourth quarter non-farm productivity rose at a 6.2% sequential rate in the fourth quarter. Economists had expected a 6.5% increase in non-farm productivity.
The productivity growth was helped by a 7.2% increase in output, partly offset by the 1% increase in hours worked. The hours worked increased for the first time since the second quarter of 2007. Meanwhile, unit labor costs fell 4.4%.
The Commerce Department is due to release its report on factory goods orders for December at 10 AM ET. Orders for manufactured goods are likely to have increased 0.5% in the month.
Durable goods orders, which make up the bulk of factory goods orders, showed a 0.3% month-over-month increase in December compared to expectations for a 2% increase. Excluding transportation, durable goods orders climbed 0.9%, beating forecasts for a 0.4% increase. Non-defense capital goods orders, excluding aircraft orders, increased 1.3%, suggesting that business investment in equipments may see strength in the first quarter. Machinery orders and orders for primary metals showed strong growth.
Stocks in Focus
Cisco Systems (CSCO) is likely to be in the spotlight after it reported that its second quarter earnings rose to 32 cents per share compared to 26 cents per share in the year-ago period. The company's adjusted earnings of 40 cents per share exceeded the 35 cents per share consensus estimate. Revenues rose 8% year-over-year to $9.8 billion. For the third quarter, the company expects sales to rise 23%-26% year-over-year, while analysts estimate revenue growth of 16.3%.
Regency Centers (REG) lost close to 5% in Wednesday's after hours session after it reported that its fourth quarter recurring funds from operations fell to 63 cents per share from 90 cents per share last year. Reported funds from operations also fell, slipping to 71 cents per share from the year-ago's 72 cents per share. The consensus estimates had called for funds from operations of 65 cents per share.
Steel Dynamics (STLD) also receded sharply in after hours trading despite reporting a profit of 12 cents per share for its fourth quarter compared to a loss of 45 cents per share last year. Net sales fell 3% to $1.2 billion. Analysts estimated a profit of 17 cents per share on revenues of $1.08 billion.
Aeropostale (ARO) could react to its announcement of a 3-for-2 stock split, which will be effected in the form of a stock dividend. The stock split will entitle all shareholders on record as of February 24th to receive one additional share for every 2 shares held on that date.
CB Richard Ellis (CBG) is likely to see some activity after it reported fourth quarter adjusted earnings of 28 cents per share on revenues of $1.30 billion. Analysts estimated earnings of 18 cents per share on revenues of $1.16 billion.
Standard Pacific (SPF) could see some activity after it said its fourth quarter homebuilding revenues fell 10% to $339.8 million but still exceeded the $288.54 million consensus estimate. The company reported earnings of $82.7 million or 31 cents per share compared to a loss of $1.65 per share in the year-ago period. Excluding one-time items, the company's profit for the recent quarter was $4 million.
Yum Brands (YUM) could see weakness after it reported fourth quarter adjusted earnings of 50 cents per share, higher than 46 cents per share last year. Total revenues fell 1% to $3.37 billion. The consensus estimates called for earnings of 48 cents per share on revenues of $3.34 billion.
THQ, Inc. (THQI) is likely to see some activity after it reported third quarter net sales of $356.7 million, down from $357.3 million last year. The company's non-GAAP earnings were 35 cents per share compared to a net loss of 14 cents per share in the year-ago period. Analysts estimated a profit of 42 cents per share on revenues of $356.80 million. The company reaffirmed its 2010 guidance of seeing higher net sales growth on a non-GAAP basis and reporting profitability.
Broadcom (BRCM) may react to its announcement that it swung to a profit of 11 cents per share in its fourth quarter compared to a loss of 32 cents per share last year. Both periods included charges. Revenues rose 19% to $1.34 billion, ahead of the $1.32 billion consensus estimate.
Novellus (NVLS) is likely to see some activity after it reported fourth quarter net sales of $244.2 million, up 38.1% year-over-year. The company reported a net profit of 36 cents per share compared to a loss of 4 cents per share last year. On an adjusted basis, the company reported a profit of 39 cents per share, higher than 21 cents per share in the year-ago period. Analysts estimated earnings of 34 cents per share on revenues of $250.70 million.
Among 'retailers, Fred's (FRED) receded in Wednesday's after hours session after it reported a 2% decline in comparable store sales in January compared to a 1.2% drop in the year-ago period. Hot Topic (HOTT) reported a 13.1% tumble in same store sales for January, reversing the 6% growth last year. Zumeiz (ZUMZ) same store sales for January climbed 1.8%, slower than the 14.8% jump last year.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.