Stock Futures Pare Gains on U.S. Data

NEW YORK (TheStreet) -- U.S. stock futures were paring gains after worse-than-expected figures on U.S. jobless claims and retail sales.

Futures for the Dow Jones Industrial Average were up 20 points, or 18 points above fair value, at 12,408. Futures for the S&P 500 were up 2 points, or 2 points above fair value, at 1290. Futures for the Nasdaq were up 6 points, or 4 points above fair value, at 2373.

Two reports on the U.S. economy stole some of the spotlight away from Europe toward the opening bell. Initial jobless claims for the week ending Jan. 7 rose by 24,000 to 399,000, according to the Labor Department. The weekly read came in slightly higher than economists' expectations for 375,000, according to a poll by Thomson Reuters. The prior week's figure was upwardly revised to 375,000 from 372,000.

In a disappointing report from the Commerce Department, U.S. retail sales for December slumped to their weakest read since May 2011. Sales rose 0.1% in December, compared to a revised 0.4% rise in November. Economists had expected sales to rise 0.3% with the help of discounts during the holiday season. Retail sales excluding car sales dropped for the first time since May 2010, declining 0.2% in Decmeber after rising 0.3% in the prior month.

At 10 a.m., the Commerce Department is expected to report that business inventories rose 0.4% for November, adding to a 0.8% gain in October.

Dow futures were up by as much as 70 points earlier before the focus turned to figures out of the U.S. As positive outcomes from government debt sales in Europe gave hope to investors that the region could deal with its high borrowing costs. On Thursday, Spain sold 9.89 billion euros of bonds maturing within the next four years after setting a goal of selling 5 billion euros. Meanwhile, Italy sold off 8.5 billion euros of one-year bills at a yield of 2.735%, down from 5.952% in a similar auction held last December.

The European Central Bank announced that it would keep the benchmark interest rate at a record low of 1%, as economists had expected. The move suggested that policy makers are taking a breather from introducing further stimulus measures despite the looming debt crisis in the eurozone. Jitters around the central bank's intentions have been high as some investors have wanted monetary officials to play a bigger role in helping to shore up the region's troubled economies.

European stocks also were paring gains. Germany's DAX was up 1% while London's FTSE was up 0.06%. Japan's Nikkei Average settled 0.74% lower, and Hong Kong's Hang Seng was down 0.3%.

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Stocks closed mixed Wednesday with the Dow easing off of a five-month high amid concerns about deteriorating growth in eurozone economies. However, the U.S. market was somewhat able to decouple itself from losses in Europe as the S&P 500 and Nasdaq managed to edge above the flatline.

In corporate news, Chevron (CVX), the oil giant, said it expects fourth-quarter earnings to come in "significantly below" the third quarter because of the impact of lower margins and refinery input volumes in its downstream business. Analysts expect Chevron to earn $3.28 a share in the fiscal fourth quarter. It earned $3.67 a share in the third quarter.

Royal Bank of Scotland (RBS) plans to cut 3,500 jobs as it scales back its investment banking arm. RBS said the cuts, largely in its global banking and markets division, will be phased in over three years. The bank is 83%-owned by the U.K. government. The job cuts announced Thursday are in addition to the 2,000 job cuts the bank announced last summer.

Regions Financial (RF) said it would record a goodwill impairment charge of $575 million to $745 million in the fourth quarter from the $930 million sale of its Morgan Keegan brokerage unit to Raymond James Financial (RJF). Regions is expected to report earnings on Jan. 24, and expects to lose as much as $633 million -- or up to 50 cents a share -- in the fourth quarter of 2011 because of the goodwill charge.

Tractor Supply (TSCO) boosted its earnings outlook late Wednesday for the full year following a strong sales performance in the fourth quarter. The Brentwood, Tenn.-based company now sees earnings of $2.97 to $2.99 a share for fiscal 2011, up from its previous projection for a profit of $2.85 to $2.89 a share. The current average estimate of analysts polled by Thomson Reuters is for earnings of $2.91 a share in fiscal 2011. The company's outlook implies a profit range of 92 to 94 cents a share for the fourth quarter ended in December, compared to Wall Street's current consensus view of 86 cents.

The Obama administration is likely going to block the Omnicare's (OCR) proposed $716 million offer for PharMerica (PMC), the New York Post reported, citing a source close to the situation. Omnicare, the pharmacy services provider, said Wednesday it wouldn't complete its $15 a share offer until the FTC says it has reached the end of its investigation.

PVH (PVH) announced Wednesday an outlook for fiscal year 2012 that missed Wall Street's current expectations. The New York-based apparel company, whose brands include Calvin Klein and Tommy Hilfiger, said it expects non-GAAP earnings of $5.90 to $6 per share for its fiscal year ending in January 2013. The current average estimate of analysts polled by Thomson Reuters is for a profit of $5.97 a share for the period.

February oil futures were up $1.28 to $102.15 a barrel. In other commodities, February gold futures were up $16.60 to $1656.20 an ounce.

The dollar index was down 0.2%. The benchmark 10-year Treasury was down 5/32, diluting the yield to 1.926%.

-- Written by Chao Deng in New York.