Stock Futures Still Weak After Claims Data
NEW YORK ( TheStreet) -- U.S. stock futures were declining Thursday as skepticism over the latest labor report added to concerns about the global economy.
There was also some lingering disappointment about the minutes from the last Federal Reserve policy meeting, which were released late in Wednesday's session. The transcript showed that "few" members of the central bank's open market committee were in favor of additional stimulus at the June 19-20 meeting and suggested macro conditions would have to deteriorate much further in order to justify another round of quantitative easing.
Futures for the Dow Jones Industrial Average were slumping 86 points, or 90.53 points below fair value, at 12,450. Futures for the S&P 500 were down by 10.8 points, or 10.9 points below fair value, at 1326. Futures for the Nasdaq 100 were down 17.75 points, or 21.44 points below fair value, at 2544.
"The minutes of the last FOMC basically told investors to get their rampant expectations of further quantitative policy firmly under control, because it is not happening any time soon," said Paul Donavan, global economist at UBS.The Labor Department said before the bell that initial jobless claims for the week ended July 7 fell to 350,000, the lowest levels since March 2008 and a decrease of 26,000 from the upwardly revised 376,000 figure from the preceding week. Economists poll by Thomson Reuters had expected a decline to 372,000. "We note that each summer, auto shutdowns give the government trouble and the seasonal are very unreliable," said Dan Greenhaus, chief global strategist at BTIG. "We absolutely do not believe this is a 'real' number." The four-week moving average was 376,500, a decrease of 9,750 from the previous week's average of 386,250. Continuing claims for the week ended June 30 was 3.304 million, a decrease of 14,000 from the prior week's level of 3.318 million. Meanwhile, the Bureau of Labor Statistics reported that U.S. import prices fell 2.7% in June, following a 1.2% decrease in May. Lower prices for both fuel and nonfuel imports contributed to the overall decline. U.S. export prices fell 1.7% in June after a 0.4% drop the previous month. The U.S. Treasury Department is expected to report at 2 p.m. that the U.S. government ran a $75 billion budget deficit in June. The deficit was $43.1 billion the same time a year ago. Hong Kong's Hang Seng Stock index closed down 2.03% and the Nikkei settled behind by 1.48% amid fears of poor economic growth data from China at the end of the week and after the Bank of Japan decided to pursue only small adjustments to monetary easing. This, as South Korean's central bank slashed its lending rate in its first easing action in over three years, highlighting its concerns about the economy. The FTSE in London was falling 0.8% and the DAX in Germany was sliding 1% as global slowdown concerns flooded the markets and overshadowed better-than-expected eurozone industrial production data for May, which had risen. August crude oil futures were sliding $1.31 to $84.50 a barrel. August gold futures were falling $13.90 to $1,561.80 an ounce. The benchmark 10-year Treasury was rising 10/32, lowering the yield to 1.487%, while the dollar was up 0.14%, according to the dollar index. In corporate news, Walt Disney (DIS) received an upgrade from Wells Fargo early Thursday. The firm went to outperform from market perform on the stock, saying concerns -- such as the potential for margin contractions at ESPN -- that previously kept its optimism in check seem to have dissipated. Disney's stock closed Wednesday at $47.27, up more than 25% year-to-date. Fastenal (FAST) reported fiscal second-quarter earnings of $112.3 million, or 38 cents a share, on sales of $804.9 million. The average estimate of analysts polled by Thomson Reuters was for a profit of 37 cents a share in the June-ended period on revenue of $807.7 million. Shares of the Winona, Minn.-based maker of industrial and construction supply products closed Wednesday's session at $39.81, down nearly 9% so far in 2012. Shares of SuperValu (SVU) were dropping sharply in pre-market action after the Minneapolis-based grocery store operator reported a below-consensus quarterly profit, suspended its dividend and said it's conducting a review of its strategic options. The company, which is seeking to reduce its debt load by between $450 million and $500 million in fiscal 2013, posted a profit of $41 million, or 19 cents a share, for its fiscal first quarter on sales of $10.6 billion. The average estimate of analysts polled by Thomson Reuters was for earnings of 38 cents a share on sales of $10.8 billion. The stock was last quoted at $3.77, down 28.7%, according to Nasdaq.com. Callaway Golf (ELY) said late Wednesday it's cutting 12% of its global workforce as part of an effort to generate gross annual savings of $52 million. The Carlsbad, Calif.-based golf equipment maker also said it now expects to report a pro forma loss of 55 to 75 cents a share for fiscal 2012. Wall Street's current consensus estimate is for a loss of 21 cents a share for the full year. It could also be a rough session for Family Dollar (FDO) shares after Bank of America Merrill Lynch lowered its rating on the stock to underperform and dropped its 12-month price target to $60 from $71, citing rising concerns about the off-price retailer's strategy and execution abilities.
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