NEW YORK ( TheStreet) -- Stock futures were paring losses after a better-than-expected jobless claims report, but were still pointing to a negative open as investors continued to worry that the Federal Reserve may be heading for a wind-down of quantitative easing. Furthermore, manufacturing data in China indicated an unexpected contraction in manufacturing activity in the country.
All overseas markets were down on the developments, with the Nikkei 225 in Japan suffering its steepest drop since the aftermath of the tsunami and nuclear disaster in March 2011, closing down 7.3%.
Despite the intraday market pressures, "the tenets of the bull market remain intact: strong earnings and corporate balance sheets, shrinking equity supply and little yield in fixed income alternatives and cash," said Jordan Waxman, managing director and partner at HighTower HSW Advisors in New York. "We are looking for opportunities in cyclical names and industries, which are now historically very cheap to the consumer staples stocks we had been buying into the new year."
Futures for the S&P 500 were down 15.25 points, or 12.8 points below fair value, to 1,640.25. U.S. markets on Wednesday erased morning gains, falling sharply after the Federal Reserve minutes from its latest policy-making meeting showed that some members are open to scaling back monetary stimulus by June.Ford (F - Get Report) shares were down 1.47% to $14.75 in premarket trading after the automaker said Thursday it will close its two Australian auto plants, ending production in the country in 2016, amid higher costs and falling sales. The closure of the plants will mean the loss of 1,200 jobs. Ford began making cars in Australia in 1925 and is the third-largest automaker in the country. The Labor Department reported that initial jobless claims for the week ended May 18 fell 23,000 to a better-than-expected 340,000 from an upwardly revised 363,000 the prior week. Economists, on average, were expecting claims to dip to 345,000. The four-week moving average on initial jobless claims was 339,500, a decrease of 500 from the previous week's 340,000. Continuing claims for the week ended May 11 decreased 112,000 to a lower-than-expected 2.912 million in the week ended May 11 from an upwardly revised 3.024 million the week before. The consensus estimate among economists was for a decline to 3 million. In China, fears of a slowing economic recovery were being sparked by a drop in the flash HSBC Purchasing Managers' Index. The preliminary report on manufacturing showed that China's factory activity shrank for the first time since October, with the index softening to 49.6 in May, below the 50 level dividing expansion and contraction. Futures for the Dow Jones Industrial Average were down 116 points, or 80.17 points below fair value, at 15,204. Futures for the Nasdaq were off 27 points, or 23.88 points below fair value, to 2,974. PetSmart (PETM) was rising 2.81% to $71 after the pet products retailer hiked its full-year estimates, with sales growth expectations of 3% to 4%. The company posted first-quarter earnings of 98 cents a share, beating estimate by 2 cents. Revenue matched expectations. Mortgage servicing provider Lender Processing (LPS) will soon be acquired by Fidelity National Financial (FNF) and Thomas H. Lee Partners for approximately $33 a share in cash and stock, or $2.9 billion, the Wall Street Journal reported. Hewlett-Packard (HPQ - Get Report) was jumping 11.1% to $23.58 after the PC and printer maker posted earnings on Wednesday that beat Wall Street expectations. "We beat the upper end of our non-GAAP diluted EPS outlook for the quarter by $0.05 per share, driven by better than expected performance in Enterprise Services and Printing, coupled with the accelerated capture of restructuring savings and improvement in our operations," said Meg Whitman, HP president and CEO, in a statement. New home sales data, out at 10 a.m., is forecast to show an increase to a seasonally adjusted annual rate of 425,000 in April from 417,000 in March. The Federal Housing Finance Agency's Housing Price Index for March will be released at 9 a.m. The FTSE 100 in the U.K. was falling 1.92% while the DAX in Germany was slumping 2.66%. The Hong Kong Hang Seng finished off 2.54%. June gold futures were surging $20.10 to $1,387.50 an ounce. July oil futures were down by $1.21 to $93.07 a barrel. The benchmark 10-year Treasury was jumping 15/32, pushing the yield down to 1.992%. The dollar was slipping 0.54% to $83.89 according to the