NEW YORK ( TheStreet) -- U.S. stock futures traded higher after U.S. weekly jobless claims came in better than expected and Italian bond yields edged down, lifting hopes for a rebound from the prior session's sharp selloff. Futures for the Dow Jones Industrial Average were up 127 points, or 121 points above fair value, at 11,859. Escalating worries about Italy's fiscal fate sent the Dow down 389 points on Wednesday. The index saw its biggest decline in seven weeks as well as its sixth-largest drop in the year. Futures for the S&P 500 were up 17 points, or 17 points above fair value, at 1243. Futures for the Nasdaq were up 26 points, or 26 above above fair value, at 2337.
The Labor Department's read on jobless claims dropped 10,000 to 390,000 for the week ended Nov. 5 from a revised 400,000 in the previous week. Economists expected claims to inch up to 400,000 according to Thomson Reuters. The U.S. trade deficit narrowed in September to its lowest level in 2011. The trade gap shrank to $43.1 billion from a revised $44.9 billion in August as exports rose to a record high. Economists expected the gap would widen to $46 billion from the originally reported $45.6 billion in August. With European stocks rebounding, U.S. stocks were set to follow suit. Yields on 10-year Italian bonds fell to 6.6%, in part due to the European Central Bank which was reportedly buying up bonds in an effort to keep a cap on rising yields. The bank's intervention comes one day after the country's debt soared to euro-era records. "The focus is on whether or not the plan to contain bond yields is going to work," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Everybody knows that the problem here is focusing on whether Italy can sustain the debt load that it has. It's a force to be reckoned with." London's FTSE was rising 0.5%, and Germany's DAX was gaining 1.3%. Overnight, Asian stocks followed the decline in U.S. stocks. Japan's Nikkei Average finished down 2.91% and Hong Kong's Hang Seng plummeted 5.25%. Greece named an interim prime minister, Lucas Papademos, to take over after the departure of Prime Minister George Papandreou. The announcement comes after weeks of political maneuvering as the country struggles to pass austerity measures needed to secure a bailout package from Europe. "Greece was small positive but pretty much as was expected," added Pado of Cantor Fitzgerald. "Trading on the Italian bonds will likely remain the big headline of the day." However, Pado added, "we could easily see swings in the triple digits today... the volatility has gotten so expected that nobody's yelling and screaming or thinking twice about a 400 point decline. We're just going to have to live with these wild swings." Helping to lift sentiment in the morning were better than expected quarterly results from tech bellwether Cisco (CSCO) . The company was gaining 5.8% after posting earnings of 43 cents per share and reporting revenues that rose 4.7% year-over-year to $11.3 billion despite sluggish corporate spending. Analysts surveyed by Thomson Reuters were looking for earnings of 39 cents a share and revenue of $11.03 billion in the period. In other corporate news, shares of K-Cup king Green Mountain Coffee Roasters ( GMCR) were plunging 32.5% in premarket trading. The company missed fourth quarter revenue expectations by a wide margin, despite growing the top line by more than 90% on a year-over-year basis. Waterbury, Vt.-based Green Mountain's revenue total of $711.9 million for the quarter was more than 6% below the average estimate of analysts polled by Thomson Reuters for revenue of $760.5 million. Cambridge, Mass-based business software maker Pegasystems ( PEGA) was plummeting 15.6% after reporting third-quarter adjusted earnings that were less than half of what Wall Street was looking for. The company posted profit of 15 cents a share on revenue of $95.5 million, up 6% year-over-year, but below forecaste earnings of 31 cents a share on revenue of $111.3 million. Advance Auto Parts ( AAP) reported third-quarter earnings of $1.41, beating the average analyst estimate of $1.18. The company also forecasted full-year earnings of $4.90 to $4.95 a share, above the average analyst estimate of $4.69 a share. Shares were up 0.4% to $66.60. Gold for December delivery was losing $28 to trade at $1,763.60 an ounce. In other commodities, the December crude oil contract edged up 71 cents to trade at $96.45 a barrel. The euro was rebounding by 0.18% to $1.347 after dropping about 2% yesterday. The dollar index lost 0.23%. Ten-year U.S. treasury notes were losing 1 18/32, pushing the yield slightly above 2%, after a rush to safety sent yields below 2% on Thursday. -- Written by Chao Deng in New York.