Stock index futures fell Thursday morning after the latest weekly jobless claims numbers from the Labor Department showed a sharp increase during the final week of January. Less than an hour before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might lose 50 points in early trading.
Weekly jobless claims surged to their highest levels since 1982. According to the Labor Department, the number of filings for jobless benefits increased by 38,000 to 626,000 in the week ended January 31. Economists are once again dumbfounded, as they had predicted a decline to 580,000.
In addition, the weekly jobless numbers hold more sway than usual because the report comes the day before the Labor Department's monthly unemployment data, which is expected to show the economy losing another 500,000 jobs in January and the unemployment rate increasing from 7.2 to 7.5 percent.
Stock index futures, which were already in the red ahead of the news, sank further when the jobless claims numbers were released.
A separate report showed fourth quarter productivity increasing by 3.2 percent, and much better than economist estimates of 1.5 percent. Unit Labor costs rose 1.8 percent, and below expectations for a 2.8 percent increase.
Bonds are holding modest gains on the heels of the weak jobless claims and inflation numbers. The benchmark ten-year Treasury is up two ticks and yields 2.9 percent.
The buck is a bit higher on the yen, up .27 to 89.72. The euro dipped .0077 to 1.2771 on the dollar.
A report on factory orders is due out at 10:00 a.m. ET. Economists expect a decline of 3.1 percent in December, which follows a 4.6 percent drop the month before.
In stock news, Cisco (CSCO) will weigh on the NASDAQ in early trading. Shares fell 2.9 percent, even after the tech bellwether reported quarterly earnings of 32 cents per share, which beat Street estimates by 2 cents.
The Dow might get some help from Wal-mart (WMT), however. Shares are up 2.6 percent after the world's largest retailer reported a better-than-expected 2.1 percent increase in monthly same store sales.
However, excluding Wal-mart, today's monthly chain store sales numbers are expected to show a 5.7 percent drop in the sector during the month of January.
Meanwhile, gold is running higher, up $22.00 to $924.20 an ounce. Crude oil sits unchanged at $40.32 a barrel.
In the options market, trading was cautious, as disappointing earnings from Kraft (KFT) and Disney (DIS), along with ongoing anxiety about the financial industry, conspired to send the Dow down 120 points Wednesday. The CBOE Volatility Index (.VIX) edged up .79 to 43.65. Approximately 6.2 million puts and 6.1 million calls traded across the exchanges.
Many of the drybulk shippers saw bullish order flow. Diana Shipping (DSX) finished the day up $1.51 to $15. Total options volume in DSX jumped to four times the normal levels, with 8,800 calls and 3,600 puts traded on the day. Share price gains and increasing options activity was also seen in Genco Shipping (GNK) and Excel Maritime (EXM).
Outside of the dry bulk shippers, bullish order flow was seen in Vale (RIO), Nova Chemicals (NCX), Tesoro (TSO), the Select Sector Industrial Fund (XLI), and the SPDR Retail Trust (XRT).
Bearish trading surfaced in some of the casino operators. Starwood Hotels (HOT) fell 47 cents to $14.74 and options activity jumped to four times the typical levels, with 33,000 puts and 4,200 calls traded. Wynn Resorts (WYNN) and Las Vegas Sands (LVS) saw similar action. Bearish flow also picked up in Medicis Pharmaceuticals (MRX), Textron (TXT), and the Dow Jones Industrial Index (.DJX) Wednesday.
Frederic Ruffy
WhatsTrading.com
