Stocks Set to Open Lower
U.S. stocks were indicated to open lower Thursday as major index futures declined in premarket trading. Traders weighed a smaller than expected increase in first time unemployment filings and a sharply lower revision to U.S. fourth-quarter productivity figures.
Investors were disappointed Chinese Premier Wen Jiabao did not announce a new economic stimulus plan; Wen said China would increase imports, and predicted 8% GDP growth.
Treasury Secretary Timothy Geithner was scheduled to testify Thursday before the House Budget Committee.
The dollar was higher after the European Union and England cut interest rates. Treasuries were higher. Gold futures were also higher. Oil futures were lower.
On Wednesday, the 30-stock Dow Jones industrial average rose 149.82 points, or 2.23%, to 6,875.84. The broad S&P 500 index was up 16.54 points, or 2.38%, to 712.87. The tech-heavy Nasdaq composite index added 32.73 points, or 2.48%, to 1,353.74.
In economic news Thursday, U.S. jobless claims were down 31,000 at 639,000 for the week ended Feb. 28, from 670,000 in the prior week (revised from 663,000). Continuing claims fell to 5,106,000 in the week ended Feb. 21, from a revised 5,120,000 (previously 5,112,000). The 4-week moving average rose 2,000, to 641,750 from 639,750.
"The data are a bit better than expected, though still at elevated levels, and will keep the focus on Friday's February payroll report, where consensus is for a 630,000 drop in nonfarm payrolls," says Action Economics.
U.S. nonfarm productivity growth was revised sharply lower to -0.4% in the fourth quarter, vs. the previously reported 3.2% and a 1.5% rate in the third quarter. Unit labor costs were revised sharply higher to a 5.7% rate of growth from 1.8% initially. Output growth was revised down to -8.7% from -5.5% previously. Compensation per hour was revised to 5.3% from 5.0%, while real compensation was revised to 15.9% from 15.6%.
Later Thursday morning, the market expected a report on January factory orders, which were seen falling 3.0% after dropping 3.9% in December
The Bank of England cut its key rate 50 basis points to 0.5% and the European Central Bank cuts its key rate to 1.5% from 2.0% in efforts to revive their respective economies. The European Union's statistics office confirmed its earlier estimate that quarter-on-quarter gross domestic product in the euro zone shrank 1.5% in the fourth quarter after a 0.2% drop in the third.
Premier Wen Jiabao said China would ramp up deficit spending this year to hit its all-important 8% growth target but did not announce an increase in an already-huge two-year economic stimulus plan that markets had craved. In his annual work report on Thursday to the National People's Congress, the largely ceremonial parliament, Wen said the 2009 growth goal was realistic despite a deepening global financial crisis.
Wen said "demand continues to shrink on international markets; the trend toward global deflation is obvious; and trade protectionism is resurgent. The external economic environment has become more serious, and uncertainties have increased significantly." But he said China's prospects were as bright as ever.
In a Form 10-K filing, General Motors (GM) said its independent public accounting firm states that GM's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain operations raise substantial doubt about its ability to continue as a going concern.
Adobe Systems (ADBE) said it sees first-quarter revenue of $783 million-$786 million, and non-GAAP EPS of $0.44-$0.45. The company expects to achieve a first-quarter operating margin of 37.0%-37.5%. Adobe said its first quarter revenue target range was $800 million-$850 million, with non-GAAP EPS of $0.43-$0.47. The company cited weakness in its creative and knowledge worker businesses. UBS reportedly upgrades to buy from neutral.
Weight Watchers International (WTW) posted $0.56 (excluding items) vs. $0.50 fourth-quarter EPS on a slight revenue rise. The company said it sees 2009 EPS of $2.50-$2.75. Wall Street's view is for 2009 EPS of $2.62.
Greenbrier Cos. (GBX) said it in talks with General Electric's (GE) Electric Railcar Services Corp. concerning potential modifications to a long-term contract for GE's purchase of 11,900 newly built tank and covered hopper cars over an eight-year period. Greenbrier said GE has advised the company that GE desires to substantially reduce, delay or otherwise cancel railcar deliveries under the contract.