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US STOCKS-Wall St set for flat open after jobless claims

Published 12/30/2010, 09:17 AM
Updated 12/30/2010, 10:08 AM

* Weekly jobless claims better-than-expected

* Chicago PMI, Nov pending home sales on tap

* Futures: Dow off 5 pts, S&P off 1.1, Nasdaq up 1.75

By Chuck Mikolajczak

NEW YORK, Dec 30 (Reuters) - U.S. stocks were poised to open little changed on Thursday after data showed the labor market was improving but that the overall employment picture remained soft.

New U.S. claims for unemployment benefits dropped 34,000 to a seasonally adjusted 388,000, the Labor Department said, the lowest reading since early July 2008. That was well below economists' expectations for 415,000.

"The claims numbers are very consistent with the view that employment conditions are improving but at a very anemic pace," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

"Even though this is a good number, even though the decrease is more than estimates, to 388,000, it's not very good at this stage of a recovery."

On the penultimate trading day of the year, the S&P 500 is headed for its best December in nearly two decades. The index has gained 6.7 percent so far this month, closing on Wednesday at its highest level since Sept. 8, 2008, and has risen in 17 of the last 20 sessions.

The Chicago Purchasing Managers Index, due at 9:45 a.m. (1445 GMT), is expected to have dipped a bit in the December reading, with analysts forecasting a drop to 61.0 from 62.5 the month before.

Pending home sales data for November from the National Association of Realtors are expected at 10 a.m., and are forecast to show a 2.0 percent increase in sales from October.

S&P 500 futures shed 1.1 points and were slightly below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 5 points, and Nasdaq 100 futures added 1.75 point.

During trading hours in Asia, a survey on Chinese manufacturing showed inflation could be cresting, an early indication that the government will be able to stick to its course of gradual rather than aggressive monetary tightening.

Volume is expected to remain tepid in light of the holiday season and the recent blizzard that blanketed the U.S. Northeast. The storm postponed about $1 billion in holiday retail sales by keeping shoppers away from stores in the days after Christmas, research firm ShopperTrak said.

U.S. health regulators have approved Endo Pharmaceuticals Holding Inc and ProStrakan Group PLC's Fortesta testosterone gel to treat men with low levels of the hormone.

Endo Pharma shares gained 4.2 percent to $36.70 in premarket trade.

Lockheed Martin Corp and the U.S. unit of Australia's Austal Ltd won U.S. Navy contracts potentially worth more than $3.5 billion each to design and build up to a combined total of 20 coastal combat ships through 2015. Lockheed shares added 1.2 percent to $69.95 in light premarket trade.

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