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The Associated Press May 19, 2011, 8:56AM ET

Stock futures rise as new unemployment claims fall

Stock futures rose Thursday after the government said the number of new claims for unemployment benefits fell more than expected last week.

The Labor Department said the number of newly laid-off workers seeking benefits dropped 29,000 last week to a seasonally-adjusted 409,000. Economists expected a decline to 420,000 from 434,000 a week earlier. The result suggests that the job market is recovering slowly.

But Sears Holding Corp. reported softer sales at its Kmart and Sears stores, causing a first-quarter loss of $1.58 per share, worse than analysts expected.

In another sign that the U.S. consumer recovery remains uneven, Big Lots Inc. futures fell 9 percent before the market opened after news reports that it decided not to sell itself. The Wall Street Journal said late Wednesday that the company received bids from two private-equity groups that were lower than it had hoped.

Ahead of the opening bell, Dow Jones industrial average futures rose 45 points, or 0.4 percent, to 12,577. Standard & Poor's 500 index futures rose 5, or 0.4 percent, to 1,344. Nasdaq 100 futures rose 7, or 0.3 percent, to 2,369.

Two reports both due at 10 a.m. could provide more clues about the strength of the housing recovery and the overall direction of U.S. growth.

The National Association of Realtors will report on the number of previously occupied homes purchased in April. Economists expect a small increase in sales that likely was driven by investors -- not the first-time homebuyers who are needed to help the housing market recover.

Economists expect that the pace of sales in April rose nearly 2 percent from the previous month to a seasonally adjusted annual rate of 5.2 million units. That's still far below the 6 million homes a year that economists say represents a healthy market. And foreclosures and short sales -- when a lender agrees to accept less than what is owed on a mortgage -- now make up 40 percent of all home sales.

The Conference Board will report on expectations for future economic activity based on an index of leading economic indicators. Economists project that the index increased a paltry 0.1 percent in April. That would be its slowest rate of increase since August 2010.

The market appears likely to take in stride news that Japan sank back into recession in the first quarter because of interruptions to output and dislocation after the earthquake, tsunami and nuclear disasters.

Government figures showed the Japanese economy shrank more than anticipated, by a quarterly rate of 0.9 percent, dragging the Nikkei index of leading Japanese shares down 0.4 percent to 9,680.82.

Technology traders can bid on shares of a social-networking company for the first time with the initial public offering of LinkedIn Corp. The first shares were priced late Wednesday at $45, the high end of the projected range. The price puts LinkedIn's market value at $4.3 billion, the highest for a U.S. Internet IPO Google Inc. went public nearly seven years ago.

The market rose Wednesday after three days of declines, as widespread gains in commodity prices lifted energy and materials companies and the Federal Reserve released minutes showing that officials believe the economy is improving. That could increase demand for raw materials like steel and fertilizer.

The Dow added 81 points, or 0.6 percent, to close at 12,560 Wednesday.

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