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Pre-Market Primer: Jobless Claims Drop the Most in One Year

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The labor market shows some signs of life, and the ECB keeps interest rates steady. Several key companies beat earnings estimates.

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MINYANVILLE ORIGINAL Stocks are climbing higher in the premarket as two official indicators showed some renewed signs of life in the US labor market and several companies issued strong earnings.

Dow (^DJI) futures advanced 0.26% to 13,228.00. S&P 500 (SPY) futures rose 0.31% to 1,401.90 and Nasdaq (^IXIC) futures rose 0.35% to 2,737.00.

Last week 365,000 Americans filed for jobless benefits, down from the upwardly-revised figure of 392,000 in the prior week. Economists expected claims to stay elevated at 378,000.

Initial jobless claims have been trending up for several weeks now, dampening optimism for the US labor market. Yesterday, a private count of jobs created in the US last month fell far short of expectations. Challenger, Gray, and Christmas, a Chicago-based outplacement firm, estimated that 40,559 people lost their jobs in mass layoffs last month, more than the month before. Economists expect tomorrow's official employment situation report to show gains of 160,000 jobs in April.

A separate report showed that worker productivity in the US fell in the first quarter of this year. Employee output per hour fell 0.5% from last year, but rose 1.2% over the December quarter. Declining productivity shows that businesses have already cut their workforces as far as they can, and can't push any more productivity out of the workers that they do have.

European shares are higher today as investors anticipated another round of LTRO. The European Central Bank is holding its policy meeting in Barcelona today. The ECB announced today that it will keep interest rates at the record low of 1%. ECB President Mario Draghi held a press conference following the announcement where he said that the policy committee did not discuss cutting interest-rates, disappointing analysts that predicted a cut. Draghi also said that price stability is under control, but oil prices and taxes will likely keep inflation above 2%. Dragi expects the European economy to recover gradually. Echoing Angela Merkel and company, Draghi favors spending cuts over tax increases.

Outside of the press conference, Spanish protesters clamored against austerity measures. About a quarter of Spain's workforce is unemployed, and investors and ratings agencies are losing faith in Spain's ability to avoid an absolute crisis. Spain's borrowing costs are also heading north. Today, Spain auctioned 2.52 billion euros of three- and five-year debt. The sale met high demand, but the yield on the longer-term debt approached 5%.

China's non-manufacturing PMI eased to 56.1 in April from March's 10-month high of 58.

Earnings from General Motors (GM), Visa (V), Whole Foods Market (WFM), and Viacom (VIA) all beat earnings estimates for the first quarter. General Motors made a profit of $1 billion, but earnings were hurt by a $590 million accounting charge in Europe. Viacom benefitted from higher fees for its Nickelodeon, Comedy Central, and MTV properties. Green Mountain Coffee Roasters (GMCR) shares sank 40% in the pre-market after issuing lower-than-expected guidance for future earnings.

Twitter: @vincent_trivett
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