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Pre-Market Primer: US Jobs Market Improves as Greece's Government Hangs in the Balance


Jobless claims fell for two straight weeks, oil futures stabilize.

MINYANVILLE ORIGINAL Stock futures turned positive as indicators showed that the US labor market is stabilizing.

Initial claims for unemployment fell to 367,000 last week, a drop of 1,000 from the week before. The Labor Department revised the level of claims for the previous week from 365,000.

European and Asian shares declined overnight. Stock futures fluctuated in the morning, and turned positive just before the jobless claims data was released. Dow (^DJI) futures rose 0.28% to 12,831.00. S&P 500 (SPY) futures gained the most, rising 0.59% to 1,359.00. Futures on the Nasdaq (^IXIC) futures gained 0.32% to 2,627.75.

The two biggest economies in the world, which trade a great deal with one another, reported on balance of trade today. The US trade deficit widened more than expected to $51.8 billion in March from $46 billion in February. China's trade surplus widened more than expected to $18.4 billion in April, from $5.4 billion in March. Import growth rose just 3% over last year, against estimates of 10.9%. Weaker demand in China could be a sign that the economy is slowing fast, and might inspire policy makers to do more to stimulate the economy.

Greece's divided parliament is still stuck in negotiations between parties to form a coalition government. On May 6, anti-austerity parties ranging from radical leftists to neo-Nazis swept the elections, but none had the numbers to form a government. Syrzia, the party with the second most seats, failed to convince the Socialists to form a government under Alexis Tsipras, who vows to renegotiate the harsh fiscal austerity terms that came with its bailout from international creditors. Now Evangelos Venizelos, leader of the Socialist Pasok party and backer of the fiscal agreements and the bailout, has three days to convince other parties to form a government. If Venizelos fails, new elections will be held.

Today, it was announced that Greek unemployment in February rose to 21.7%.

Spain confirmed that the state will inject capital into Bankia, which accounts for 10% of deposits in Spain. Bankia holds about 184 billion euros in toxic debt leftover from the Spanish property bubble.

Germany's Bundesbank, congenitally hawkish on inflation since the nightmare of the Weimar Republic's currency, is showing willingness to ease up. A central banker told Reuters that the bank is prepared to accept "an inflation rate moderately above the ECB inflation target of around 2%."

The Bank of England announced today that it will keep interest rates steady at 0.5% and maintained its quantitative easing level at 325 billion pounds.

Industrial production declined on a yearly basis in three European countries in March. Italian output fell 5.8%. British industry put out 2.6% less than last year. French industrial production fell 0.9%.

Crude oil futures broke its downward trend this morning, stabilizing at $96.88/barrel, up 0.07%.

Cisco (CSCO) shares slumped 7.35% in the pre-market after the company issued lower-than-expected earnings guidance for the coming quarter. CEO John Chambers attributed the pessimistic outlook to customers' lack of confidence and concerns about the global economy.

"We are still in an uncertain environment economically," the CEO said in a conference call. "We are waiting to see what happens in Europe and what happens with government policy."

The largest maker of computer networking equipment earned $0.48 per share in the quarter ending April 28, one penny above analysts' expectations.

Other enterprise technology bellwethers, Dell (DELL) and Hewlett-Packard (HPQ), will report earnings on May 22 and 23.

Twitter: @vincent_trivett
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