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Pre-Market Primer: Japan's Experiment Pans Out; Jobless Claims Jump


Abenomics is a success for now.

US stock futures pointed upward this morning as jobless claims jump and declining food and energy prices created deflation in the United States.

The Dow (INDEXDJX:.DJI) and S&P (INDEXSP:.INX) both hit record highs again yesterday and futures are heading slightly higher this morning. Dow futures are up 0.03% at 15,240. S&P 500 futures rose 0.03% to 1,654.80 and future contracts on the Nasdaq (INDEXNASDAQ:.IXIC) index gained 0.20% to 3,007.00. Gold futures fell 1.6% to $1374.40.

Initial jobless claims rose by 32,000 to 360,000, missing estimates of 330,000. Consumer prices in the US fell 0.4% in April. This was slightly more deflation than expected. Excluding food and energy, prices rose 0.1%.

Housing starts slowed to a seasonally adjusted annualized rate of 853,000 last month, down from 1.02 million in March. Permits sped up to a rate of 1.017 million.

Japan's aggressive stimulus and anti-deflation efforts have paid off. In the first quarter of the year, Japan under "Abenomics" grew 0.9%, or annualized 3.5% growth, exceeding economists' already rosy projections. Corporate investment fell 0.7%, however -- the fifth straight quarterly decline.

Inflation in the European Union fell to just 1.2% in April. Prices rose just 1.1% in Germany, but Greece had 0.6% deflation. The eurozone average was 1.2%. Exports from the eurozone rose 2.8% while imports fell 1%.

Right after yesterday's confirmation that France is in a recession, the country reported that payroll employment declined by 20,300, according to a flash estimate.

Wal-Mart (NYSE:WMT) shares fell 2.9% before the bell today after reporting earnings that came in slightly below estimates. The retailer earned $1.14 per share on $114.2 billion in revenue. Comparable sales fell 1.4% over the three months between January 26 and April 26. Executives also forecast that it will earn between $1.22 and $1.77 per share in the current quarter, a range slightly lower than analyst projections.

After the bell today, JC Penney (NYSE:JCP) will deliver its first earnings statement since ousting Ron Johnson.

Twitter: @vincent_trivett
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