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Weekly jobless claims give rise to futures

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Equity traders are looking at a higher open after the Labor Department said that weekly jobless claims plunged by 60,000 to 378,000, which was better than the 405,000 level economists had forecasted.

While weekly claims fell, the closely monitored four-week average of first time jobless benefits edged up 2,500 to 404,500, which leaves the number just above the 400,000 threshold that economists say marks an improving labor market.

A Labor Department official said the Thanksgiving and winter holidays tend to skew the numbers significantly even though the government tries to allow for these changes statistically in their seasonal adjustments.

Factors such as what day of the week the holiday falls on and how that might affect the volume of claimants, as well as the expected, but difficult to predict, expansion of the claimant pool in the early part of each New Year, all can be factors in large swings in both directions.

Just two weeks earlier, the weekly number expanded by a larger than expected 86,000 new applicants.

Further, for many unemployed workers their benefits have simply run out, as the federally mandated expansion expired for many at the end of December. Congress must consider renewing the extension, which President Bush has recommended.

This morning's jobless data had stock futures jumping to their best levels of the morning, but futures are just off their highs after retailer and Dow component Wal-Mart (NYSE:WMT) $49.70 cut its December sales outlook as holiday demand fell short of expectations. In a recorded sales update, Wal-Mart said it now expected sales at stores open at least one year to be up 2-3% in the five-week period ending January 3. This is below the previously forecasted gain of 3-5%. The company did say that demand accelerated over the past weekend and into Christmas Eve, with two of those days topping the $1 billion in sales, but "the increase was too late and too little for us to reach our sales plan," Wal-Mart said.

S&P futures (sp03h) currently trade higher by 4.6 points to 896.10. NASDAQ futures (nd03h) are gaining 9.5 points at 1,033.50, while Dow futures (dj03h) are up 50 points at 8,480.

Fair value for the S&P 500 today is $0.06. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.22 and set for program selling at $-2.36. Fair value for the NASDAQ-100 today is $3.50.

Jeff Bailey

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