The pre-markets headed lower this morning on follow through weakness from Europe and Asia, and on the heels of a larger than expected jump of 18,000 initial jobless claims to 460,000 from 442,000 (revised 3,000 higher) in the prior week. This sent the S&P 500 lower at the open by about -7 points but the index has pared most of the losses and is now trading near breakeven. Traders continue to test the European resolve on Greece ahead of the European Central Bank rate decision, while spreads between German and Greek 10-year bonds continue to widen above 425 bps.

In the jobless claims report The Labor Department warned that seasonal volatility will shake up the initial claims numbers through the next several weeks, citing not only the Easter holiday as a distortion but also the Cesar Chavez holiday in California. Otherwise, the department reports "nothing unusual." The four-week average of initial claims is at 450,250, up 2,250 from the end of March but down more than 20,000 from the beginning of March. Tracking the month-over-month comparison in the weeks ahead will shape expectations for the April employment report. Continuing claims, which is a lagging indicator, fell 131,000 to 4.550 million for the lowest level of the economic recovery. The four-week average also fell 36,000 to 4.648 million and is also the best reading of the economic recovery. Although the data from continuing claims is favorable, there is noise as the improvement also reflects discouraged workers falling out of the unemployment pool.

March same-store sales data came in even stronger than the positive numbers seen in the past three months, although analysts are pointing out that comparisons with last year are difficult due to last spring's dismal economic conditions. The majority of comps were in the positive double-digit range, and only two major reports came in below estimates. Kohl's report was among the leaders of the major retailers at 22.5% comps. Abercrombie and Fitch remains a laggard as its comps were flat with last month's performance, missing expectations. It is also worth noting that industry analysts at ICSC predict overall April same store sales to decline 3% and multiple retailers have noted that the early Easter will negatively impact April comps.

In equities, Bed, Bath and Beyond is up +3.50% after beating top and bottom line expectations and offering strong guidance for next quarter and the full year. Many casino names are heading higher after Nevada disclosed strong growth in casino spending, which included 33% year-over-year growth on the Las Vegas strip. MGM is up nearly +10%, while WYNN and LVS are higher by about +4%. News reports that US Airways and United are in deep merger talks are giving the airlines a lift. Shares of United are up +9% and US Airways are up +12%. Heavy vehicle maker Navistar raised its 2010 earnings view significantly to $2.75-3.25 from $1.75-2.25 that the firm reiterated just a month ago.

Commodities:
Front month crude is down -0.50% to about $85.50 per barrel after testing the $87 level most of the week. Gold has settled in at about the $1,150 level while silver is just above $18.00, down -0.74%. Natural gas is back below $4.00 to $3.93 (-2.09%) following a build in weekly inventories. Copper is off by -0.46%.

International Markets:
Every major international market closed lower on Thursday with the exception of Korea which was higher by +0.42%. Leading the declines in Asia-Pacific region were Japan (-1.10%), China (-0.94%), and Thailand (-3.53%).

All European major markets led by France (-1.20%), Italy (-1.31%), and Spain (-1.03%). In London and Germany stocks closed lower by -0.86% and -.81%, respectively.

Core Sector List:
Overall Reading: 9 sectors advancing, 7 sectors declining
Strongest Sectors: Retail, Software, Banks
Weakest Sectors: Semiconductors, Gold Miners, Utilities

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