Stock futures fall but pull off lows as jobless claims drop; Goldman, Citi numbers disappoint

Stock futures pull off lows as jobless claims drop

NEW YORK — Stock futures pointed to a lower open Thursday as earnings reports from Goldman Sachs Group Inc. and Citigroup Inc. failed to dazzle investors the way a report from JPMorgan Chase & Co. did a day earlier.

Investors drew some comfort from a government report that the number of newly laid-off workers filing claims for unemployment insurance fell last week.

The market’s expectations for bank earnings increased after JPMorgan set a high bar Wednesday with a surprisingly strong profit that helped propel the Dow Jones industrials past the 10,000 mark for the first time in a year.

Goldman Sachs said it earned $3.19 billion, or $5.25 per share, in the third quarter. Profits were boosted by increased activity in fixed income, commodities and currency trading. But revenue from its investment banking operations fell sharply from the previous quarter, reflecting slow activity in dealmaking. Goldman also said it set aside about $5.35 billion for compensation and bonuses, more than in the third quarter a year ago.

Citigroup, meanwhile, reported a slightly smaller loss per share than expected but said its credit losses remain elevated.

Bank earnings are a particular focus for investors, as a healthy banking system is integral to a strong economy, and the best indication that the market has recovered from the financial devastation of last fall.

Tech firms Google Inc., IBM Corp. and Advanced Micro Devices will issue their results after the market’s close Thursday.

On Wednesday, the Dow jumped 144 points to close at 10,015 — its biggest gain since Aug. 21 and highest close since Oct. 3 last year. Broader stock indexes also rallied to 2009 highs.

The reports Thursday brought reminders that the recovery will take time.

“Things are going in the right direction but the fundamental economic improvement is slow,” said Robert Dye, senior economist at PNC Financial Services Group. “The tendency is for the markets to get ahead of themselves and have to be rebalanced periodically.”

Dow Jones industrial average futures fell 30, or 0.3 percent, to 9,922. Standard & Poor’s 500 index futures fell 5.00, or 0.5 percent, to 1,082.70, while Nasdaq 100 index futures fell 7.25, or 0.4 percent, to 1,740.50.

The Dow is now up 53 percent since hitting a 12-year low in March, while the S&P 500 index is up 61.4 percent and the Nasdaq composite index is up 71.2 percent.

In economic news, the Labor Department said the number of newly laid-off workers filing claims for unemployment insurance fell to its lowest level since early January. First-time claims for jobless benefits dropped to a seasonally adjusted 514,000 from an upwardly revised 524,000 the previous week. It was the fifth drop in six weeks and better than the level of 525,000 that economists had been expecting, according to Thomson Reuters.

The Labor Department also said consumer prices rose 0.2 percent last month, matching analysts’ expectations. Prices excluding the volatile energy and food categories also rose 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast. Consumer prices have fallen in the past year as the recession has held down inflation.

Investors took some comfort from an index of manufacturing in New York indicated that demand has jumped in October. The main index from New York Federal Reserve’s Empire State Manufacturing Survey rose 16 points in October to 34.6, its highest level in five years.

Traders also continued to track corporate earnings reports. Investors want to see companies grow their profits through sales and not just cost-cutting, which would signal that consumers and businesses are becoming more comfortable spending again.

JPMorgan, the first major bank to report its quarterly results, set a precedent for its peers, reporting a $3.59 billion profit that came in well above Wall Street’s expectations. Though the bank said it expects loan losses to remain high well into the future, business in its investment banking division is booming, and should help to offset those losses.

Goldman shares fell $4.27, or 2.2 percent, to $188.01 in electronic trading, while Citigroup shares lost 20 cents, or 4 percent, to $4.80.

In other earnings news, Southwest Airlines Co. said it lost $16 million in the third quarter because of fuel hedges and an early retirement program. Excluding those one-time items, the discount carrier said it would have made a profit of $23 million.

In other trading, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.46 percent from 3.42 percent late Wednesday.

Overseas, Japan’s Nikkei stock average jumped 1.8 percent. In afternoon trading, Britain’s FTSE 100 fell 0.5 percent, Germany’s DAX index fell 0.5 percent, and France’s CAC-40 lost 0.2 percent.