U.S. stocks are set to dip at the open on Thursday as investors shy away from rising oil prices, fears of rising interest rates, and unease over geopolitical events. A sharper-than-expected drop in weekly jobless claims failed to raise optimism, as labor costs edged higher, sparking new fears of inflation. Citigroup Inc. may fall after it said on Wednesday the U.S. Securities and Exchange Commission is investigating its accounting for its Argentina business. Lockheed Martin Corp. could benefit after it won a contract to develop the U.S. military's next-generation tactical missile, a deal that could be worth $5.5 billion over 14 years.
"There's some concern about unit labor costs," said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access. "People are concerned about commodity-led inflation and now this could spark concern about wage inflation." Government data showed on Thursday that the number of Americans filing initial claims for jobless pay dropped last week to the lowest level since October 2000, to 315,000 from a revised 340,000 the previous week. That was offset by data showing that U.S. first-quarter business productivity grew, but unit labor costs unexpectedly rose 0.5 percent over the first quarter, surprising Wall Street economists who had expected no change, raising fears that inflation is more of a threat than the Federal Reserve has acknowledged. Investors are now looking forward to the government's April employment report, set for 8:30 a.m. (1230 GMT) on Friday, with Wall Street expecting to see 173,000 new non-farm jobs created, after a giant leap of 308,000 the month before.
U.S. stock futures were trading lower before the bell on Thursday, below fair value, pointing toward a lower open. The markets may feel more downward pressure after world oil prices set fresh 13-year highs on Thursday. Prices edged towards $40 a barrel for U.S. crude, stoked by worries about summer gasoline shortages in the United States.///