US Stocks Head to Lower Open as Oil Advances

NEW YORK - Wall Street headed for a lower open Thursday after a government report showed that unemployment spiked unexpectedly last week and oil prices advanced for the first time this week.

The Labor Department reported that new applications for unemployment insurance rose last week to a seasonally adjusted 444,000, up 15,000 from the previous week. Economists had expected a slight drop to 420,000 claims, and the report reversed three weeks of declines.

Meanwhile, investors were also skittish as crude rose to almost $110 a barrel as Wall Street waited to see if a weekly U.S. inventory report would contain evidence that slowing economic growth has cut demand. The Energy Department is scheduled to release its report on oil stockpiles for the week ended Aug. 29 later in the session.

A barrel of light sweet crude rose 56 cents to $109.91 a barrel in electronic trading on the New York Mercantile Exchange. It dipped below $108 a barrel on Wednesday.

Meanwhile, many U.S. chain stores were reporting their August sales, expected to be weak except for some discounters. Consumers have been cautious with back-to-school shopping. Wal-Mart Stores Inc., the world's largest retailer, reported sales that surpassed Wall Street projections.

Investors are also awaiting a report that is expected to show the nation's service sector improved slightly last month.

The Institute for Supply Management, a trade group of purchasing executives, is expected to report at 10 a.m. EDT that its service sector index rose to 50.0 from 49.5 in July, according to Wall Street economists surveyed by Thomson/IFR. Any reading above 50 signals growth, while a reading below 50 indicates contraction.

Dow Jones industrial average futures fell 75, or 0.48 percent, to 11,466. Standard & Poor's 500 index futures shed 6.40, or 0.50 percent, to 1,268.80 and Nasdaq 100 index futures dropped 10.25, or 0.56 percent, to 1,824.25.

The move in futures follows a volatile session on Wednesday, with investors unsettled about the economy ahead of the government's August employment report on Friday and only somewhat relieved about the recent slide in commodities prices. The Dow ended up 15.96, after rising by as many as 37 points and falling by as many as 100.

Bond prices moved higher Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.68 percent from 3.70 percent late Wednesday.

In corporate news, Wal-Mart said sales of groceries and back-to-school products helped its August same-store sales rise 3 percent, beating expectations. Sales in stores open at least one year, a measure known as same-store sales, rose 2.8 percent at Wal-Mart Stores and 4.2 percent at Sam's Club for the four weeks ended Aug. 29.

Limited Brands Inc., the operator of Victoria's Secret and Bath & Body Works, suffered a 7 percent drop, in line with the 6.9 percent decline estimated from Wall Street. Meanwhile, clothing and accessories retailer Stage Stores recorded an 8.3 percent drop in August. Analysts polled by Thomson Reuters expected a same-store sales drop of 1.7 percent.

Overseas, the Bank of England and European Central Bank left their benchmark interest rates unchanged on Thursday, a move that analysts expected as both face mounting inflation and slowing economic growth. Britain's FTSE 100 rose 0.31 percent, Germany's DAX index fell 1.10 percent, and France's CAC-40 shed 0.55 percent. Japan's Nikkei stock closed down 1.04 percent.


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