Stocks Head for Lower Open as Economic Woes Mount

NEW YORK – Wall Street recoiled again Thursday, sending stock futures lower ahead of the market's open as new readings on retail sales and jobless claims fanned investors' worries that the economy is in a deep recession.

New claims for unemployment benefits did dip by 4,000 to a seasonally adjusted level of 481,000, according to the Labor Department. But jobless claims above 400,000 are considered recessionary levels, and have run above that figure for 16 weeks. Also, long-term claims jumped to 3.84 million, the highest level in 25 years.

Meanwhile, retailers are releasing October sales figures that indicate consumers are pulling back their spending sharply. Wal-Mart Stores Inc. reported a better-than-expected 2.4 percent rise in October sales at stores open for at least a year, but investors are worried about other specialty retailers; Limited Brands Inc. and Gap Inc., for example, posted worse-than-expected sales drops.

Ahead of the market's open, Dow Jones industrial futures fell 129, or 1.41 percent, to 9,046. Standard & Poor's 500 index futures fell 15.60, or 1.63 percent, to 942.40, while Nasdaq 100 index futures fell 32.75, or 2.51 percent, to 1,273.50.

Stock futures pared their losses on briefly after interest rate cuts by central banks in Europe. The Bank of England slashed its key interest rate by a bold 1.5 percentage points Thursday; the Swiss Central Bank cut its own key rate by a surprising half-point; and the European Central Bank lowered its key rate by a half-point.

On Wednesday, Wall Street plunged as investors considered once again how deep and protracted a U.S. recession President-elect Barack Obama will face in January when he is sworn in. After a string of gains in stocks, jitters returned to the market, driving the Dow down nearly 500 points. All three major indexes dropped more than 5 percent.

A late Wednesday warning by Cisco Systems Inc. added to investors' nervousness. The world's largest maker of computer networking gear said orders fell off sharply last month, suggesting to the market that the weak economy and tight credit markets are taking a larger-than-expected toll on many companies.

And in other troubling corporate news, Japanese automaker Toyota Motor Corp. reduced its annual earnings forecast Thursday to less than a third of what it was in previous fiscal year.

The dollar traded mixed against most other major currencies, while gold prices turned higher.

Light, sweet crude fell $1.25 to $64.05 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Interbank lending rates fell for the 19th straight day, a sign that banks are becoming more willing to lend. The London Interbank Offered Rate, or Libor, for three-month dollar loans dipped to 2.39 percent from 2.51 percent.

The three-month Treasury bill, considered the ultimate safe asset, saw its yield dip further to 0.34 percent from 0.42 percent late Wednesday. In general, a lower yield means higher demand, but it is also affected by the federal funds rate.

In Asian trading, Japan's Nikkei index fell 6.53 percent, and Hong Kong's Hang Seng Index fell 7.08 percent. In midday trading in Europe, Britain's FTSE 100 fell 4.54 percent, Germany's DAX index fell 2.01 percent, and France's CAC-40 fell 1.40 percent.