Wall Street was set to drop nearly 1 percent at the open on Thursday after new applications for jobless insurance rose unexpectedly, adding to worries over sovereign debt in some euro zone countries that kept investors away from risky investments, including equities.
Initial claims for state unemployment benefits unexpectedly increased by 8,000 to a seasonally adjusted 480,000 in the week ended January 30, pointing to stubborn weakness in the labor market even as the economy continues to grow.
The data suggests any improvement in employment will be slow, said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto. I think that's the reason the (stock) markets haven't been moving higher.
In a good sign for the technology sector, shares of Cisco Systems Inc
European stocks followed Asian markets lower on concerns that Greece's fiscal problems would spread to other highly indebted euro zone countries like Portugal and Spain.
We're seeing some evidence that certain countries are really having difficulties. A year or nine months after the recession, and they're still struggling with these structural imbalances, said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
S&P 500 futures dropped 11.4 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 78 points, and Nasdaq 100 futures lost 13.25 points.
Separate government data showed U.S. non-farm productivity rose faster than expected, as employers ramped up output at the quickest pace in six years.
January sales at top U.S. retailers moved into positive territory after last year's decline, as many chains avoided drastic clearance sales and shoppers redeemed holiday gift cards.
The Commerce Department will report December factory orders at 10 a.m. EST. Economists expect a rise of 0.5 percent, compared with a 0.6 percent increase in the prior month.
(Additional reporting by Ryan Vlastelica and Edward Krudy; editing by Jeffrey Benkoe)