Wall Street set for lower open after jobs data and Cisco

 @ibtimes
on August 12 2010 9:32 AM

Stocks were set to fall about 1 percent at the open on Thursday as an unexpected rise in jobless claims heightened fears of a double-dip recession and a bleak outlook from Cisco weighed on the technology sector.

The S&P 500 <.SPX> was poised to open below a key technical level that could further exacerbate yesterday's sell-off. All three major indexes recorded their worst percentage declines in more than a month, erasing gains for the year in the aftermath of a gloomier outlook from the Federal Reserve earlier this week.

The number of people filing new claims for unemployment insurance rose in the latest week to its highest level in close to six months. The unexpected rise was a fresh signal of a weak labor market.

A weaker-than-expected revenue forecast from Cisco Systems Inc was expected to hurt technology shares. John Chambers, the chief executive, also warned of unusual uncertainty in the economy. The stock was off 8.6 percent at $21.70 in premarket trade.

(Government) stimulus is supposed to be peaking right about now, but claims are going the wrong way. What the (jobless) claims do is to confirm how bad things have gotten, said John Brady, senior vice president at MF Global in Chicago.

S&P 500 futures fell 12.7 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 dipped 78 points, and Nasdaq 100 futures fell 24.25 points.

A breach under a key level of 1,088 for the S&P 500 would take near-term technical support down to 1,057, which is roughly 3 percent below the benchmark's close on Wednesday.

In company news, General Motors Co posted its biggest quarterly profit in six years a day ahead of its expected filing for an initial public offering.

Kohl's Corp shares fell 3 percent to $46.35 after the company reported better-than-expected earnings on improved market share.

American International Group Inc has started negotiations with potential investors to sell stakes in its Asian life insurance business AIA ahead of a planned IPO, sources said. The stock was off 0.4 percent at $37.70 in premarket.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)

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