A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., March 7, 2022.
A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., March 7, 2022. Reuters / ANDREW KELLY

Wall Street was set for a muted open on Thursday as investors digested a fresh batch of earnings after a rally that made the previous session the best in a week, while the number of Americans claiming unemployment benefits rose slightly.

After a dull start to August, the major indexes roared back to life on Wednesday on a boost from a slew of strong results from companies including PayPal Inc and CVS Health.

The second-quarter earnings season has helped markets bounce back from concerns around the fallout of the Ukraine war, soaring inflation, flare-up in China COVID-19 cases and an aggressive rise in borrowing costs.

The benchmark S&P 500 has gained nearly 14.2% from its mid-June lows, but is still in a bear market and down 12.8% for the year.

Sam Stovall, Chief Investment Strategist at CFRA, said investors are not seeing it as a bear market rally. "When the S&P closes above 4200 it will be a sign that we are now in the beginning of a new bull market," he said.

After an unexpected rebound in July services activity that allayed recessions fears, market participants are keeping a close eye on data related to the labor market.

Data on Wednesday showed weekly jobless claims increased last week, suggesting some softening in the labor market though overall conditions remain tight.

Focus is now on July employment report on Friday, which is expected to show nonfarm payrolls likely increased by 250,000 jobs in last month after rising by 372,000 in June.

The data is crucial as the U.S. Federal Reserve attempts to cool labor demand to tame inflation.

"Investors are aware that we are in a soft landing for the economy... what will shake up the market is if we end up seeing substantial cuts in growth expectations, meaning if we end up with a lot of companies that are actually just getting rid of employees that could be a problem," Stovall said.

At 8:46 a.m. ET, Dow e-minis were up 18 points, or 0.05%, S&P 500 e-minis were up 6 points, or 0.14%, and Nasdaq 100 e-minis were up 31 points, or 0.23%.

Shares of Alibaba Group Holding Ltd jumped 6.3% in premarket trading after the Chinese tech-giant beat market expectations, even though growth was flat for the first time due to the impact of the Shanghai lockdown.

ConocoPhillips rose 2.5% as the U.S. oil producer raised its planned capital returns to $15 billion for 2022 after posting a second-quarter profit that more than doubled on surging energy prices.

Shares of the world's largest lithium producer Albemarle Corp and health insurer Cigna Corp gained 4.4% and 3.9%, respectively, after raising their annual profit forecasts.

Drugmaker Eli Lilly and Co slipped 2.2% as its cut annual profit view for the second time after quarterly earnings slumped by a third due to lower prices of insulin and competition for its cancer drug, Alimta.