* S&P 500 comes off three straight days of gains
* Jobless claims up more than expected in latest week
* Morgan Stanley, Travelers rally after results
* Futures down: Dow 9 pts, S&P 4.2 pts, Nasdaq 10.5 pts
By Ryan Vlastelica
NEW YORK, Oct 18 (Reuters) - U.S. stock index futures
pointed to a lower open on Thursday in the wake of
weaker-than-expected labor market data.
Weekly jobless claims rose sharply in the latest week to
388,000, compared with analysts' estimates for a rise to
365,000. The previous week's reading was revised up slightly to
342,000 from 339,000.
"I've expected the market to crack 100 times; we have to go
down on this. This could be the start of a correction," said Uri
Landesman, president at Platinum Partners in New York.
"On the one hand, you never want to respond too much to one
data point, but on the other, this market is priced for
The benchmark S&P 500 index has risen 2.3 percent over the
past three days, putting it just 0.33 percent shy of the year's
closing high. Those gains have come on better-than-expected
results from such companies as Johnson & Johnson and
Goldman Sachs, though disappointments from IBM
and JPMorgan Chase limited gains.
Morgan Stanley rose 1.9 percent to $18.85 in
premarket trading after reporting adjusted earnings that beat
expectations on higher revenue from bond trading.
"What troubles me about the earnings we've seen from
financials is that the standard businesses of lending and credit
aren't really there," Landesman said. "I don't see how the
economy can expand in 2013 if our biggest lenders aren't
A pair of Dow components also reported. Verizon
Communications Inc had revenue that was slightly above
expectations while Travelers Cos posted operating
earnings that were much stronger than expected.
Verizon rose 0.5 percent to $44.96 before the bell while
Travelers was up 2.2 percent, limiting losses in the Dow.
S&P 500 futures fell 4.2 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 lost 9
points and Nasdaq 100 futures fell 10.5 points.
Although it's still early in the earnings season, results
have been a bit better than anticipated. With 14 percent of S&P
500 companies having reported, 65 percent have beaten analysts'
expectations, ahead of the long-term average of 62 percent.
Still, earnings are seen falling 1.7 percent from a year
ago, according to Thomson Reuters data, a little better than a
forecast for a drop of 2.3 percent earlier in the week.
While U.S. company earnings have been the primary driver
over the past two weeks, market participants continue to closely
watch Europe for how it may deal with debt in Spain and Greece.
EU leaders meet Thursday at a summit where they will try to
bridge differences over plans for a banking union, seen as the
first stage in a long-term strategy to overhaul the monetary
Still, no substantial decisions are expected, keeping
investors cautious over how the region will tackle its
three-year-old debt crisis. European shares were down
less than 0.1 percent.
At 10:00 a.m., the Philadelphia Federal Reserve Bank
releases its September business activity survey. For the
survey's main index, analysts see a reading of 1.0 compared with
-1.9 in August.
In China, the country's GDP growth rate in the third quarter
suggested it may have hit the floor of a seven-quarter-long
The S&P 500 rose for a third straight day on Wednesday as
housing starts hit a four-year high, but the Dow was pressured
by IBM after it reported weaker revenue.