Stocks headed for weak open

Markets lift in reaction to retail sales and better-than-expected jobless claims, but then fall.

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NEW YORK( -- U.S. stocks were slightly lower Thursday, as investors reacted to an increase in retail sales and a better-than-expected report on initial jobless claims.

At 8:55 a.m. ET, Dow Jones industrial average, S&P 500 and Nasdaq 100 futures waffled, rising then slipping after government reports.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

"Positive news gave [stocks] a little boost, but it didn't last very long," said Ken Wattret, economist with BNP Paribas in London. "The good news is priced in, and the risk is that the good news won't last long."

He also said, in an interview prior to the reports, that the economy needed to continue to see positive signs before investors would believe that the recession is nearing its end.

"What you need to see are some hard numbers improving, and one example of that is consumer spending," he said.

U.S. stocks fell slightly Wednesday as Treasury yields and crude prices climbed, igniting inflation worries.

Retail: The government reported that retail sales rose 0.5% in May, as expected in a consensus forecast from, after falling a revised 0.2% the prior month.

Jobs: Initial jobless claims fell 24,000 to 601,000 in the week ending June 6, the government said.

Claims were expected to have slipped slightly to 615,000, according to the consensus forecast.

Banks: Bank of America (BAC, Fortune 500) CEO Ken Lewis is due to testify before lawmakers about the government's role in ensuring that the bank complete its controversial merger with Merrill Lynch.

New e-mails added more insight into the heated talks and indicate the Federal Reserve strong-armed BofA into completing the deal last year.

Bonds and oil: The benchmark 10-year Treasury yield was up to 3.97% from 3.95% late Wednesday. The yield reached 4% during Wednesday trading for the first time since last fall.

Crude prices topped $72 a barrel after the International Energy Agency raised its 2009 outlook for oil demand.

World markets: In Asia, stocks mostly finished higher, although Japan's Nikkei ticked lower. European shares edged higher in midday trading.

Currency: The dollar rose versus the euro and the yen but fell against the British pound. To top of page

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