Stocks set to drop at open

NEW YORK (CNNMoney.com) -- U.S. stocks were poised for a lower open Thursday, with losses escalating after a dismal report on the job market.

Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100 futures were lower.

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

U.S. stocks slipped Wednesday after weak economic readings rattled investors. The mild losses for Wall Street came after two straight sessions of gains. But after the close, Cisco Systems (CSCO, Fortune 500) and chipmaker Novellus Systems (NVLS) reported quarterly results that beat sales and earnings estimates.

"We may well see some nervous trading until we get the proper payrolls [report] tomorrow," said David Jones, chief market strategist at IG Markets in London, referring to the government's monthly employment figures due Friday.

Speaking before the release of the jobless claims report, Jones added that investors are hoping to see a turning point with job market statistics.

"I think there's hope, over the last couple of months, [that] even though unemployment is increasing over the world, we're seeing it increasing at a much lower rate than feared," he said.

Jones also said that declines in U.S. futures were trailing the slump in European markets, which were heavily influenced by Royal Dutch Shell falling short of earnings expectations.

Jobs: The futures sell-off escalated immediately after the Labor Department announced that initial jobless claims soared to 480,000 in the week ended Jan. 30.

This was much worse than expected. According to a consensus of economists surveyed by Briefing.com, 455,000 claims were expected for the week ended Jan. 30.

Investors were also awaiting Friday's monthly report on employment, the most closely watched gauge of the job market. The government report is expected to show a net gain of 15,000 jobs in January, with an unemployment rate of 10%, according to Briefing.com consensus.

But the Bureau of Labor Statistics is also expected to issue a big downward revision to its estimate of U.S. payrolls in the 12 months from April 2008 through March 2009.

After the opening bell, a report on December factory orders is due. Orders are expected to have risen 0.5% in December, according to Briefing.com consensus.

Earnings: Cisco (CSCO, Fortune 500) posted upbeat sales and earnings after U.S. markets closed Wednesday. The results topped Wall Street's estimates.

Toyota Motor (TM) reported a profit for its most recent quarter, which ended before it began a massive recall of some of its vehicles. The company said it expects the global recall to cost as much as $2 billion.

World markets: Stocks in Asia dropped. Japan's Nikkei lost 0.5% and the Hang Seng in Hong Kong shed 1.8%. European shares fell in midday trading.

Cash and bonds: The dollar rose against most major international currencies but slipped against the yen. The price of the 10-year note gained, pushing down the yield to 3.65%.

Oil and gold: Oil prices fell 94 cents a barrel to $76.04. The price of gold fell $6 per ounce to $1,105.40.