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Jobless claims hit highest level since March; stocks fall

The number of Americans applying for unemployment benefits rose to the highest level in nearly nine months, pulling stocks lower one day after the Fed's decision to trim its monthly asset purchases sent the market soaring. 

By Rodrigo CamposReuters / December 19, 2013

A man looks over employment opportunities at a jobs center in San Francisco, California, in 2010. The number of people filing new claims for unemployment insurance rose last week to the highest level in nearly nine months, pulling stocks lower in early trading.

Robert Galbraith/Reuters/File

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U.S. stocks were set to open lower Thursday following data showing a rise in jobless claims, having hit record highs a day earlier after the Federal Reserve said the economy was strong enough for it to begin paring its massive stimulus.

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The Fed's decision Wednesday to trim its monthly asset purchases by $10 billion to $75 billion beginning in January was accompanied by a dovish indication of rock-bottom interest rates for the foreseeable future. That combination enticed buyers and helped the S&P 500 and Dow post their largest gains in two months.

"If the Fed can afford to taper, the economy is strong enough to justify stock prices," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

He said with the market at record highs, "investors need to see fourth quarter earnings support current prices; until we get the details of how the holiday season shopping went, it's going to be hard for the market to break to the upside from here."

Futures drifted lower after data showed the number of Americans filing new claims for unemployment benefits rose last week to the highest in nearly nine months, casting a shadow on the labor market.

"Obviously, the Fed won't be looking at these numbers kindly after what happened yesterday (Wednesday)," saidJoel Naroff, President of Naroff Economic Advisors in Holland, Pennsylvania.

"If this persists, we could be looking at a weak December payrolls number."

S&P 500 futures fell 7 points and were lower in terms of 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 fell 52 points and Nasdaq 100 futures lost 16 points.

Facebook fell 2.7 percent in premarket trading after it announced the offering of 70 million shares, including more than 41 million shares from chief executive Mark Zuckerberg worth about $2.3 billion. Zuckerberg's sale, partly to pay a tax bill, will reduce his voting power to 56.1 percent from 58.8 percent.

Oracle shares rose 2 percent in premarket trading, a day after the No. 2 software maker's better-than-expected results and quarterly revenue outlook spurred hopes it's on track to revive growth.

Dish is considering a bid for T-Mobile US next year, according to people close to the matter, in what would be thesatellite TV provider's second attempt at acquiring a major wireless operator.

Darden Restaurants said it would sell or spin off its Red Lobster business, buckling under pressure from activist investor Barington Capital Group. Darden shares fell 1.8 percent in premarket trading.

At 10:00 a.m. (1500 GMT), the National Association of Realtors releases existing home sales for November, theConference Board reports November leading indicators and the Philadelphia Fed releases its December business activity survey.

On Wednesday, U.S. stocks staged an explosive rally which drove the Dow and the S&P 500 to all-time closing highs after the Federal Reserve announced it would start to unwind its historic stimulus.

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