Wall Street set for flat open as retailers weigh

NEW YORK (Reuters) - Stocks were set for a flat open on Thursday as data showed an unexpected drop in jobless claims, sparking some optimism ahead of Friday's payrolls report, but soft retailer sales raised questions about consumer spending.

Initial claims for state unemployment benefits dropped 27,000 to a seasonally adjusted 365,000, the biggest weekly drop since May 2011. The report ran counter to data in the prior session that indicated weak private sector hiring and pushed stocks lower.

"That is kind of a nice comeback from the ADP number yesterday. It suggests that the ADP number may be a little bit pessimistic," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"The market certainly did take a pretty good drop when the ADP report came out yesterday, and this is a sign maybe people are tempering that and thinking the employment number won't be quite as bad as that might have seemed."

Disappointing retail sales could push the market lower. Costco Wholesale Corp's April sales missed estimates, sending shares down 1.6 percent to $85.30 in premarket trading. Of the 15 companies reporting sales, seven missed expectations, according to Thomson Reuters data.

At 10 a.m. EDT (1400 GMT), the Institute for Supply Management's April reading on the non-manufacturing sector is due and is seen falling from the prior month.

A softening in domestic data coupled with flare-ups in the euro zone debt crisis sent the S&P 500 to a monthly decline in April, the first since November. The index has struggled to convincingly break above the 1,400 level, a key resistance point, without stronger proof of the recovery.

The European Central Bank held interest rates at 1.0 percent and will resist calls to do more to fight the euro zone crisis, putting the onus on governments.

S&P 500 futures rose 1.5 points and were about even with 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 were up 13 points, and Nasdaq 100 futures added 5.5 points.

General Motors Co edged up 0.5 percent to $23.05 premarket after the automaker's profit beat estimates and it cut losses in Europe.

Earnings are expected from 35 S&P companies on Thursday. According to Thomson Reuters data through Wednesday morning, of the 350 companies in the benchmark index reporting earnings, 70 percent have topped expectations.

Companies on tap to report results Thursday included American International Group Inc and Kraft Foods Inc .

Dutch food and chemicals group DSM is buying medical device maker Kensey Nash Corp for $360 million to strengthen its biomedical business. Kensey shares surged 32.2 percent to $38.35 premarket.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)

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