U.S. MARKET AVERAGES

U.S. stock averages opened near the unchanged mark on uneven December sales figures. All in all retail sales were higher, though a few big names disappointed investors. A five-year drop in unemployment claims failed to lift market sentiment. Investors also awaited the Institute for Supply Management's December index of service sector activity.

The nation's big retailers released reports, showing volatile but respectable holiday season as consumers saved most of their shopping for the days before and after Christmas. The early winners included Target Corp., Costco Wholesale Corp., Nordstrom Inc., Abercrombie & Fitch Co. and others.

Wal-Mart (WMT: chart), the world's largest retailer, fell short of expectations posting a 2.2% gain in same-store sales. The results missed the 2.4% estimate from analysts surveyed by Thomson Financial. Total sales rose 6.3%. The company also said its Q4 profits would come in at the low end of expectations.

Rival Target reported a 4.7% gain in same-store sales in December, beating estimates of 4.6%. Total sales rose 11.6%. The company reaffirmed its Q4 outlook.

American Eagle Outfitters (AEOS: chart) revealed that its total sales for December rose 15.5% to $433.2 million, while comparable store sales grew by 9.8%.

Luxury retailers had the best performance among department stores. Nordstrom had a 7.7% gain in same-store sales, well above of expectations of a 3.8% increase. Total sales rose 10.7%.

Federated Department Stores Inc. posted a 3.4% gain in same-store sales, better than the 2.1% increase from Wall Street. Total sales, which include stores from the company''s 2005 acquisition of May Department Stores Co., rose nearly 100%.

In research news, Banc of America Securities downgraded Boeing Co to neutral from buy on valuation, saying the stock is likely to be range bound after its strong performance since March 2003.

Lehman Brothers raised JDS Uniphase Corp. (JDSU: chart) to equal-weight from underweight. Deutsche Bank raised its rating on Cablevision Systems Corp (CVC: chart) to buy from hold.

In the first hour of trading, the Dow Jones industrial average fell 1.12, or 0.01%. The Standard & Poor''s 500 index rose 1.15, or 0.09%, and the Nasdaq composite index rose 5.28, or 0.23%.

Bonds edged lower, with the yield on the 10-year Treasury note rising to 4.37% from 4.35% late Wednesday.

MOVERS AND SHAKERS

Boeing (BA: chart) was downgraded by the Bank of America to neutral from buy, citing valuation. Analyst Nick Fothergill also cut his price target on the company by $1 to $72 on consideration that further upside to the stock appears limited, after a strong run in the shares since March 2003. A 50% drop in orders in 2006 is expected. A supply chain survey shows increasing risk in raw material price inflation and a risk of component shortages, and as a result the broker cut his 2007 aircraft delivery forecast to 437 planes from 453. The company’s shares fell 2.1%.

Computer Sciences (CSC: chart) gained 8.5%, following a report that private equity firm Blackstone Group and Hewlett-Packard Co are considering a buy out of the company.

Aeropostale Inc. (ARO: chart) said its comparable-store sales rose 11.4% in December, and the company boosted its fourth-quarter earnings forecast. The stock jumped 9.2%.

Gentiva Health Services (GTIV: chart) agreed to buy the provider of home healthcare and hospice Healthfield Group Inc. for $454 million in cash and stock with $55 million of Gentiva common stock and around $399 million in cash. Gentiva anticipates the transaction will be accretive to its fiscal 2006 results. Gentiva’s shares rose 7.9%.

ECONOMIC NEWS

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended December 31, showing that jobless claims fell more than economists had been expecting.

The Labor Dept. said that jobless claims fell to 291,000 from the previous week''s revised figure of 326,000. Economists had been expecting jobless claims to fall to 320,000 from the 322,000 originally reported for the previous week.

The report also showed that the less volatile 4-week moving average fell to 316,750 from the previous week''s revised average of 326,000.

The Labor Dept. added that continuing claims during the week ended December 24 rose to 2.718 million from the preceding week''s revised level of 2.705 million.