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By MADLEN READ

NEW YORK - Wall Street headed for a lower open today after getting hit by yet another bad reading on the economy: A massive jump in jobless claims.

Initial jobless claims rose to 626,000, a 26-year high, the Labor Department said. And the number of claims by people continuing to apply for unemployment benefits reached a new record of nearly 4.8 million.

The gloomy data overshadowed the government's report that productivity rose by 3.2 percent in the fourth quarter, more than twice what analysts expected. It also offered a grim look at the job market ahead of this week's most highly anticipated economic gauge, Friday's January payrolls report.

Another round of weak retail sales figures and troubling results from Cisco Systems Inc. also weighed on stock futures ahead of the market's open. Investors have been sorting through corporate earnings and economic data as they wait for a stimulus plan to pass through the Senate. The bill keeps swelling - most recently, a new tax break for homebuyers pushed the cost well above $900 billion.

Dow Jones industrial average futures fell 70, or 0.88 percent, to 7,855. Standard & Poor's 500 index futures fell 7.60, or 0.92 percent, to 822.20, and Nasdaq 100 index futures fell 22.00, or 1.81 percent, to 1,192.00.

Retailers reporting steeper-than-expected drops in January sales included Wet Seal Inc. and Children's Place Retail Stores Inc.

The retail sales followed news late Wednesday from Cisco, the world's largest maker of computer networking equipment, which posted a 27 percent drop in profit and said incoming orders dropped off sharply in January. When orders fall, it's not only bad for the company - it's a worrisome signal about the economy.

The stock market on Wednesday took a tumble after earnings from companies including two Dow components - Kraft Foods Inc. and Walt Disney Co. - disappointed investors.

Early Thursday, bond prices were mostly higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.91 percent from 2.94 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.30 percent from 0.28 percent.

The dollar was mostly higher against other major currencies. Gold prices also climbed.

Light, sweet crude slipped 22 cents to $40.10 a barrel in premarket trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 1.11 percent. In afternoon trading, Britain's FTSE 100 fell 1.05 percent, Germany's DAX index fell 1.62 percent, and France's CAC-40 fell 2.14 percent.

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