Major averages continued their slide yesterday, led by the Dow Jones Industrial Average (-0.95%) which was pressured by disappointing guidance from Chevron (CVX) and Alcoa (AA).  Every sector closed lower, with the exception of the financial sector (+0.1%).  The S&P 500 and Nasdaq logged their fourth straight losing sessions and closed near their lows for the day.

The S&P futures, however, are 0.5% above fair value this morning, suggesting a modestly higher start for the cash market is on tap.

It has helped that Europe hasn't freaked out following a Standard & Poor's downgrade of Spain from BBB+ to BBB-, which is one notch above junk status.  Most of the major bourses are sporting modest gains, although Spain's IBEX (-0.5%) is understandably on the defensive.

The yield on Spain's 10-year debt has jumped 6 bps to 5.84%.  We probably would have seen a more dramatic jump if the ECB hadn't made its bond-buying pledge nearly a month ago.  Still, debt-holder angst continues to build the longer Spain abstains from asking for a bailout from the ESM, which is a precondition for the ECB's bond-buying support.

This, and dealings with Greece, ain't over yet.

For now, the market is drawing a measure of support from additional central bank stimulus that came courtesy of Brazil and South Korea.  Central banks for both countries cut their key lending rates by 25 bps to 7.25% and 2.75%, respectively.  The move by Brazil was a surprise.

South Korea for its part also cut its 2012 growth outlook to 2.4% from 3.0% and reduced its 2013 forecast to 3.2% from 3.8%. 

The weak growth outlook, and the losses in the U.S. on Wednesday, appeared to prevail for Asian investors as most indexes finished in the red.

There is another tie-in, however, between Asia and the U.S. this morning that is helping to improve sentiment.  Specifically, new has broken that Japan's Softbank is in discussions to buy a 75% stake in Sprint Nextel (S) for $12.8 bln.  Shares of Clearwire (CLWR) are also rallying on a report from CNBC that Softbank would look to acquire Clearwire as well in a Sprint Nextel deal.

Economic data has also provided some ballast for the futures market. 

Initial claims for the week ending October 6 reportedly fell 30,000 to 339,000 (Briefing.com consensus 370,000).  That is the lowest level of initial claims since January 2008, although it has been reported that a seasonal adjustment issue in one, unnamed state has spurred the surprising drop (conspiracy theory powers activate -- form of a Jack Welch tweet!).

The four-week moving average for initial claims dropped by 11,000 to 364,000.

Continuing claims decreased 15,000 to 3.273 mln, which was in-line with expectations.  That lowered the four-week moving average by 7,750 to 3.279 mln.

The trade deficit news was less supportive, yet it has taken a backseat to the claims data for now.  

The report from the Commerce Department indicated the trade deficit for August widened to $44.2 bln from $42.5 bln in July.  Both exports and imports declined in August, dropping $1.9 bln and $0.2 bln, respectively. 

The drop in exports was led by industrial supplies and materials ($1.2 bln) while the drop in imports was paced by a drop in consumer goods ($1.2 bln).  The average real trade deficit for the third quarter ($47.7 bln) is up 1.9% from the second quarter, suggesting net exports will be a drag on Q3 GDP forecasts. 

There aren't any major earnings surprises today.  A large number of Fed officials (Yellen, Stein, Raskin, Plosser and Bullard) will be speaking throughout the day and into the night.  Separately, the Treasury will announce results of its $13 bln 30-year bond auction at 1:00 p.m. ET.

--Patrick J. O'Hare, Briefing.com

(Editor's Note: In the original post, we said initial claims are at their lowest level since mid-November 2008.  It should have said January 2008.  The comment has been corrected.)