Stocks were set to open lower on Thursday after cautious outlooks from J.C. Penney Co. Inc. and Applied Materials Inc added to fears about the profit picture, while nervousness about the credit market persisted.

Shares of General Electric Co fell about 1 percent to $38.65 before the bell after it said its short-term bond fund ran into trouble amid losses on asset-backed securities and that all its outside investors have liquidated their holdings.

However, UBS has advised some analysts this week that the Swiss bank does not expect to make a huge fourth-quarter writedown on its subprime-related exposures.

Retailer J.C. Penney shares tumbled 4.6 percent to $44.60 before the bell after the retailer slashed its fourth-quarter profit outlook by at least 25 percent.

S&P 500 futures fell 9.70 points and were below fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures declined 65 points, and Nasdaq 100 futures were down 14.50 points.

Stock futures briefly pared losses after data showing a rise in core U.S. consumer prices was in line with expectations, while new applications for U.S. jobless aid rose more than expected.

As long as inflation stays within consensus, I think that it's a net positive for the market, but the real focus is going to shift to retail, earnings and what happens to the consumer, said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.

After Wednesday's closing bell, shares of Applied Materials sank as the top supplier of tools for making microchips posted a lower quarterly profit and forecast fiscal first-quarter profit below Wall Street's estimates.

(Editing by Kenneth Barry)

Investment U.S. Update