U.S. Stocks Down; AIG Net Loss

Arthi Gupta
06 Aug, 2010
New York City

U.S. stocks decline after non-farm payrolls drop 131,000 in July. Treasury Secretary Geithner noted health care reform bill improved Medicare, Social Security finances. BP completes cementing procedure on the leaking Gulf of Mexico oil well.

[R]9:45 AM New York – U.S. stocks decline after non-farm payrolls drop 131,000 in July. Treasury Secretary Geithner noted health care reform bill improved Medicare, Social Security finances. BP completes cementing procedure on the leaking Gulf of Mexico oil well.[/R]

U.S. stocks fall after disappointing employment data, Asian and European markets advanced.

The U.S. Labor Department report showed that total employment fell by much more than expected for the month of July reflecting a notable decrease in temporary workers hired for the census.

The Labor Department said today that non-farm payroll employment fell by 131,000 jobs in July following a revised decrease of 221,000 jobs in June. At the same time, the report showed that the unemployment rate came in unchanged compared to the previous month at 9.5%.

Treasury Secretary Timothy Geithner said on Thursday that the administration''s health care reform bill enhances the solvency of the Social Security and Medicare trust funds.

Geithner said The Affordable Care Act dramatically improved projected Medicare and Social Security''s finances. He further stated starting in 2019 a new tax on high-cost health care plans is expected to result in a shift in labor compensation from health insurance to earnings, which are subject to Social Security and Medicare taxes.

BP plc completed cementing operations at the damaged Gulf of Mexico well as part of the static kill procedure. The company noted that monitoring of the well is underway in order to confirm the effectiveness of the procedure.

BP reaffirmed that it is operating with the guidance and approval of the National Incident Commander and government officials to continue the ongoing relief well operations. Depending upon weather conditions, the company currently estimates mid-August as the most likely date by which the first relief well will intercept the Macondo well annulus.

National Incident Commander Admiral Thad Allen said it could take at least five to seven days after the cement dries to finish the last part of the 18,000-foot relief well that BP has been drilling for the past three months

Earnings Review

American International Group Inc., the insurer reported second-quarter total revenues declined 16.5% to $19.982 billion from $23.922 billion in the prior-year quarter. Net loss in the quarter was $2.7 billion or $3.96 a share, compared to net income of $1.8 billion or $2.30 a share in the year-ago quarter. The company stated the loss was primarily due to a $3.3 billion non-cash goodwill impairment charge.

Adjusted net income in the quarter rose 17.5% to $1.34 billion or $1.99 from $1.14 billion or $1.71 in the prior year quarter.

Dynegy Inc., the power utility company stated second-quarter revenues slumped 46.9% to $239 million from $450 million in the year-ago quarter. Net loss in the quarter narrowed 44.6% to $191 million or $1.59 per share, compared to a net loss of $345 million or $2.05 per share for the second quarter 2009.

Pepco Holdings, Inc., the diversified energy company said second-quarter revenue fell 1.8% to $1.64 billion, compared to $1.67 billion in the prior-year quarter. Net loss in the quarter was $54 million or 24 cents a share, compared to a profit of $25 million or 11 cents a share in the year-ago quarter.

Progress Energy, Inc., the electric utility company stated second-quarter operating revenues grew 2.6% to $2.37 billion from $2.31 billion in the previous year. Net income in the quarter rose 3.4% to $180 million or 62 cents a share from $174 million or 62 cents a share, in the year-ago period.