Inflation, Retail Sales Data Drag Stocks

Arthi Gupta
13 Aug, 2010
New York City

U.S. stocks decline after CPI rose 0.3% and retail sales grew 0.4% in July. India may demand Google and Skype messaging services to comply with tighter monitoring as it tightens security measures. Nordstrom quarterly sales increased 12.7% and net surged 38.6%.

[R]9:35 AM New York – U.S. stocks decline after CPI rose 0.3% and retail sales grew 0.4% in July. India may demand Google and Skype messaging services to comply with tighter monitoring as it tightens security measures. Nordstrom quarterly sales increased 12.7% and net surged 38.6%.[/R]

U.S. stocks fell on weak economic outlook. Asian stocks rose on bargain hunting and European markets advanced after encouraging economic data from Germany and France.

The Labor Department said its consumer price index rose 0.3% in July after edging down 0.1% in June. Core prices, which exclude food and energy prices, inched up 0.1% in July following a 0.2% increase in the June.

Retail sales saw a modest increase in the month of July, according to a report released by the U.S. Commerce Department today after a notable rebound in auto and gasoline sales.

The report showed that retail sales increased 0.4% in July following a revised 0.3% decrease in June. Retail sales increased 0.2% in July compared to a 0.1% drop in June, excluding a 1.6% increase in sales by motor vehicle and parts dealers.

The Pentagon termed as the ""height of irresponsibility"" the announcement of WikiLeaks that it would post 15,000 more classified military documents on Afghan war on its Web site.

If WikiLeaks published ""any additional documents after hearing our concerns about the harm it will cause our forces, our allies and innocent Afghan civilians, it would be the height of irresponsibility,"" said Pentagon spokesman Geoff Morrell.

The Pentagon reaction came after WikiLeaks founder Julian Assange said in London that the Web site still planned to release the final batch of 15,000 classified American military documents, despite American demands it refrain from doing so.

BP plc agreed to pay a record $50.6 million fine for failing to correct safety hazards at its Texas City oil refinery after a disastrous explosion in 2005 killed 15 workers and injured 170 others, the U.S. Occupational Safety and Health Administration said on Thursday.

In addition, BP Products North America Inc. and the U.S. Occupational Safety and Health Administration reached a settlement to resolve 270 of the 709 citations that OSHA issued to BP at its Texas City refinery in October 2009. In these citations, OSHA alleged that BP failed to meet obligations set forth in a 2005 agreement with OSHA.

The explosion at the Texas refinery was found to have resulted due to safety violations by BP. After the disaster, BP paid a $21.3 million fine in 2005. But OSHA said that in a follow-up investigation in 2009, it found that BP had still not met its commitments.

BP further agreed to establish a liaison between its North American and London boards of directors and OSHA, which will allow the agency to raise compliance problems at the highest level.

Ronald Burkle, the billionaire activist investor launched a proxy war to gain control of bookstore chain Barnes & Noble, Inc. after negotiations failed on a potential agreement with his investment firm Yucaipa Cos. over the doubling of their stake in the company.

Burkle was negotiating for the expansion of the company''s board by three seats to nominate directors of his choice. In exchange, Burkle agreed not to wage a proxy war and withdraw the lawsuit against the company instituting the ''poison pill.'' Additionally, Burkle would have supported the company''s nominees for directors for the current year and next year.

""Barnes & Noble and Yucaipa were unable to conclude an agreement on mutually acceptable terms,"" Barnes & Noble said in a brief statement on Thursday.

Oracle Corp, the business software maker filed a complaint for patent and copyright infringement against Google, Inc.

""In developing Android, Google knowingly, directly and repeatedly infringed Oracle''s Java-related intellectual property. This lawsuit seeks appropriate remedies for their infringement,"" said Oracle spokesperson Karen Tillman.

India may shut down Google and Skype Internet-based messaging services over security concerns, the Financial Times reported today.

The Financial Times quoted from the minutes of a July 12 meeting between telecommunication ministry security officials and operator associations to look at possible solutions to ""intercept and monitor"" encrypted communications.

""There was consensus that there [is] more than one type of service for which solutions are to be explored. Some of them are BlackBerry, Skype, Google etc,"" according to the department''s minutes. ""It was decided first to undertake the issue of BlackBerry and then the other services.""

On Thursday, the Indian government became the latest of several nations that have threatened to cut off Research In Motion''s encrypted BlackBerry email and instant messaging services if the Canadian company does not address national security concerns.

India set an Aug 31 deadline for RIM. It wants access in a readable format to encrypted BlackBerry communication, on grounds it could be used by militants.

India''s demands follow a deal with Saudi Arabia, where a source said Research In Motion agreed to give authorities codes for BlackBerry Messenger users. The United Arab Emirates, Lebanon and Algeria also seek access.

Officials say RIM had proposed tracking emails without sharing encryption details, but that was not enough.

The Financial Times report said representatives from two of the telecom operator associations present confirmed the details of the meeting earlier this month.

Earnings Review

Autodesk, Inc. ((ADSK)), the design software maker reported second quarter revenue increased 14% to $472.8 million from $414.9 million in the same quarter last year. Net income in the quarter surged 470% to $59.9 million or 25 cents per diluted share, compared to $10.5 million or 5 cents per share for the year-ago quarter.

DeVry Inc. ((DV)), the education service provider stated fourth quarter revenues grew 28% to $506.67 million from $396.24 million in the prior-year quarter. Net income advanced 93% to $71.90 million or 99 cents per diluted share from $37.07 million or 51 cents per share in the same quarter a year ago.

J. C. Penney Company, Inc. ((JCP)), the department stores operator stated second-quarter total net sales declined 0.1% to $3.938 billion, compared to $3.943 billion in the prior-year quarter. Net income generated in the quarter was $14 million or 6 cents per diluted share, compared to a loss of $1 million or break-even per share in last year''s second quarter.

Nordstrom, Inc. ((JWN)), the fashion specialty retailer said second quarter net sales rose 12.7% to $2.42 billion from $2.14 billion during the same period in fiscal 2009. Net income in the quarter soared 38.6% to $146 million or 66 cents per diluted share, compared to $105 million or 48 cents per share in the year-ago quarter.

Nvidia Corporation ((NVDA)), the graphics chipmaker reported second quarter revenue increased 4.5% to $811.2 million from $776.5 million in the same quarter last year. Net loss in the quarter widened 34% to $141.0 million or 25 cents per diluted share, compared to a net loss of $105.3 million or 19 cents per share in the prior-year quarter.