U.S. Jobless Claims Fall; Trade Deficit Narrows

Arthi Gupta
09 Sep, 2010
New York City

U.S. stocks trade higher after weekly jobless claims fell 27,000 to 451,000 and trade deficit narrowed in July. Fed noted slowdown in economic growth and OECD reiterated recession is

[R]9:35 AM New York – U.S. stocks trade higher after weekly jobless claims fell 27,000 to 451,000 and trade deficit narrowed in July. Fed noted slowdown in economic growth and OECD reiterated recession is “unlikely.” Airgas rejected $65.50 per share offer from Air Products.[/R]

U.S. stocks gained, Asian and European markets advanced.

The Labor Department released a report today stating that first-time claims for unemployment benefits fell by much more than expected in the week ended September 4th.

The report showed that initial jobless claims fell to 451,000 from the previous week''s revised figure of 478,000.

The U.S. trade deficit for July narrowed with the value of exports rising and the value of imports falling, according to a report released by the Commerce Department today.

The Commerce Department said that the trade deficit narrowed to $42.8 billion in July from a revised $49.8 billion in June.

The Federal Reserve''s Beige Book report acknowledged that the twelve Fed districts have seen widespread signs of a deceleration in the pace of economic growth in recent weeks but noted that national economic activity continued to expand at a moderate pace.

The Federal Reserve noted that there was modest economic growth in the period from mid-July through the end of August

With regard to inflation, the Fed noted that upward price pressures remained limited despite higher prices for certain commodities. Wage pressures also remained limited.

In another report, the Fed stated that consumer credit fell $3.6 billion in July following a revised $1.0 billion decrease in June.

Revolving credit fell $4.4 billion in July after declining by $5.2 billion in June. Non-revolving credit edged higher $0.7 billion in July following a $4.2 billion increase in June.

The Organization for Economic Cooperation and Development said today that global economic recovery may be slowing ""faster than previously anticipated.""

In its latest Interim Economic Assessment, the Paris-based think tank projected growth in the Group of Seven nations to be nearly 1.5% in the second half of the year, slightly weaker than its 1.75% estimate from May.

The OECD report said overall financial conditions have stabilized and growth remains strong in the major emerging-market economies. The U.S. economy is expected to expand 2% in the third quarter, but then moderate to 1.2% growth in the final three months of 2010. For Japan, GDP growth is forecast at 0.7% in the fourth quarter after 0.6% in the third quarter.

The OECD Chief Economist Pier Carlo Padoan said ""it is unlikely that we are heading into another downturn.""

The United States fell to fourth position from second in the global competitive ranking, according to the Global Competitiveness Report 2010-2011 released by the World Economic Forum today. Switzerland topped the list, followed by Sweden and Singapore.

The Australian Bureau of Statistics reported that the jobless rate unexpectedly declined to 5.1% in August from 5.3% in July, with 30,900 new jobs created during the month.

The Bank of Korea monetary policy board members voted to hold interest rates at the current level of 2.25%.

Airgas, Inc. rejected the revised unsolicited tender offer from Air Products & Chemicals, Inc. to acquire all outstanding common shares of Airgas at a price of $65.50 per share in cash.

Goldman Sachs Group, Inc. has been fined approximately £20 million or $31 million by the Financial Services Authority in the United Kingdom for failing to disclose that Fabrice Tourre, the company''s London-based trader was being investigated for fraud by the Securities and Exchange Commission in the United States.

According to reports, Google, Inc. is working on ""the next logical succession"" in mobile technology, with real-time speech translation via Android operating system-based smartphones.

The company also called the idea of being able to speak any word or phrase and get an instant vocal translation a big experiment so far. There is no roll out date as yet since it is experimental.

Earnings Review

General Mills, Inc. ((GIS)), the packaged food company said it was on track to achieve its sales and earnings targets for the fiscal year ending May 2011 and reaffirmed its earnings per share guidance of $2.46 to $2.48 before any effects of mark-to-market valuation for the full year.

Silicon Laboratories Inc. ((SLAB)), the chipmaker lowered its third quarter revenue guidance, citing broadening demand weakness primarily in customer premises equipment and consumer end markets.

The company cut its third quarter revenue guidance to a range of $118 million to $122 million and estimates earnings to be in the range of around $0.32 to $0.35 per share.

Southwest Airlines Co. ((LUV)), the airline operator reported a 2.1 percentage points increase in load factor for the month of August, with a 6.4% rise in traffic and a 3.7% increase in capacity from last year. The company also noted that passenger revenue per available seat mile for August is estimated to have increased in the 15% to 16% range from a year ago.

The Men''s Wearhouse, Inc. ((MW)), the men''s apparel retailer reported second quarter total net sales increased 2% to $536.99 million from $526.21 million in the same quarter last year, helped by strong growth in Tuxedo rentals. Net income in the quarter rose 8% to $42.5 million or 80 cents per diluted share, compared to net income of $39.5 million or 75 cents per share for the year-ago quarter.

The Talbots, Inc. ((TLB)), the women''s apparel retailer said second quarter total net sales declined 1.3% to $300.74 million from $304.64 million in the year-ago period. Net income in the quarter was $941 thousand or 1 cent per diluted share, compared to a net loss of $24.49 million or 45 cents per share in the year-ago period.