U. S. Jobless Claims Fall; Caterpillar, eBay, Netflix Earnings Rise

Arthi Gupta
21 Oct, 2010
New York City

U.S. stocks rose after Caterpillar profit soared 96% and sales rose 53%. The regional survey conducted by the Fed confirmed modest growth in 12 districts. U.S. weekly jobless claims fell 23,000 to 452,000. eBay quarterly profit increased 23% on the surge in revenues at online payment unit.

[R]9:35 AM New York – U.S. stocks rose after Caterpillar profit soared 96% and sales rose 53%. The Federal Reserve's Beige Book confirmed modest growth in 12 districts. U.S. weekly jobless claims fell 23,000 to 452,000. eBay quarterly profit increased 23% on the surge in revenues at online payment unit.[/R]

Asian markets traded mixed after China reported slower but still the fastest economic growth of the largest 20 economies in the world. The European markets gained on earnings momentum.

On the earnings front, several companies reported better than expected results. E*TRADE and the parent of American Airlines, AMR swung to profit and Netflix revenue grew 31%.

U.S. announced $60 billion arms deal with Saudi Arabia. Japan's NTT Data in talks to acquire U.S.-based Keane for $1.23 billion.

China's GDP for the third quarter expanded at 9.6% annually, a slower than the 10.3% rate in the second quarter and 11.9% for the first quarter.

Industrial production rose 13.3% in September, while investment in fixed assets climbed 24% in the January to September period. Retail sales surged 18.8% in the month.

Seasonally adjusted weekly U.S. jobless claims for the week ended October 16th decreased 23,000 to 452,000 from the revised previous week claims of 475,000. The preliminary insured unemployment rate in the week ending October 9 unchanged to 3.5% from the prior week's unrevised rate of 3.5%.

The four-week average of new jobless claims fell 4,250 to 458,000. The number of people receiving continuous benefits dropped 9,000 to 4.44 million in the week ended October 9. This was the fewest since June.

The Federal Reserve estimated a modest rise in the U.S. economy from September through early October, according to a regional survey also known as Beige Book.

The central bank detected that consumers were regaining confidence, albeit slowly, despite lingering weakness in the jobs and housing markets. Looking ahead, retailers in several districts expected modest sales growth through year-end.

The Fed said that the economic activity in its 12 districts inched up over the past month or so, with the most notable improvements coming from the manufacturing sector. The report made note of increased demand for loans but also stated that both conditions in the employment and housing sectors remained tepid, although there were some price gains.

Richmond Federal Reserve President Jeffrey Lacker said it would be difficult to justify another round of quantitative easing in the U.S. Lacker was quoted as saying that if the economy continues to grow as expected, more bond buying """"would be a hard case to make.""""

The U.S. government announced arms sale package to Saudi Arabia that the Pentagon believes will benefit the United States' national security and its wider regional security goals in the Gulf. Under America's biggest arms deal ever, worth $60 billion, Saudi Arabia will receive warplanes, helicopters and other weapons over the next 15 to 20 years.

Toyota Motor Corp., the car maker announced that it will voluntarily recall 740,000 vehicles sold in the United States, citing safety concerns. Media reports also said that the company is recalling 600,000 cars in Japan.

According to Nikkei business daily, Japan's largest IT services provider Nippon Telegraph & Telephone Corp.'s majority-owned subsidiary NTT Data Group is in final stage talks to acquire U.S. IT service provider Keane, Inc. for about $1.23 billion or more than 100 billion yen. The companies are reportedly expected to announce a deal by month-end.

Earnings

AMR Corporation ((AMR)), the owner of American Airlines, reported third quarter total operating revenues rose 14% to $5.84 billion from $5.13 billion last year. Net income generated in the quarter was $143 million or 39 per diluted share, compared to a net loss of $359 million or $1.26 per share in the previous year.

Caterpillar Inc. ((CAT)), the farm and construction machinery manufacturer reported third quarter sales and revenues surged 53% to $11.134 billion, from $7.298 billion in last year period. Net profit in the quarter soared 96% to $792 million or $1.22 per diluted share, compared to net profit of $404 million or 64 cents per share in the prior-year quarter.

eBay Inc. ((EBAY)), the online auctioneer said third quarter revenue grew 1% to $2.25 billion from $2.24 billion in the same quarter last year. Net income in the quarter rose 23% to $432 million or 33 cents per diluted share, compared to net income of $350 million or 27 cents per share in the prior-year quarter.

E*TRADE Financial Corporation ((ETFC)), the online brokerage said third quarter net revenue declined 15% to $489.42 million, from $575.33 million last year. Net income generated in the quarter was $8.40 million or 3 cents per diluted share, compared to a net loss of $854.69 million or $6.74 per share in the previous year.

Lam Research Corporation ((LRCX)), the supplier of wafer fabrication equipment and services stated first quarter total revenue surged 153% to $805.87 million, from $318.54 million in the same quarter last year. Net income in the quarter soared 1,053% to $193.7 million, or $1.55 per diluted share, compared to net income of $16.8 million or 13 cents per share in the year-ago quarter.

Netflix, Inc. ((NFLX)), the online movie rental service provider said third quarter revenue grew 31% to $553.2 million from $423.1 million in the year-ago quarter. Net income in the quarter rose 26% to $38.0 million or 70 cents per diluted share, compared to net income of $30.1 million or 52 cents per share in the prior-year quarter.

Xerox Corporation ((XRX)), the document management company third quarter reported revenues gained 48% to $5.428 billion, compared to $3.675 billion in the prior-year quarter. Net income in the quarter rose 103% to $250 million or 17 cents per diluted share, compared to net income of $123 million or 14 cents per share in the same quarter last year.