U.S. Jobless Claims Rise, Stocks Up; Irish Bailout Package

Arthi Gupta
18 Nov, 2010
New York City

U.S. stocks gained on expectations for a resolution to the Irish debt crisis and weekly jobless claims rose 2,000 to 439,000. GM priced its public offering at $33 per share. OECD cut 2011 global growth forecast. Western Coal received C$3.3 billion merger proposal from Walter Energy.

[R]9:35 AM New York – U.S. stocks gained on expectations for a resolution to the Irish debt crisis and weekly jobless claims rose 2,000 to 439,000. GM priced its public offering at $33 per share. OECD cut 2011 global growth forecast. Western Coal received C$3.3 billion merger proposal from Walter Energy.[/R]

The U.S. and European indexes advanced on hopes that Ireland would accept the EU, ECB and the IMF bailout package. Asian markets rose amid expectations that China may not raise interest rates.

Ireland Debt Crisis

The European Union, the European Central Bank and the International Monetary Fund are discussing means to rescue Ireland from its debt crisis. Official talks between Irish authorities and a delegation of officials from the European Union and the European Central Bank start today in Dublin as the Republic seeks to resolve its fiscal woes and reassure investors over its solvency.

However, Irish finance officials have also expressed concerns that conditions attached to any rescue would threaten its ability to maintain the low corporate taxes that fueled the nation''s growth before the 2008 crash.

Irish central bank Governor Patrick Honohan said on Thursday that the Republic is likely to get loans worth ""tens of billions"" of euros from the European Union and the International Monetary Fund as talks begin in Dublin.

Fed Urges More Stress Tests for Banks

The Federal Reserve announced on Wednesday that Wall Street''s biggest banks must undergo another round of stress tests by the central bank before undertaking capital actions such as increasing dividend payments or repurchasing stock.

The Fed said that it would review the capital holdings of the 19 banks that were part of the stress tests in 2009 to ensure that the firms have adequate capital to maintain ready access to funding, continue operations, and continue to serve as credit intermediaries, even under adverse conditions.

In another statement, the Federal Reserve Bank of St. Louis President James Bullard on Wednesday called for the U.S. mortgage market to be privatized as much as possible to return the sector to sound lending practices.

Weekly Jobless Claims

According to a report released by the Labor Department on Thursday, first-time claims for unemployment benefits in the U.S. saw a modest increase in the week ended November 13.

Seasonally adjusted weekly jobless claims increased 2,000 to 439,000 from the revised previous week claims of 437,000. The preliminary insured unemployment rate in the week ending November 6 changed to 3.4% from the prior week''s revised rate of 3.5%.

OECD Cuts Global Growth Forecast

The Organization for Economic Cooperation and Development on Thursday cut its 2011 growth forecast for the global economy to 4.2% from its May projection of 4.5%. The U.S. economy is projected to grow 2.2% next year, while Japan and the euro-zone are both predicted to grow 1.7%.

GM Offering Priced at $33 a Share

General Motors Co., the automaker priced the common stock in its historic initial public offering at $33 per share, which is at the top end of the previously expected $32 to $33 per share range.

The offering is expected to raise at least $20.1 billion, through the sale of 478 million shares of stock for $15.77 billion and 87 million shares of mandatory convertible junior preferred stock for $4.35 billion.

Allegheny Acquires Ladish

Allegheny Technologies Inc., the specialty metals producer announced a deal to acquire metal components producer Ladish Co., Inc. for about $778 million. Allegheny''s Chairman and Chief Executive Officer Patrick Hassey stated that the acquisition is expected to add at least $100 million in sales.

Western Coal Receives Merger Proposal from Walter Energy

Western Coal Corp., the Canada-based metallurgical coal producer said it received a proposal from U.S.-based Walter Energy, Inc. for a strategic business combination valuing its equity at C$3.3 billion and has entered into an exclusivity agreement with Walter. The combination is expected to create one of the world''s largest pure-play publicly-traded producers of metallurgical coal with synergistic technical expertise in open-pit and underground coal mining.

Ford Reduces Stake in Mazda Motor

Ford Motor Co. said on Thursday that it will reduce its stake in Mazda Motor Corp. to 3.5% from the current 11% and will no longer be its largest stockholder.

Fiat S.p.A., the Italian automaker announced its official return to the U.S. markets after a gap of 27 years with its peppy 2012 model Fiat 500 subcompact car. Fiat had pulled out its cars from the U.S market in 1983 due to its unreliability, rust problems and other quality issues.

Earnings Review

American Eagle Outfitters, Inc. ((AEO)), the clothing and accessories retailer said third quarter total sales increased 2.1% to $751.51 million from $736.01 million in the prior year. Comparable store sales rose by 1%. Net income in the quarter slid 44.2% to $33.02 million or 17 cents per diluted share, compared to net income of $59.16 million or 28 cents per share a year earlier.

Applied Materials, Inc. ((AMAT)), the world''s biggest semiconductor equipment maker said fourth quarter net sales surged 89% to $2.89 billion from $1.53 billion in the same quarter last year. Net income for the quarter soared 239% to $468.0 million or 35 cents per diluted share, compared to net income of $137.9 million or 10 cents per share for the year-ago quarter.

Limited Brands, Inc. ((LTD)), the women''s apparel and personal care products retailer said third quarter net sales increased 11% to $1.98 billion from $1.78 billion in the same quarter last year. Comparable store sales increased 10% for the latest quarter. Net income in the quarter surged 311% to $61.3 million or 18 cents per diluted share, compared to net income of $14.9 million or 5 cents per share in the prior-year quarter.

Netease.com, Inc. ((NTES)), China-based online games and advertising services company reported third quarter total revenues rose 59% to RMB 1.4 billion or $215.1 million, from RMB 879.4 million or $128.8 million reported a year ago. Net profit in the quarter rose 49% to RMB 585.3 million or $87.5 million from RMB 393.8 million or $57.7 million in the same quarter last year. Earnings per ADS rose to RMB 4.48 or $0.67 compared with RMB 3.02 or $0.44 a year ago.

NetApp Inc. ((NTAP)), the storage device maker reported second quarter revenues increased 33% to $1.207 billion from $910 million in the previous year quarter. Net income in the quarter surged 72% to $165 million or 42 cents per diluted share, compared to net income of $96 million or 27 cents per share in the year-ago quarter helped by strong product and service revenues.

PetSmart, Inc. ((PETM)), the pet products retailer reported third quarter net sales increased 7.2% to $1.39 billion from $1.29 billion last year. Comparable store sales grew 5.6% in the third quarter, benefiting from comparable transactions growth of 3.6%. Net income for the quarter increased 20% to $45.61 million or 38 cents per diluted share, compared to net income of $38.07 million or 31 cents per share in the previous year.

Staples, Inc. ((SPLS)), the office products company said third quarter sales increased 0.3% to $6.54 billion from $6.52 billion in the previous year. Net income for the quarter increased 7.2% to $288.68 million or 40 cents per diluted share, compared to net income of $269.38 million or 37 cents per share last year.

Williams-Sonoma, Inc. ((WSM)), the specialty retailer of products for the home stated third quarter net revenues increased 11.8% to $815.52 million from $729.30 million in the comparable period a year ago. Net earnings in the quarter soared 398% to $36.53 million or 34 cents per diluted share, compared to net earnings of $7.33 million or 7 cents per share last year.