U.S. Jobless Claims, Durable Goods Orders Fall; Stocks Gain

Arthi Gupta
24 Nov, 2010
New York City

U.S. stocks gained after weekly jobless claims fell 34,000. S&P downgraded Ireland credit rating. SAP ordered to pay $1.3 billion in damages to Oracle. J. Crew Group agrees to be acquired by TPG Capital for $3 billion. Dynegy terminated deal with Blackstone.

[R]9:35 AM New York – U.S. stocks gained after weekly jobless claims fell 34,000. S&P downgraded Ireland credit rating. SAP ordered to pay $1.3 billion in damages to Oracle. J. Crew Group agrees to be acquired by TPG Capital for $3 billion. Dynegy terminated deal with Blackstone.[/R]

U.S. stocks traded higher after mortgage applications for home purchases rose and durable goods orders dropped more than anticipated in October. Asian markets declined on concerns related to developments in the Korean peninsula and the Irish debt crisis. The European markets advanced after positive economic data in the region.

Portuguese workers brought the country to a near standstill today as they staged a 24-hour nationwide strike in protest against the Socialist government''s austerity measures. The strike hit the country''s services sector, media and fuel supplies and paralyzed transportation.

Mortgage Demand Rises

According to industry data published today, mortgage applications for home purchases in the U.S. rose to their highest level in more than six months. The Mortgage Bankers Association''s Market Composite Index for the week ending November 19 increased 2.1% on a seasonally adjusted basis from one week earlier.

Applications for home purchases surged 14.4% from one week earlier, which included Veterans Day. This represents the biggest rise in purchase applications since May. However, the Refinance Index decreased 1.0% from the previous week.

Weekly Jobless Claims Falls

The U.S. Labor Department stated for the week ended November 20 that seasonally adjusted weekly jobless claims decreased 34,000 to 407,000 from the revised previous week claims of 441,000. The preliminary insured unemployment rate in the week ending November 20 changed to 3.3% from the prior week''s revised rate of 3.4%.

Durable Goods Orders Decline

According to a report released by the U.S. Commerce Department today orders for durable goods fell 3.3% in October following an upwardly revised 5.0% increase in September.

Personal Spending and Income Rises

The Commerce Department in a report stated on Wednesday that personal spending and personal income in the U.S. increased for the fourth consecutive month in October.

The report showed that personal spending increased 0.4% in October following an upwardly revised 0.3% increase in September.

The Commerce Department said that personal income rose 0.5% in October after coming in unchanged in September.

S&P Downgrades Ireland Credit Rating

International ratings agency Standard & Poor''s cut the Irish Republic''s sovereign credit rating by two notches to A from AA- and the short-term rating was lowered by one notch to A-1 from A-1+. Both were placed on CreditWatch with negative implications, meaning more downgrades are likely.

SAP Ordered to Pay $1.3 Billion to Oracle

SAP AG, German business software maker, which is charged of software theft by U.S. rival Oracle Corp. has been ordered by a U.S. Federal Court to pay Oracle $1.3 billion in damages.

Oracle sued SAP in 2007 claiming its U.S.-based, now defunct, its TomorrowNow unit made hundreds of thousands of illegal downloads and several thousand copies of Oracle''s software to avoid paying licensing fees and steal customers.

In a statement released by Oracle, its President Safra Catz said, ""For more than three years, SAP stole thousands of copies of Oracle software and then resold that software and related services to Oracle''s own customers.""

TPG Capital Acquires J. Crew Group

J. Crew Group, Inc. entered into an agreement to be acquired by funds affiliated with TPG Capital and Leonard Green & Partners, L.P. for $43.50 per share in cash or a total of approximately $3.0 billion. The price represents a premium of 29% to J.Crew''s average closing share price over the last month.

Dynegy Rejects Blackstone Offer

Dynegy Inc., the electric energy company decided to terminate the $5 per share merger deal with Blackstone Group on the backdrop of strong opposition from shareholders. The company indicated it would look for other potential buyers while also considering options such as restructuring.

Rolls-Royce in Deal with Emirates

Rolls-Royce, the global power systems company, concluded new agreements to provide engine services for 50 of Emirates’ existing fleet of 152 wide-bodied aircraft.

Earnings Review

Campbell Soup Company ((CPB)), the world''s largest soup company reported first quarter sales decreased 1% to $2.17 billion from $2.20 billion a year ago, even as the company stepped up promotional spending. Net earnings in the quarter dropped 8.2% to $279 million or 82 cents per diluted share, compared with net earnings of $304 million or 87 cents per share in the prior-year quarter.

Deere & Company ((DE)), the farm equipment maker reported fourth quarter total net sales and revenues climbed 35% to $7.20 billion from $5.33 billion in the prior year. Net income generated in the quarter was $457.2 million or $1.07 per share, compared to a net loss of $222.8 million or 53 cents per share last year.

Guess?, Inc. ((GES)), the international fashion house said third quarter total net revenue rose 17.4% to $613.90 million from $522.81 million in the same quarter last year. Net income in the quarter increased 8% to $69.1 million or 75 cents per diluted share, compared to net income of $64.1 million or 69 cents per share for the year-ago quarter.

Hormel Foods Corporation ((HRL)), the meat and food products firm reported fourth quarter net sales soared 23% to $2.06 billion from $1.68 billion in the prior year. Net earnings in the quarter climbed 17% to $121.15 million or 90 cents per diluted share, compared to net earnings of $103.88 million or 77 cents per share last year, driven by segment profit gains in its Jennie-O Turkey Store and Refrigerated Foods segments.

Total annual sales also grew 10.5% to $7.22 billion from $6.53 billion recorded in the previous year. For the full year, net earnings grew 15.3% to $395.59 million or $2.92 per share from $342.81 million or $2.53 per share in the prior year.

J. Crew Group, Inc. ((JCG)), the apparel retailer stated third quarter revenues increased 4% to $429.3 million from $414.1 million in the same period last year. Net profit in the quarter declined 14% to $37.8 million or 58 cents per diluted share, compared to net profit of $43.9 million or 67 cents per share in the prior-year quarter.

Patterson Companies, Inc. ((PDCO)), the dental and veterinary products distributor reported second quarter net sales grew 5% to $857.41 million from $814.95 million in the prior-year quarter. Net income in the quarter advanced 8.1% to $53.36 million or 45 cents per diluted share, compared to net income of $49.34 million or 41 cents per share last year.

Tiffany & Co. ((TIF)), the luxury-jewelry retailer reported third quarter net sales increased 14% to $681.73 million from $598.21 million in the comparable period a year ago. Net earnings in the quarter grew 27% to $55.08 million or 43 cents per diluted share, compared to net earnings of $43.31 million or 34 cents per share a year earlier, boosted by margin expansion and sales growth across all geographic regions.