U.S. Jobless Claims Rise, GDP Expands 1.8%

Arthi Gupta
28 Apr, 2011
New York City

U.S. indexes traded lower after weekly jobless claims unexpectedly rose to a 3-month high to 429,000 and GDP expanded at 1.8% rate, less than estimated in the first quarter. Exelon agreed to buy Constellation Energy for $7.9 billion. Colgate-Palmolive net surged 61%.

U.S. Jobless Claims Rise, GDP Expands 1.8%

[R]9:50 AM New York – U.S. indexes traded lower after weekly jobless claims unexpectedly rose to a 3-month high to 429,000 and GDP expanded at 1.8% rate, less than estimated in the first quarter. Exelon agreed to buy Constellation Energy for $7.9 billion. Colgate-Palmolive net surged 61%.[/R]

Market indexes gained in the early trading after a rally that lifted three popular indexes to multi-year highs in the last five days.

The small cap focused Russell 200 index hovered near an all-time high and tech heavy Nasdaq traded near 10-year high.

Better than expected earnings also lifted sentiment in New York, Europe and Tokyo trading.

The Bank of Japan left its key lending rate target between zero and 0.1% and cut its annual growth outlook in the current year to 0.6% from 1.6%. But the central bank lifted its economic growth outlook to 2.9% in the next fiscal year.

U.S. Weekly Jobless Claims Rise

First-time claims for unemployment benefits showed an unexpected increase in the week ended April 23, according to a report released by the Labor Department today.

The report showed that initial jobless claims rose by 25,000 to 429,000 from the previous week's revised figure of 404,000.

The preliminary insured unemployment rate in the week ending April 16 fell 2.9% from the prior week's revised rate of 3.0%.

U.S. GDP Expansion Slows

The U.S. economy continued to expand at an annual rate of 1.8% in the first quarter of 2011, reflecting a notable slowdown from the 3.1% growth seen in the fourth quarter of 2010, according to data released by the Commerce Department today.

The price index of gross domestic purchases increased 2.2% in the quarter compared to 1.1% in the fourth. Change in private inventories added 0.93% compared to 3.42% in the fourth.

Exelon Buys Constellation Energy

Exelon Corp. agreed to buy electricity generator and utility operator Constellation Energy Group in a stock-for-stock deal valued at $38.59 per share or $7.9 billion.

Constellation shareholders will receive 0.930 Exelon common shares in exchange of each Constellation share. Based on Exelon's closing share price on April 27, Constellation shareholders would receive $38.59 per share.

The merger is expected to be breakeven to Exelon's adjusted earnings in 2012 and is projected to be earnings accretive by over 5% in 2013.

Earnings Review

Baidu.com, Inc. ((BIDU)), the Chinese language Internet search provider said first quarter revenue grew 88.3% to RMB 2.436 billion from RMB 1.294 billion in the year-ago period. Net income in the quarter surged 122.8% to RMB 1.071 billion compared to net income of RMB 480.5 million in the year-ago quarter. On a per-ADS basis, earnings for the quarter rose to RMB 3.06 or $0.47 from RMB 1.38 or $0.20 last year.

Colgate-Palmolive Company ((CL)), the consumer products maker reported first quarter net sales grew 4.5% to $3.99 billion from $3.83 billion last year. Net profit in the quarter surged 61.3% to $576 million or $1.16 per share compared to net profit of $357 million or $0.69 per share in the prior-year quarter.

eBay Inc. ((EBAY)), the online auctioneer said first quarter revenue increased 16% to $2.55 billion from $2.20 billion in the same quarter last year. Net income in the quarter rose 20% to $475.9 million or 36 cents per share compared to net income of $397.7 million or 30 cents per share in the prior-year quarter.

Norfolk Southern Corp. ((NSC)), the holding company for the Norfolk Southern Railway, reported first quarter railway operating revenues increased 17% to $2.6 billion from $2.2 billion last year, on increase in revenue per unit as well as volume. Net income in the quarter rose 26.5% to $325 million or 90 cents per share compared to net income of $257 million or 68 cents per share in the year-ago quarter.

PepsiCo, Inc. ((PEP)), the food and beverage giant reported first quarter net revenue increased 27% to $11.94 billion from $9.37 billion reported in the same quarter last year. Net income in the quarter declined 20% to $1.14 billion or 71 cents per diluted share compared to net income of $1.43 billion or 89 cents per share in the prior-year quarter.

Starbucks Corporation ((SBUX)), the specialty coffee retailer said second quarter total net revenues rose 10% to $2.79 billion from $2.53 billion in the same quarter last year. Net income in the quarter rose 20% to $261.6 million or 34 cents per diluted share compared to net income of $217.3 million or 28 cents per share for the year-ago quarter.

The Allstate Corporation ((ALL)), the home and auto insurer, said first quarter revenues increased 4.5% to $8.10 billion from $7.75 billion in the same quarter last year. Net income in the quarter surged 332.5% to $519 million or 97 cents per diluted share compared to net income of $120 million or 22 cents per share in the prior-year quarter.