U.S. Indexes Trade Sideways; IATA Lowers Industry Profit Estimate

Arthi Gupta
06 Jun, 2011
New York City

The U.S. indexes traded sideways after disappointing economic jobs data. The International Air Transport Association slashed airline industry current year profit forecast to $4 billion from $8 billion in March. LaSalle Hotel Properties agreed to acquire Park Central Hotel for $405.5 million.

[R]9:10 AM New York – The U.S. indexes traded sideways after disappointing economic jobs data. The International Air Transport Association slashed airline industry current year profit forecast to $4 billion from $8 billion in March. LaSalle Hotel Properties agreed to acquire Park Central Hotel for $405.5 million.[/R]

The U.S. investors await the Fed’s assessment of the economy and weekly jobless claims this week. The latest string of weak economic data dragged market indexes last week and global economic sentiment is also waning.

Asian markets fell on global economic concerns with the Japanese benchmark Nikkei average falling 1.2%. Australian stocks declined for the fifth day in a row and markets in Hong Kong fell 1.3%.

The European indexes traded lower after Portugal ruling party lost the general election and Greece set to receive next tranche of the €110 billion bailout.

Federal Reserve Bank of Philadelphia President Charles Plosser on Monday said in a speech in Helsinki, Finland that asset sales of the Federal Reserve should be systematic and rule-based.

Plosser also reiterated the need for the central bank to adopt an explicit numerical inflation target to keep inflation expectations well anchored.

IATA Lowers 2011 Net Estimate

The International Air Transport Association further downgraded its 2011 airline industry profit forecast to $4 billion citing natural disasters in Japan, unrest in the Middle East and North Africa, and the sharp rise in oil prices.

IATA said it now projects global airline industry profits for 2011 to be $4 billion, 54% lower than the $8.6 billion in profits forecast in March and also 78% lower than the $18 billion net profit recorded in 2010.

Dollar Thrifty Recommends Shareholders Not To Take Action

Dollar Thrifty Automotive Group, Inc., the car rental company urged its shareholders not to tender their shares pursuant to Hertz Global Holdings, Inc.''s offer to acquire all of the outstanding shares of common stock of Dollar Thrifty for a price of $72 per Dollar Thrifty share, consisting of $57.60 in cash and 0.8546 shares of Hertz common stock.

LaSalle Hotel Properties Acquires Park Central Hotel

LaSalle Hotel Properties said it inked a purchase and sale agreement to acquire The Park Central Hotel for $405.5 million.

LaSalle Hotel Properties anticipates funding the majority of the purchase price with net proceeds of around $216.6 million from the company''s previously completed sale of common shares on April 26, 2011 and property level financing.

Earnings Review

Forest City Enterprises, Inc. ((FCEA)), the real estate company reported first quarter consolidated revenues rose 16.7% to $316.9 million from $271.5 million in the prior year. Net earnings in the quarter swung to a profit of $47.6 million or 25 cents per diluted share compared to a net loss of $15.6 million or 10 cents per share last year.

Newell Rubbermaid Inc. ((NWL)), the consumer and commercial products company said it expects second-quarter normalized earnings per share may fall as much as 15% than analysts'' current expectations for fiscal year 2011, the company now projects reported earnings between $1.35 and $1.42 per share, including restructuring related costs of $0.22 to $0.26 per share.

PartnerRe Ltd. ((PRE)), the provider of reinsurance said it estimates a loss of between $50 million and $70 million related to the tornado outbreak in the U.S. in late April.

Wi-LAN Inc., the Canadian technology licensing company said first quarter revenues surged 65.4% to $26.3 million from $15.9 million in the previous year. Net earnings in the quarter soared to $19.8 million or 17 cents per share compared to net earnings of $1.1 million or 1 cent per share reported a year ago.