U.S. Weekly Jobless Claims Rise; Indexes Lower on Fed Views

Arthi Gupta
23 Jun, 2011
New York City

U.S. indexes slid after weekly jobless claims rose more than estimated to 429,000. Maple Group raised bid offer for TMX Group to C$3.8 billion. Aviva agreed to sell RAC to Carlyle Group for $1.60 billion. Airbus won orders worth $72 billion in Paris Air Show.

[R]9:00 AM New York – U.S. indexes slid after weekly jobless claims rose more than estimated to 429,000. Maple Group raised bid offer for TMX Group to C$3.8 billion. Aviva agreed to sell RAC to Carlyle Group for $1.60 billion. Airbus won orders worth $72 billion in Paris Air Show.[/R]

World stocks edged lower after the U.S. Federal Reserve lowered its growth forecast for 2011 and 2012 and gave no indication of further stimulus plans.

U.S. indexes futures fell after weekly jobless claims rose 9,000 to 429,000 indicating no signs of improvement in the labor market.

The Greek cabinet on Wednesday approved a 2012-15 austerity budget plan and laws for its implementation, a condition crucial to secure further international aid.

The Greek Prime Minister George Papandreou now faces the difficult task of getting the austerity budget plan totaling €78 billion approved by the Parliament as a precursor to receiving the second tranche of the bailout fund of €12 billion.

European leaders meet in Brussels today in a two-day summit to discuss the bailout plan for Greece.

U.S. Weekly Jobless Claims Rise

New claims for unemployment insurance in the U.S. increased in the week ended June 18, according to data released by the Labor Department.

On a seasonally adjusted basis, the new level of initial unemployment claims rose 9,000 to 429,000, from the previous week''s revised level of 420,000.

The preliminary insured unemployment rate in the week ending June 11 was 2.9% unchanged from the prior week''s unrevised rate of 2.9%.

Maple Raises Bid for TMX Group

Maple Group Acquisition Corp. sweetened its offer for bourse operator TMX Group, Inc. to C$50 a share or about C$3.8 billion in cash and stock. The current offer is to acquire up to 80% of the outstanding common shares of TMX in cash.

TMX, the operator of the Toronto Stock Exchange and TSX Venture Exchange, said its Board will ""reassess"" the offer.

Aviva Sells RAC

Aviva plc, the life insurer agreed to sell its UK-based roadside assistance service RAC Ltd. to global asset management firm Carlyle Group for £1 billion pounds or about $1.60 billion.

Airbus Secures Orders Valued at $72 Billion

Airbus SAS, a unit of European Aeronautic Defence and Space Co. NV received firm orders and commitments worth $72.2 billion from 16 customers for a total of 730 aircraft at the 49th Paris Air Show in Le Bourget.

The commitments include order indications for 312 aircraft worth $28.2 billion and firm orders for 418 aircraft worth about $44 billion, Airbus said.

Earnings Review

Bed Bath & Beyond Inc. ((BBBY)), the domestic merchandise retail stores operator reported first quarter revenues rose 9.7% to $2.11 billion from $1.92 billion in the year-ago quarter. On a same-store basis, sales grew about 7% compared with an increase of nearly 8.4% a year before.

Net profit in the quarter climbed 31.2% to $180.6 million or 72 cents per diluted share compared to $137.6 million or 52 cents per share last year.

IHS Inc. ((IHS)), the publicly traded business information services company reported second quarter revenues increased 22% to $325.1 million from $266.5 million in the year-ago quarter.

Net income in the quarter rose 0.5% to $38.7 million compared to net income of $38.5 million in the year-ago period. Earnings per share were down to $0.59 from $0.60 last year, reflecting a higher share count for the quarter.

Lennar Corporation ((LEN)), the home builder reported second quarter total revenues declined 6% to $764.49 million from $814.48 million last year. Net earnings in the quarter slumped 65% to $13.79 million or 7 cents per diluted share compared to net earnings of $39.72 million or 21 cents per share in the prior-year quarter.

Nissan Motor Co., Ltd., the Japan-based automobile manufacturer estimates fiscal year 2011 net income of 270 billion yen or $3.38 billion on net revenues of 9.4 trillion yen or $117.5 billion. In addition, operating profit is estimated to be 460 billion yen or $5.75 billion for the full year.

Paychex, Inc. ((PAYX)), the staffing and outsourcing service provider said fourth quarter total revenue increased 5% to $522.7 million from $496.2 million in the same quarter last year. Net income in the quarter gained 3% to $118.9 million or 33 cents per diluted share compared to net income of $115.5 million or 32 cents per share in the prior-year quarter.

For fiscal year 2011, total revenue increased 4% to $2.1 billion from $2.0 billion in the prior year. Annual net income rose 8% to $515.3 million or $1.42 per share from $477.0 million or $1.32 per share in the previous year.

Red Hat, Inc. ((RHT)), the world''s largest seller of Linux software stated first quarter total revenue rose 27% to $264.75 million from $209.14 million in the same quarter last year. Net income in the quarter edged higher 35% to $32.5 million or 17 cents per diluted share compared to net income of $24.1 million or 12 cents per share for the year-ago quarter.