U.S. Jobless Claims Drop, Deficit Widens; Cisco Net Falls 36%

Arthi Gupta
11 Aug, 2011
New York City

U.S. indexes rebounded after weekly jobless claims fell 7,000 to 395,000, foreclosure filings declined in July, and deficit widened in June. Cisco quarterly net slumped 36% on restructuring charges.

[R]10:20 AM New York – U.S. indexes rebounded after weekly jobless claims fell 7,000 to 395,000, foreclosure filings declined in July, and deficit widened in June. Cisco quarterly net slumped 36% on restructuring charges.[/R]

U.S. indexes surged in a volatile trading a day after dropping more than 4% in the previous session. The euro-zone debt worries remained in the focus as French banks fell for the second day but better than expected jobless claims and lesser than expected trade deficit lifted the sentiment.

Seasonally adjusted weekly jobless claims decreased 7,000 and trade deficit in June increased to $53.1 billion from the revised $50.8 billion in May.

European markets traded negative with banks leading the decline for the second day in a row. French banks extended losses for the second day as market speculated a rating decline for France and more losses for banks stemming from the Italian and Spanish bond holdings.

Asian markets were on the decline on the worsening global economic backdrop. Chinese fiscal revenue increased 26.7% in July from a year ago to 986.4 billion yuan, the Ministry of Finance said.

U.S. Weekly Jobless Claims Fall

The U.S. Labor Department released a report today showing an unexpected drop in initial jobless claims in the week ended August 6, with claims dropping below the key 400,000 level.

Seasonally adjusted weekly jobless claims decreased 7,000 to 395,000 from the revised previous week claims of 402,000. The preliminary insured unemployment rate in the week ending July 30 fell to 2.9% from the prior week''s unrevised rate of 3%.

U.S. Deficit Widens

U.S. trade deficit widened in June after exports and imports fell, according to a report released by the U.S. Department of Commerce.

Trade deficit in June increased to $53.1 billion from the revised $50.8 billion in May. June exports decreased $4.1 billion and imports decreased $1.9 billion. The goods deficit rose to $67.6 billion and service surplus fell to $14.5 billion.

U.S. Foreclosure Filings Drop

U.S. foreclosure activity fell to a 44-month low in July, with one in every 611 U.S. housing units receiving a foreclosure filing, according to RealtyTrac.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were reported on 212,764 properties in July, down 4% from June and a 35% decline from last year. This was the 10th straight month of annual decrease in foreclosure activity and the lowest monthly total since November 2007.

Earnings Review

Cisco Systems, Inc. ((CSCO)), the computer networking gear maker said fourth quarter net sales rose 3.3% to $11.20 billion from $10.84 billion in the same quarter last year. Net income in the quarter slumped 36% to $1.2 billion or 22 cents per diluted share compared to net income of $1.9 billion or 33 cents per share for the year-ago quarter.

Kohl''s Corporation ((KSS)), the department store chain operator reported second quarter net sales grew 3.6% to $4.25 billion from $4.10 billion a year ago. Comparable store sales, or sales from stores open for at least a year, increased 1.9% for the quarter.

Net income in the quarter increased 17% to $303 million or $1.09 per diluted share compared to net income of $260 million or 84 cents per share last year.

News Corporation ((NWSA)), the diversified global media company said fourth quarter revenues increased 10.5% to $8.96 billion from $8.11 billion in the same quarter last year. Net income in the quarter declined 22% to $683 million or 26 cents per diluted compared to net income of $875 million or 33 cents per share in the prior-year quarter.

Sara Lee Corp. ((SLE)), the consumer-goods company reported fourth quarter net sales rose 9% to $2.297 billion from $2.113 billion in the prior-year quarter. Net income in the quarter declined 41% to $111 million or 19 cents per diluted share compared to net income of $187 million or 28 cents per share in the same quarter last year.