U.S. GDP Revised Up to 1.3%; Weekly Jobless Claims Fall

Arthi Gupta
29 Sep, 2011
New York City

U.S. indexes traded higher after weekly jobless claims fell 37,000 to 391,000 and the economy grew more than initially estimated in the second quarter. German lawmakers approved the resolution to increase the lending capacity of the European Financial Stability Facility.

[R]9:35 AM New York – U.S. indexes traded higher after weekly jobless claims fell 37,000 to 391,000 and the economy grew more than initially estimated in the second quarter. German lawmakers approved the resolution to increase the lending capacity of the European Financial Stability Facility.[/R]

U.S. indexes climbed after better-than-estimated weekly jobless claims and GDP data.

U.S. Weekly Jobless Claims Drop

First time claims for U.S. unemployment benefits declined notably in the week ended September 24, according to a report released by the U.S. Labor Department today, with claims dropping below the key 400,000 level.

The report showed that initial jobless claims fell by 37,000 to 391,000 from the previous week''s revised figure of 428,000.

U.S. GDP Upwardly Revised

The Commerce Department released a report showing that the U.S. economy grew by more than initially reported in the second quarter.

The Commerce Department said that GDP grew 1.3% in the second quarter, 0.3 percentage points stronger than the 1% growth previously reported.

European Markets Decline, Germany Approves Bailout Fund

The European indexes gained after German lawmakers agreed to expand the bailout fund and the German Parliament voted in favor of the strengthened euro-zone bailout fund.

The proposal for the expansion of the European Financial Stability Facility was passed with an overwhelming majority in a vote held in the lower house of the German parliament Bundestag with 523 votes in favour, 85 against and 3 abstentions.

The Bundestag approval paves way for raising Germany''s contribution to the EFSF from €123 billion to €211 billion.

Germany became the 10th euro area nation to approve the reforms to the euro rescue fund.

Italy’s Borrowing Cost Rises

Italy sold €7.9 billion in bonds today as borrowing costs rose nearly 100 basis points from the previous auction.

The Italian Treasury sold €3.14 billion of five-year bonds at a higher yield of 4.68% compared with a yield of 3.87% at the last auction on Aug. 30. Demand was 1.36 times the amount sold compared with 1.32 times at the last sale.

The Treasury also sold €2.47 billion of bonds due in 2022 at a higher yield of 5.86% versus 5.22% at the last auction on August 30.

The Treasury also auctioned €1.3 billion of 2021 bonds to yield 5.49% and €926 million in floating-rate 2015 bonds to yield 5.63%.

Asian markets increased on positive developments in Europe.

Earnings Review

Rite Aid Corporation ((RAD)), the retail drugstore chain said its same store sales for September increased 1.3% from the prior year. Total drugstore sales for the four-week period grew 1.1% to $1.92 billion from $1.9 billion in the same period last year

The Mosaic Company ((MOS)), the fertilizer company said first quarter net sales rose 41% to $3.08 billion from $2.19 billion in the same quarter last year. Net income in the quarter soared 77% to $526.0 million or $1.17 per share compared to net income of $297.7 million or 67 cents per share for the year-ago quarter.

Worthington Industries, Inc. ((WOR)), the diversified metals company reported first quarter revenues dropped 2% to $602.4 million from $616.8 million in the year-ago quarter. Net income in the quarter rose 15% to $25.7 million or 35 cents per diluted share compared to net income of $22.4 million or 29 cents per share in the year-ago period.