U.S. Weekly Jobless Claims, Housing Starts Drop

Arthi Gupta
17 Nov, 2011
New York City

U.S. stock futures declined after ratings agency Fitch warned that the euro-zone contagion threatened the outlook for U.S. banks. Spain

[R]9:40 AM New York – U.S. stock futures declined after ratings agency Fitch warned that the euro-zone contagion threatened the outlook for U.S. banks. Spain’s borrowing costs rose to a euro-era record in a bond auction today. U.S. weekly jobless claims fell unexpectedly to 388,000 and housing starts fell in October.[/R]

Global indexes traded lower after the ratings agency Fitch warned that the euro-zone contagion threatened the outlook for U.S. banks. Markets were served another batch of better domestic economic data.

Weekly jobless claims declined to a 7-month low and further below 400,000 in the last week and building permits jumped.

Spain''s risk premium to German bunds surged to a record high of 490 basis points since the creation of the euro leading to contagion fears.

Fitch predicted that U.S. banks are exposed if the euro zone debt contagion continues to spread beyond Greece, Ireland, Italy, Portugal, and Spain.

""Unless the euro-zone debt crisis is resolved in a timely and orderly manner, the broad outlook for U.S. banks could worsen,"" the agency said.

Asian markets traded mixed amidst speculation that more monetary policy easing may be announced by the China’s central bank.

Greek PM Wins Confidence Vote

The newly formed interim government in Greece led by Prime Minister Lucas Papademos won a confidence vote held in the country''s parliament late on Wednesday, according to House Speaker Filippos Petsalnikos.

Spain Auctions 10-Year Bonds

The Spanish Treasury issued €3.56 billion in 10-year bonds at a yield of 6.975% compared to 5.433% in the prior 10-year bond auction held on October 20. The bid-to-cover ratio declined to 1.54 compared to 1.76 on the previous occasion.

Spain''s risk premium to German bunds has surged to a record high of 490 basis points since the creation of the euro.

U.S. Weekly Jobless Claims Drop

First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended November 12, the Labor Department stated in a report today, with claims falling below the key 400,000 level.

The report showed that initial jobless claims fell by 5,000 to 388,000 from the previous week''s revised figure of 393,000.

U.S. Housing Starts Fall

New housing starts in the U.S. declined 0.3% in October at a seasonally adjusted annual rate of 628,000 to the revised September rate of 630,000, according to data released by the U.S. Commerce Department today.

U.S. Homebuilder Confidence Improves

Homebuilder confidence in the U.S. improved significantly in November, according to a report released by the National Association of Home Builders on Wednesday.

The report showed that the NAHB/Wells Fargo Housing Market Index soared to 20 in November from a downwardly revised 17 in October.

OECD Area Economy Expands

The gross domestic product in the Organization for Economic Cooperation and Development area increased 0.6% sequentially in the third quarter, faster than the 0.3% growth in the second quarter, driven mainly by strong growth in Japan, preliminary data showed today.

The U.S economy grew 0.6% in the third quarter, after expanding 0.3% in the second quarter.

Earnings Review

Applied Materials, Inc. ((AMAT)), the world''s largest semiconductor equipment maker said fourth quarter net sales fell 24% to $2.18 billion from $2.89 billion in the same quarter last year. Net income in the quarter fell 2.6% to $456 million or 34 cents per diluted share compared to net income of $468 million or 35 cents per share for the year-ago quarter.

Limited Brands, Inc. ((LTD)), the apparel company reported third quarter revenues grew 9.6% to $2.173 billion from $1.983 billion in the year-ago quarter. Net income in the quarter soared 54.6% to $94.3 million or 31 cents per diluted share compared to net income of $61.3 million or 18 cents per share in the year-ago period.

NetApp Inc. ((NTAP)), the data storage management company said second quarter revenues rose 20.5% to $1.507 billion, from $1.251 billion a year ago. Net earnings in the quarter declined 5.6% to $165.6 million or 44 cents per diluted share compared to net earnings of $175.4 million or 45 cents per share last year.

Sears Holdings Corporation ((SHLD)), the broadline retailer reported third quarter total revenues, from merchandise sales and services, decreased 1.1% to $9.57 billion from $9.68 billion a year ago. Net loss in the quarter widened 93.1% to $421 million or $3.95 per share compared to net loss of $218 million or $1.98 per share in the prior year.