U.S. Weekly Jobless Claims, Fed to Conduct Stress Tests

Arthi Gupta
23 Nov, 2011
New York City

The U.S. durable goods orders declined 0.7% in October, weekly jobless claims rose to 393,000, and mortgage demand eased. The Fed announced stress tests for banks that will cover 31 banks. Merck agreed to pay $950 million to settle claims related to Vioxx.

[R]9:35 AM New York – The U.S. durable goods orders declined 0.7% in October, weekly jobless claims rose to 393,000, and mortgage demand eased. The Fed announced stress tests for banks that will cover 31 banks. Merck agreed to pay $950 million to settle claims related to Vioxx.[/R]

U.S. indexes traded sideways after a batch of mixed economic data and weak trading in Europe and mounting concern of the health of the banks in the euro zone.

U.S. durable goods orders declined 0.7%, weekly jobless claims rose 2,000 to 393,000, and mortgage demand eased.

The decline in orders was less than expected and weekly jobless claims were below the 400,000 mark and mortgage demand eased as consumers struggle for bank approvals.

The U.S. Federal Reserve on Tuesday announced that the banks will be stress tested for the deterioration in the euro zone liquidation conditions and a possible debt contagion rooted in the region.

The tests are scheduled in the next few weeks will expand to 31 banks from the 19 banks that participated in the first round in the spring of 2009.

European markets were cautious as Greece and Italy inch forward in implementing economic reforms and more banks turn to central bank for their short term financing.

Nokia Siemens Networks B.V launched an extensive global restructuring program, including plans to reduce its global workforce by 23% or about 17,000 over the next two years.

The restructuring program targets a €1 billion or $1.35 billion reduction in operating expense and production overheads by the end of 2013.

Asian markets slumped on weak Chinese manufacturing data and rupee in India dropped 17% in the year extending the selloff in financial markets in Mumbai in the last two weeks. The benchmark indexes are down 23% in the year so far.

China’s Manufacturing Slowdown

Operating conditions across China''s manufacturing sector declined in November, the latest survey results from Markit Economics showed on Wednesday.

The flash Markit/HSBC purchasing managers'' index for the manufacturing sector declined to 48 in November from 51 in October. This was the lowest reading in 32 months.

U.S. Durable Goods Orders Drop

U.S. durable goods orders dropped by a smaller than estimated margin in October according to data released by the Commerce Department today. The drop in new orders of manufactured durable goods was 0.7% or $1.4 billion.

However, durable goods orders excluding transportation rose 0.7% in October after a downwardly revised 0.6% increase in September.

U.S. Weekly Jobless Claims Rise

First-time claims for U.S. unemployment benefits in the week ended November 19 showed a modest increase, according to a report released by the U.S. Labor Department today with claims remaining below the key 400,000 level.

The report showed that initial jobless claims edged up to 393,000 from the previous week''s revised figure of 391,000.

U.S. Personal Income Up

U.S. personal income rose 0.4% or $48.1 billion in October, according to data released by the Commerce Department.

However, personal spending edged up just 0.1% compared to the revised 0.7% increase in consumer spending in September, revised up from the 0.6% increase reported earlier.

U.S. Mortgage Demand Eases

The Mortgage Bankers Association in the U.S. said its seasonally adjusted index of mortgage application activity eased 1.2% in the week ended November 18, after a 10% drop the week before.

The decline was driven by a 4% fall in refinancing applications.

The MBA''s measure of loan requests for home purchases rose 8.2%, as fixed 30-year mortgage rates were unchanged at an average 4.23%.

Merck Resolves Vioxx Claims

Merck & Co. Inc. agreed to pay $950 million to settle criminal charges and civil claims related to the promotion of its painkiller Vioxx.

The agreement with the U.S. Justice Department requires Merck plead guilty to illegal promotional activity and pay a criminal fine of about $321.64 million and pay nearly $628.4 million to settle additional charges regarding off-label marketing of Vioxx and false statements about the drug''s cardiovascular safety.

Shanda to Go Private

Shanda Interactive Entertainment Ltd., the Chinese entertainment media company agreed to be taken private by a buyer group led by its chairman and chief executive Tianqiao Chen for $2.3 billion. The buyer group collectively beneficially owns about 69.7% of the company''s outstanding shares.

The group is offering $20.675 per ordinary share or $41.35 each for the American depositary shares they don''t already own.

Icahn Sells Motorola Mobility Shares

Carl Icahn, the largest shareholder of Motorola Mobility Holdings Inc. sold 2.9 million shares of the company.

Icahn sold the shares in three transactions for a total of $114.30 million. Icahn first sold 2.69 million shares at $38.79 on November 18 and on November 21 sold 200,000 shares at $38.73 and the rest 56,600 shares at $38.75.

Earnings Review

Deere & Company ((DE)), the manufacturer of agricultural machinery said fourth-quarter worldwide net sales grew 20% to $8.62 billion for the fourth quarter from $7.20 billion in the comparable period. Net income in the quarter increased 46% to $669.6 million, or $1.62 per diluted share compared to net income of $457.2 million, or $1.07 per share for the same period last year.

Nuance Communications Inc. ((NUAN)), the maker of speech-recognition software stated fourth quarter revenues grew 18.5% to $367.0 million from $309.8 million last year. Net loss for the quarter was $5.1 million or 2 cents per diluted share compared to net income of $2.1 million or 1 cent per share in the prior-year quarter.

Pandora Media, Inc. ((P)), the Internet radio company reported third quarter revenues surged 99% to $75.0 million from $37.7 million in the year-ago quarter. Net income in the quarter was $0.6 million or breakeven per share compared to a loss of $1.8 million or 15 cents per share in the year-ago period.

The Valspar Corporation ((VAL)), the paints and coatings maker reported fourth quarter net sales increased 19.4% to $1.05 billion from $876.84 million in the same quarter last year. Net loss in the quarter was $295.72 million or $3.18 per diluted share compared to net income of $51.30 million or 51 cents per share in the prior-year quarter.

Yingli Green Energy Hold. Co. Ltd. ((YGE)), the Chinese solar energy company reported third quarter total net revenues surged 30% to RMB 4.26 billion from RMB 3.28 billion in the same quarter last year. Net loss in the quarter was RMB 180.45 million compared to net income of RMB 456.14 million in the prior-year quarter.

Losses per ADS share were RMB 1.14 compared to earnings of RMB 2.92 last year.