U.S. Jobless Claims Drop, GDP Growth Estimate Lowered Again

Arthi Gupta
22 Dec, 2011
New York City

The U.S. indexes futures edged higher after weekly jobless claims fell to 364,000 and gross domestic product growth was revised down to 1.8% in the third quarter. Akamai agreed to acquire Cotendo for $268 million.

[R]9:10 AM New York – The U.S. indexes futures edged higher after weekly jobless claims fell to 364,000 and gross domestic product growth was revised down to 1.8% in the third quarter. Akamai agreed to acquire Cotendo for $268 million.[/R]

U.S. indexes futures gained after weekly jobless claims fell 4,000 to 364,000 and the final estimate of the gross domestic product growth was lowered in the third quarter.

The European indexes advanced more than 1% a day after the central bank offered cheap financing and extended loans collaterals to include smaller bank. The move was widely welcomed by investors across the region and lowered tensions in the euro zone financial system.

European banks were scheduled to receive nearly half a trillion euros today and the availability of funds also arrested the rising sovereign yields in the region for eight days to the date of the ECB tender.

However, the sovereign yields inched up again today. Italian 10-year bond yields rose 29 basis points to 6.92% and similar Spanish bond yields gained 10 basis points to 5.23%.

Standard & Poor''s downgraded Hungary’s sovereign credit rating to ''junk'' status with a ''negative'' outlook, citing unpredictable policy framework that is harming the economy''s medium-term growth prospects.

The Italian government led by Prime Minister Mario Monti will have a final confidence vote later today seeking approval of austerity measures that is expected to save up to €33 billion. The measures are already passed by the lower house.

Asian markets closed lower in light trading.

U.S. Weekly Jobless Claims Drop

First time claims for U.S. unemployment benefits fell in the week ended December 17, according to a report released by the Labor Department today, with claims falling to their lowest level since April 2008.

The report showed that initial jobless claims fell 4,000 to 364,000 from the previous week''s revised figure of 368,000.

U.S. GDP Growth Revised Down

U.S. gross domestic product growth in the third quarter of 2011 was downwardly revised for the second time, according to data released by the U.S. Commerce Department today.

U.S. gross domestic product increased at an annual rate of 1.8% in the third quarter of 2011, according to the third Commerce Department estimate.
The economic growth was estimated at 2.5% in the first estimate which was revised down to 2% in the second estimate.

Japanese Automakers Global Production Falls

Japanese automakers, including Toyota, Honda, and Mitsubishi reported lower global production and sales performances for November impacted by the earthquake and tsunami early this year and supply chain problems linked to Thailand floods.

Nissan Motor was the only automaker to show production increase.

Akamai to Buy Cotendo

Akamai Technologies, Inc., the Internet infrastructure provider agreed to acquire privately-held Cotendo Inc. for $268 million in cash.

H.B. Fuller to Acquire Forbo''s Industrial Adhesives Business

H.B. Fuller Co., the specialty chemicals manufacturer signed an agreement to purchase the global industrial adhesives business of Forbo Group for Sfr370 million in cash on a debt-free and cash-free basis.

eBay Acquires BillSAFE

eBay Inc. acquired BillSAFE, a provider of purchase-on-invoice technology in Germany. The acquisition extends the company’s leadership in payments by combining BILLSAFE with eBay’s PayPal, a payment service provider.

Terms of the deal were not disclosed.

Earnings Review

American Greetings Corporation ((AM)), the greeting card company said third quarter total revenue rose 8% to $463.6 million compared with $430.1 million in the year earlier period. Net income in the quarter fell 37% to $20.25 million or 50 cents per diluted share compared to net income of $32.16 million or 78 cents per share in the prior year.

Bed Bath & Beyond Inc. ((BBBY)), the home furnishings retailer reported third quarter sales rose 6.8% to $2.34 billion from $2.19 billion last year. Comparable store sales grew 4.1% in the quarter compared to a 7% increase in the prior year. Net income in the quarter soared 21% to $228.5 million or 95 cents per diluted share compared to net income of $188.6 million or 74 cents per share last year.

Corporate Office Properties Trust ((OFC)), the specialty office real estate investment trust, estimates fourth quarter loss in the range of $1.22 to $1.25 per share, while the earlier forecast estimated earnings between $0.10 and $0.13.

TIBCO Software Inc. ((TIBX)), the independent provider of middleware and infrastructure software reported fourth quarter revenues rose 20% to $289.5 million from $241.2 million in the year-ago quarter. Net income in the quarter rose 38.4% to $51.9 million or 30 cents per diluted share compared to net income of $37.5 million or 22 cents per share in the year-ago period.