U.S. Weekly Jobless Claims Flat, Wal-Mart Net up 10%

Arthi Gupta
17 May, 2012
New York City

U.S. indexes traded lower tracking the European markets. U.S. weekly jobless claims were nearly unchanged at 370,000 and foreclosure activity fell in April. Agilent agreed to acquire Denmark-based Dako for $2.2 billion and Boyd Gaming agreed to buy Peninsula Gaming for $1.45 billion.

[R]9:35 AM New York – U.S. indexes traded lower tracking the European markets. U.S. weekly jobless claims were nearly unchanged at 370,000 and foreclosure activity fell in April. Agilent agreed to acquire Denmark-based Dako for $2.2 billion and Boyd Gaming agreed to buy Peninsula Gaming for $1.45 billion.[/R]

U.S. indexes traded lower on the ongoing political turmoil in the euro zone and the debt contagion to Spain and Italy after bond yields shot up to worrisome levels. Weekly jobless claims in the U.S. remained steady.

The European indexes edged lower after fresh parliamentary election in Greece were announced for June 17 that is expected to vote in parties that resist austerity measures to a larger representation and worries linked to Spain mounted.

Spain was in focus after the latest economic data showed second quarter of contraction in a row and depositors withdrew from nationalized Bankia SA more than €1 billion or nearly 1% of its deposit base.

The Spanish Treasury sold €2.5 billion of debt today compared to the target range of €1.5 billion to €2.5 billion.

Spain sold €1.02 billion from bonds maturing on July 2015 at an average yield of 4.876% from 4.037% in the prior auction held on May 3. The bid-to-cover rose to 3.01 from 2.88 times in the prior auction.

From the auction of securities maturing on January 2015, the treasury received €372 million. The yield surged to 4.375% from 2.89%. The bid-to-cover ratio improved to 4.47 from 2.41.

The treasury raised €1.1 billion from April 2016 bonds at an average yield of 5.106% from 3.374% in the last auction. The bid-to-cover ratio rose to 2.38 from 4.13.

In Asian markets stocks were choppy after Japan reported a rise in its economic activities but other large markets in Asia closed mixed.

Japan’s GDP in the March quarter increased 1% from the previous quarter after the growth in the December quarter was revised to zero.

Domestic demand drove the expansion as international markets offered few opportunities to exporters for growth.

Exports in the quarter increased 2.9% and in imports rose 1.9%. For the fiscal year ending in March, GDP decreased 0.01% after rising 3.2% in the fiscal year ending in March 2011.

In the current fiscal year, the GDP is expected to grow 2% as the Bank of Japan offered more stimulus in April and domestic consumption and rebuilding efforts provide impetus to the economic expansion.

U.S. Weekly Jobless Claims Flat

New claims for unemployment in the U.S were unchanged at 370,000 in the week ended May 12, according to data released by the U.S. Labor Department today

The four-week rolling average of new unemployment claims declined 4,750 to 375,000 from the previous average of 379,750.

U.S. Foreclosure Activity Falls

U.S. foreclosure activity in April decreased 14% from April 2011 and fell 5% from the previous month, according to RealtyTrac. One in every 698 U.S. housing units had a foreclosure filing during the month.

The online marketplace for foreclosure properties stated foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were reported on 188,780 U.S. properties in April, the lowest monthly total since July 2007.

Agilent to Buy Dako

Agilent Technologies Inc. agreed to acquire Dako, the Denmark-based cancer diagnostic company. The $2.2 billion acquisition is on a debt-free basis.

The acquisition will strategically complement Agilent’s research technologies and accelerate growth in rapidly expanding segments of diagnostic markets.

Dako''s products are sold in more than 100 countries with 2010 revenue of approximately $340 million. Agilent had net revenues of $6.6 billion in fiscal 2011.

Boyd Gaming Acquires Peninsula Gaming

Boyd Gaming Corporation agreed to acquire Peninsula Gaming, LLC, for total consideration of $1.45 billion. The acquisition will complement Boyd Gaming''s existing portfolio by adding five properties in some of the nation''s strongest growth regions.

The purchase is seven times its operating earnings based on the trailing 12-month EBITDA of $109 million for Peninsula''s Iowa and Louisiana properties, an annualized run-rate for Kansas Star based on its first-quarter 2012 EBITDA of $26.8 million, and corporate expense of $10 million.

Berkshire Unit to Buy Media General

BH Media Group, a unit of Berkshire Hathaway agreed to buy all of the newspapers owned by Media General, with the exception of the Tampa group, for $142 million cash.

According to a separate credit deal, Berkshire Hathaway would also provide Media General with a $400 million term loan and a $45 million revolving credit line.

Media General stock shot up 56% in the early trading.

Earnings Review

Dollar Tree, Inc. ((DLTR)), the operator of discount variety stores reported first quarter net sales grew 11.5% to $1.72 billion from $1.55 billion in the prior-year quarter. Comparable store sales increased 5.6% in the quarter.

Net profit for the quarter rose 15% to $116.1 million or $1 per diluted share compared to net profit of $101 million or 82 cents per share a year ago.

Limited Brands, Inc. ((LTD)), the women''s apparel retailer said first quarter net sales fell 3% to $2.15 billion from last year''s first quarter sales of $2.22 billion. Comparable store sales for the first quarter increased 7%.

Net income for the quarter fell 25% to $124.6 million or 41 cents per diluted share compared to net income of $165.2 million or 50 cents per share for the year-ago quarter.

Vedanta Resources Plc ((VED.L)), the India-focused miner said fiscal year 2012 revenue grew 22.6% to $14 billion from $11.43 billion a year ago. For the year, profit before tax declined 35% to $1.75 billion from $2.68 billion reported last year.

Wal-Mart Stores, Inc. ((WMT)), the operator of retail stores stated first quarter revenues rose 8.5% to $113.02 billion from $104.19 billion in the previous year. Net income for the quarter climbed 10% to $3.74 billion or $1.09 per diluted share compared to net income of $3.40 billion or 97 cents per share for the year-ago quarter.