U.S. Weekly Jobless Claims Up, Consumer Prices Decline

Arthi Gupta
14 Jun, 2012
New York City

U.S. indexes gained after weekly jobless claims rose 6,000 to 386,000 and consumer prices fell 0.3% in May. The euro area contagion worries notched up after Spanish 10-year yield crossed 7% and Italian yields rose. Nokia plans to slash 10,000 jobs.

[R]9:35 AM New York – U.S. indexes gained after weekly jobless claims rose 6,000 to 386,000 and consumer prices fell 0.3% in May. The euro area contagion worries notched up after Spanish 10-year yield crossed 7% and Italian yields rose. Nokia plans to slash 10,000 jobs.[/R]

In early trading, U.S. indexes climbed and weekly jobless claims rose but consumer prices fell in May. Markets in Europe were on the decline ahead of the Greek election and bond yields of Spain and Italy rose for the fourth day in a row.

Spanish 10-year bond yields surged to 7%, the level that most economist deem unsustainable and a tipping point for the international bailout and Italian bond yields also rose as the debt stress mounted in the region.

Ratings agency Moody''s cut its rating on Spanish government debt to Baa3 from A3 and Spanish 10-year bond yields rose to euro-era record highs today at 7%. The Italian 10-year bond yield rose to 6.30%.

Also, European Central Bank’s net lending to Spanish banks surged to a record high of €287.8 billion in May from €263.5 billion in April, data from Bank of Spain showed today.

The Italian treasury sold a total €4.5 billion of its longer-term debt today, including a three-year bond or BTPs. The yield on the 2.50 percent March 2015 bond surged to 5.30% from 3.91% in the previous sale on May 14. The bid-to-cover ratio rose to 1.59 from 1.52.

The country paid a yield of 6.1% for its 4.25 percent February 2019 off-the-run BTP and 6.13% for its 4.25 percent March 2020 debt.

U.S. Foreclosure Activity Rises

Foreclosure filings which include default notices, scheduled auctions and bank repossessions were reported on 205,990 U.S. properties in May, an increase of 9% from April but still down 4% from May 2011, according to a report released by RealtyTrac.

Georgia posted the nation’s highest state foreclosure rate in May, the first time since February 2006.

U.S. Weekly Jobless Claims Up

New claims for unemployment insurance in the U.S. rose for the week ending June 9, according to data released by the U.S. Labor Department today.

Seasonally adjusted weekly jobless claims increased 6,000 to 386,000 from the previous week''s revised level of 380,000. The 4-week moving average was 382,000, an increase of 3,500 from the previous week''s revised average of 378,500.

The total number of people claiming benefits in all programs for the week ending May 26 was 5,824,739, a decrease of 145,990 from the previous week.

U.S. Consumer Prices Decline

The consumer price index for the U.S. fell 0.3% in May after remaining relatively unchanged in April, according to data released by the Labor Department today.

Compared to May 2011, consumer prices rose 1.7% for the year. Excluding the volatile food and energy sectors, core consumer prices rose 0.2% in May.

Costco Subsidiary Acquires Stake in Costco De Mexico

Costco Wholesale Corp.’s wholly-owned subsidiaries will purchase from Controladora Comercial Mexicana, S.A.B. de C.V. its 50% share interest in Costco de Mexico, S.A. de C.V., a joint venture, for 10.65 billion pesos or $760.4 million.

Nokia to Slash Jobs

Nokia Corp., the mobile phones maker outlined a range of planned actions aimed at sharpening its strategy, improving its operating model and returning the company to profitable growth.

The company plans to reduce up to 10,000 positions globally by the end of 2013 and also proposed reductions related to non-core assets, including possible divestments.

Earnings Review

Pier 1 Imports, Inc. ((PIR)), the specialty retailer of decorative home furnishings reported first quarter total net sales grew 8% to $361.12 million from $334.6 million in the year-ago quarter. Comparable store sales increased 7.2% compared to a 10.2% gain last year

Net income in the quarter climbed 26.5% to $17.83 million or 16 cents per diluted share compared to net income of $14.10 million or 12 cents per share a year ago.

Smithfield Foods, Inc. ((SFD)), the packaged pork and meat products maker said fourth quarter sales grew 3% to $3.21 billion. Net income in the quarter declined 19% to $79.5 million or 49 cents per diluted share compared to net income of $98.4 million or 59 cents per share a year ago.

Sales for the full year rose a record 7% to $13.1 billion. Net income for the year was $361.3 million or $2.21 per diluted share.

The Kroger Co. ((KR)), the grocery retailer reported first quarter total sales, including fuel rose 5.8% to $29.1 billion from $27.5 billion for the same period in 2011. Net earnings in the quarter gained 1.6% to $439.4 million or 78 cents per diluted share compared to net earnings of $432.3 million, or 70 cents per share last year.