U.S. Jobless Claims Drop, JP Morgan Losses May Rise to $9 Billion

Arthi Gupta
28 Jun, 2012
New York City

U.S. indexes declined after the government confirmed 1.9% growth in the first quarter and weekly jobless claims fell 6,000 to 386,000. News Corp said to plans to split in two companies.

[R]9:40 AM New York – U.S. indexes declined after the government confirmed 1.9% growth in the first quarter and weekly jobless claims fell 6,000 to 386,000. News Corp said to plans to split in two companies.[/R]

U.S. indexes dropped after weekly jobless claims fell 6,000 to 386,000 but were still higher than anticipated and first quarter GDP growth was confirmed at 1.9%. Bank stocks were in focus after the estimate of losses at JP Morgan are expected to rise to $9 billion.

JP Morgan was in focus after the estimate of losses at its derivatives holdings may surge to $9 billion and the bank plans to disclose losses at the time of earnings scheduled to release of Jul 13, according to a New York Times report.

The report referred to an internal report that noted that losses could increase to $9 billion as the bank unwinds most of its positions linked to the trade but may be limited to between $6 billion and $7 billion. JP Morgan declined to comment.

European markets suffered as regional leaders gather to finalize the banking union and find ways to stimulate economies of peripheral nations that are forced to pay higher interest rates.

Spain, the current center of the crisis is slowly but steadily drifting to requesting a bailout that may exceed €400 billion committed for the governments of Ireland, Greece and Portugal combined. Italy is also facing the political heat at home as growth falters and austerity begins to bite.

Euro-zone economic confidence fell to a 32-month low in June, a European Commission report showed today. The economic confidence index fell to 89.9 in June, the lowest since October 2009, from 90.5 in May.

Asian stocks ended the day mixed. The EU summit starting today did nothing to lift investor sentiment. But still investors await any positive news emerging from the meeting.

Japan's retail sales rose 3.6% annually in May, data from the Ministry of Economy, Trade and Industry showed.

U.S. GDP Rises

The U.S. economy expanded at an annual rate of 1.9% in the first quarter compared to the 3% growth in the fourth quarter, according to data released by the Commerce Department today.

The price index of gross domestic purchases increased 2.6% in the first quarter compared to 1.1% in the fourth quarter. Personal consumption expenditures increased 2.5% in the first quarter from 2.1% in the fourth quarter.

The third and final estimate of first quarter GDP growth was reaffirmed but the export growth was revised to 4.2% increase compared to previous estimate of 7.2% rise. Government spending decline was revised to 4% from 3.9% and consumer spending increase was cut down to 2.5% from 2.7%.

Increase in imports was lowered to 2.7% from the previous estimates of 6.1%.

U.S. Initial Jobless Claims Drop

New claims for unemployment fell, according to data released by the Labor Department today.

Initial unemployment claims at a seasonally adjusted level decreased 6,000 to 386,000 for the week ending June 23 from the previous week's level of 392,000, revised up from the 387,000 initially reported.

The four-week moving average of new unemployment claims fell by 750 to 386,750 from the previous week's revised average of 387,500.

News Corp Intends Separating Businesses

News Corporation plans to separate its publishing and media and entertainment businesses into two distinct publicly traded companies but the control of two companies will still be retained by Murdoch family.

The publishing company is expected to include newspapers and information businesses in the U.S., U.K., and Australia, the company's leading book publishing brands, its integrated marketing services company, its digital education group, as well as its other assets in Australia.

The global media and entertainment company will hold broadcast and worldwide cable networks, film and television production studios, television stations and successful pay-TV businesses in Europe and India.

Earnings Review

American Greetings Corp. ((AM)), the greeting cards makers said first quarter total revenue dropped 3% to $393.11 million from $403.7 million in the prior-year quarter. Net profit in the quarter plunged 78% to $7.25 million or 20 cents per diluted share compared to $32.59 million or 78 cents per share a year earlier.

CoreLogic, Inc. ((CLGX)), the provider of financial, property and consumer information raised its 2012 outlook and estimated full-year revenue between $1.45 billion and $1.48 billion and adjusted earnings per share in the range of $1.15 to $1.20.

Family Dollar Stores, Inc. ((FDO)), the discount retailer reported third quarter total net sales rose 9.6% to $2.36 billion and comparable store sales rose 5%.

Net income in the quarter increased 12.1% to $124.5 million or $1.06 per diluted share compared to net income of $111.1 million or 91 cents per share last year.

MSC Industrial Direct Co. Inc. ((MSM)), the industrial products direct marketer stated third quarter net sales rose 15% from a year ago to $612 million. Net income in the quarter climbed 13.1% to $70.2 million compared to net income of $62.1 million last year. Diluted earnings per share grew to $1.10 from 97 cents in the prior year.

Progress Software Corporation ((PRGS), the enterprise software developer reported second quarter revenues dropped 15% from a year ago to $114.6 million. Net loss in the quarter swung to $1.9 million or 3 cents a diluted share compared to net income of $18 million or 26 cents per share last year.