U.S. Jobless Claims Rise, Global Slowdown Worries Persist

Arthi Gupta
23 Aug, 2012
New York City

U.S. indexes edged lower after jobless claims rose 4,000 to 372,000. Sony Mobile plans to slash 1,000 jobs and move headquarters from Sweden to Tokyo. Rockwood Holdings agreed to acquire Talison for C$724 million. Hewlett-Packard swung to quarterly loss.

[R]10:00 AM New York – U.S. indexes edged lower after jobless claims rose 4,000 to 372,000. Sony Mobile plans to slash 1,000 jobs and move headquarters from Sweden to Tokyo. Rockwood Holdings agreed to acquire Talison for C$724 million. Hewlett-Packard swung to quarterly loss.[/R]

The latest U.S. weekly jobless claims data added to the string of worrisome private sector surveys released in the euro zone and China.

The weekly jobless claims declined after months of volatile data as automaker shift production schedule around. The clearer labor market read for the first time this month showed continued weakness in the jobs market.

Separately, a private survey of European businesses indicated slowing economic activities in the euro zone and a decline of 0.5% in the GDP in the region and not sparing Germany either.

A similar preliminary survey of manufacturers in China also suggested a falling growth rate last seen in November.

U.S. jobless claims rose 4,000 to 372,000. And the new home sales report later today may shed some more insight into the economy.

European indexes opened higher on optimism ahead of the meeting of leaders of Greece, Germany and France. But market quickly shifted to negative after the euro zone finance chief Jean-Claude Juncker and Greek Prime Minister Antonis Samaras yesterday delayed resolution by one more month.

Juncker held firm that the decision is likely to be taken after a review report on Greece’s progress in implementing measures from the troika next month.

Asian markets closed higher despite disappointing manufacturing survey data from China. Indexes in Hong Kong gained 1.2% and in Japan added 0.5% and in India barely gained.

China''s manufacturing sector fell to a nine-month low in August. The flash HSBC manufacturing Purchasing Managers'' Index dropped to 47.8 in August from 49.3 in July, Markit Economics said.

U.S. Jobless Claims Rise

Initial claims for U.S. unemployment benefits unexpectedly rose in the week ended August 18, according to a report released by the U.S. Labor Department today.

Seasonally adjusted weekly jobless claims increased 4,000 to 372,000, from the previous week''s revised figure of 368,000.

The 4-week moving average was 368,000, an increase of 3,750 from the previous week''s revised average of 364,250.

Sony Mobile Plans Workforce Reduction

Sony Mobile Communications AB, a wholly-owned subsidiary of Sony Corporation plans to reduce its global headcount by nearly 15% or about 1,000 personnel, including consultants in the next eighteen months to increase operational efficiency and reduce costs.

The company will also move its corporate headquarters and certain other functions from Lund, Sweden, to Tokyo, Japan this October.

Rockwood Holdings to Acquire Talison

Rockwood Holdings Inc. agreed to purchase Talison Lithium Ltd. in an all-cash transaction for C$6.50 a share for an equity purchase price of around C$724 million, on a fully diluted basis.

Earnings Review

Big Lots, Inc. ((BIG)), the closeout retailer reported second quarter net sales increased 4.4% to $1.22 billion from a year before. Net income in the quarter fell 38% to $22.1 million or 36 cents per diluted share compared with $35.7 million or 50 cents per share, for second quarter of fiscal 2011.

Hewlett-Packard Company ((HPQ)), the computer and printer maker said third quarter net revenue fell 5% to $29.7 billion from the same quarter last year. Net loss in the quarter swung to $8.9 billion or $4.49 per diluted share compared to net income of $1.9 billion or 93 cents per share for the year-ago quarter.

The company generated $2.8 billion in cash flow from operations in the third quarter.

Hormel Foods Corporation ((HRL)), the food company reported third quarter sales rose 5% to $2 billion from the same period in fiscal 2011. Net earnings for the quarter rose 13% to $111.2 million or 41 cents per diluted share from $98.5 million or 36 cents per share a year earlier.

Patterson Companies, Inc. ((PDCO)), the medical supplies conglomerate said first quarter consolidated sales rose 5% to $889.23 million from the year-earlier period. Net income for the quarter fell to $47.54 million or 45 cents per diluted share from $48.61 million or 42 cents per share last year.