U.S. Jobless Claims Rise, Stocks Trade Higher

Arthi Gupta
04 Oct, 2012
New York City

U.S. indexes climbed after weekly jobless claims rose 4,000 to 367,000. Ocwen Financial agreed to acquire Homeward Residential Holdings for $750 million. Calpine agreed to purchase Bosque Power Plant for $432 million.

[R]9:35 AM New York – U.S. indexes climbed after weekly jobless claims rose 4,000 to 367,000. Ocwen Financial agreed to acquire Homeward Residential Holdings for $750 million. Calpine agreed to purchase Bosque Power Plant for $432 million.[/R]

U.S. indexes edged higher in early morning trading and weekly jobless claims rose less than estimated and markets in Europe were mixed after central banks left rates unchanged.

Retailers also reported slower increase in same store sales in September after two months of solid gains during the back-to-school buying.

U.S. Weekly Jobless Claims Rise

First-time claims for U.S. unemployment benefits rose in the week ended September 29, according to a report released by the U.S. Labor Department today.

Seasonally adjusted initial jobless claims rose 4,000 to 367,000, from the previous week''s revised figure of 363,000. The 4-week moving average was 375,000, unchanged from the previous week''s revised average.

Central Bank in Europe Hold Rates

The European Central Bank left its benchmark interest rate unchanged at a record low at 0.75% for the third consecutive month and kept its deposit rate at zero and the marginal lending facility rate at 1.5%.

The Bank of England maintained the size of quantitative easing at £375 billion and the record low interest rate unchanged at 0.5%, as expected. The current rate is the lowest since the central bank was established in 1694.

Portugal announced fresh austerity measures to rein its budget deficit for 2013 that includes lifting income taxes.

Asian Markets Trade Up

Asian stocks closed higher tracking Wall Street. The benchmark index in India jumped 1% and in Japan gained 0.9%. However, markets in Hong Kong closed flat and in Australia added 0.3%.

Australian retail sales rose 0.2% on a monthly basis in August following a 0.8% decline in July.

Separately, building approvals in Australia gained 6.4% from a month ago in August from the 21.2% fall in July.

Applied Materials to Slash Jobs

Applied Materials, Inc., the semiconductor equipment maker planned to cut approximately 900 to 1,300 positions or 6% to 9% of its global workforce to restructure its business.

Ocwen to Acquire Homeward Residential

Ocwen Financial Corporation agreed to acquire Homeward Residential Holdings Inc. from private equity firm WL Ross & Co. LLC for approximately $588 million in cash and $162 million of convertible preferred stock.

The deal includes Homeward''s various residential mortgage loan servicing and origination operating subsidiaries.

Calpine to Purchase Bosque Power Plant

Calpine Corporation agreed to purchase the 800 megawatt power plant owned by Bosque Power Co., LLC, for $432 million plus adjustments or approximately $540 per kilowatt. The natural gas-fired, combined-cycle plant is located in Central Texas near the unincorporated community of Laguna Park in Bosque County.

Earnings Review

Costco Wholesale Corporation ((COST)), the membership warehouses operator reported net sales rose 8% to $9.31 billion in September, from the similar period last year on comparable sales rise of 6%.

International Speedway Corporation ((ISCA)), the motorsports themed entertainment promoter reported third-quarter revenues decreased to $115.93 million compared with $150.3 million in the prior-year quarter. Net loss for the quarter was $1 million, or 2 cents per diluted share compared to net income of $9.7 million or 20 cents per diluted share, in the prior year period.

Google Inc ((GOOG)) said it plans to cut jobs at units located outside the U.S. and will take $390 million in one-time charge related to job cuts.

Marriott International, Inc. ((MAR)), the hotel operator reported third quarter revenues fell to $2.73 billion, from $2.87 billion a year ago. Net income in the quarter swung to $143 million or 44 cents per diluted share compared to a net loss of $179 million or 52 cents per share last year.