U.S. Economy Expands 2%, Apple Offers Cautious Outlook

Arthi Gupta
26 Oct, 2012
New York City

U.S. indexes traded higher after gross domestic product expanded at 2% annual rate in the third quarter. TransDigm agreed to acquire the pump and engine control systems business of Goodrich for $236 million.

[R]9:35 AM New York – U.S. indexes traded higher after gross domestic product expanded at 2% annual rate in the third quarter. TransDigm agreed to acquire the pump and engine control systems business of Goodrich for $236 million.[/R]

Stocks in New York in early trading gained after September quarter gross domestic product increased at 2% annual rate, faster than expected. The economy expanded at a faster pace after durable goods orders increased sharply and consumer spending also increased and housing sector showed first sustained sign of a recovery in more than a year.

The economy slowed to a growth of 1.3% in the second quarter after growing at 2% in the first quarter.

Across the Atlantic, European markets extended losses in the week on the growing worries of global economic slowdown. Market indexes in Asia closed sharply lower. Market indexes in Japan dropped 1.3%, in Hong Kong declined 1.2% and in India fell 0.7%.

Japan''s consumer prices declined for a fifth straight month in September, data released by the Ministry of Internal Affairs and Communications showed today. The core consumer price index fell 0.1% annually in September.

U.S. Economy Expands

The U.S. gross domestic product expanded 2% annually in the third quarter, following a 1.3% gain in the second quarter, according to data released by the U.S. Commerce Department today.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures, federal government spending, and residential fixed investment.

Real personal consumption expenditures increased 2% in the third quarter compared to 1.5% in the second quarter. Residential investment increased at an annual rate of 14.4%.

Durable goods increased 8.5% in the third quarter, in contrast to a decrease of 0.2% in the second quarter. Nondurable goods increased 2.4% in the third quarter compared with an increase of 0.6% in the second quarter.

TransDigm to Acquire Goodrich Pump & Engine Control Systems

TransDigm Group Incorporated inked an agreement with United Technologies Corporation to acquire the pump and engine control systems business of Goodrich for approximately $236 million in cash.

The acquisition is expected to close late in the current calendar year or early in 2013.

Earnings Review

Apple Inc. ((AAPL)), the computer and mobile phone devices maker said fourth quarter net sales rose 27% to $36 billion from the same quarter last year. Net income in the quarter increased 24% to $8.2 billion or $8.67 per diluted share compared to $6.6 billion or $7.05 per share for the year-ago quarter.

For the quarter, iPhones sales surged 58% to 26.9 million units and iPads sales climbed 26% to 14 million over the year-ago quarter.

Comcast Corporation ((CMCSA)), the cable network operator provider reported third quarter revenue climbed 15.4% to $16.54 billion from the year-ago quarter. Net income soared to $2.11 billion or 78 cents per diluted share compared to $908 million or 33 cents per share last year.

Legg Mason, Inc. ((LM)), the asset management company reported second quarter revenue declined 4% to $640.3 million from $669.9 million in the prior year quarter. Net profit in the quarter rose to $80.8 million or 60 cents per diluted share from $56.7 million or 39 cents per share last year.

Weyerhaeuser Company ((WY)), the forest products company stated third quarter net sales rose to $1.77 billion compared with $1.57 billion for the third quarter of 2011. Net earnings in the quarter fell to 117 million or 22 cents per diluted share compared with $157 million or 29 cents per share last year.