U.S.Jobless Claims Rise 38,000; Income Surges on Dividend Payouts

Nichole Harper
31 Jan, 2013
New York City

Stocks in New York traded sideways after Chicago area manufacturing indicated expansion. Jobless claims increased 38,000 at the end of last week. Personal income rose 2.6% in December, the largest increase in nine years.

[R]10:45 AM New York – Stocks in New York traded sideways after Chicago area manufacturing indicated expansion. Jobless claims increased 38,000 at the end of last week. Personal income rose 2.6% in December, the largest increase in nine years.[R]

Stocks opened lowered after jobless claims last week rose more than expected and personal income rose the most in eight years.

The S&P 500 index increased 0.1% and the Nasdaq Composite Index added 0.2%.

The stocks staged a turnaround after the Chicago-area purchasing managers index for January increased to 55.6. A reading of 50 and higher indicates expansion.

Jobless Claims Rises, Personal Income Gains

The Labor Department said weekly applications for initial jobless claims increased 38,000 to 368,000 after adjusting for seasonality. The four-week average of claims which tend to smooth out other factors increased to 352,000, barely above a 4-year low.

The number of people collecting unemployment benefits increased 22,000 to 3.2 million in the week ending on January 19. Long term unemployment benefits recipients increased 418,000 to 2.11 million in the week ending on Jan 12.

Separately, Commerce Department said personal income increased 2.6% in December. The increase was the largest since December 2004 and above what economists had anticipated, 0.8% increase.

Personal income increase in November and December because companies accelerated dividend and special bonuses to beat the higher taxes that are expected to kick in this year, according to the Commerce Department.

Consumer spending increased 0.2% in December after rising 0.4% in November. After-tax income rose 2.7% in December, the largest increase since May 2008.

International Markets

Markets in Asia closed mixed. The Nikkei average declined 1% but recovered to close up 1% as the earnings season peaked. Nintendo lowered its sales outlook and Alps Electric said it plans to lay off 3,000 positions worldwide. For the month, the Nikkei added 7.2%.

Markets in Australia halted a ten-day rally after investors took profit ahead of earnings season next week. For the month, the ASX 200 index gained 4.6%.

The Sensex in Mumbai fell 0.5% and Reliance Industries places $800 million of perpetual bonds in the international markets. For the month, the Sensex added 2.4%.

Markets in Europe traded lower after German retail sales declined 1.7% in December. The indexes in 14 countries in the euro region declined.

Earnings Review

On the earnings front, Citrix Systems ((CTXS)) surged 10% after the software developer reported earnings and revenues that were ahead of expectations.

Nasdaq OMX ((NDAQ)) decreased 0.6% after the exchange operator reported earnings that topped estimates but guidance failed to spark interest among investors.

WMS Industries ((WMS)) surged 52% after Scientific Games ((SGMS)) agreed to acquire the gaming company for $1.5 billion. Scientific Games soared 17%.

Blackstone Group ((BXG)) increased 7% and the private equity firm reported increase in its management and performance fees.

Stocks in Review

Aetna Inc. ((AET)) slipped 2.1% or $1.06 to $47.88 after the insurance company said revenue in the fourth quarter ending in December jumped 16% to $9.93 billion from $8.57 billion in the same period of last year. Net income in the quarter plunged 49% to $190.1 million or 56 cents per diluted share compared to $372.6 million or $1.02 a share a year ago earlier.

Aetna said medical membership in the quarter increased to 18.2 million at the end of last year and total medical benefit ratio was 84.1% for the quarter and 82.2% for the year.

Aetna reaffirms full year operating earnings per share of at least $5.40.

Facebook, Inc. ((FB)) declined 5.6% or $1.82 to $29.37 after the social network website stated revenue in the fourth quarter ending in December soared 40% to $1.59 billion from $1.13 billion in the same period of last year. Net income in the quarter tumbled 69% to $64 million or 3 cents per diluted share compared to $205 million or 14 cents a share a year ago.

Facebook added revenue for the quarter from advertising increased to $1.33 billion, representing 84% of total revenue and mobile revenue represented approximately 23%. Monthly active users were 1.06 billion as of December 31 and mobile users were 680 million.

MasterCard Inc ((MA)) gained 1.8% or $9.30 to $525.93 after the electronic payment service provider reported revenue in the fourth quarter ending in December jumped 10% to $1.90 billion from $1.73 billion in the same period of last year. Net income in the quarter surged to $605 million or $4.86 per diluted share compared to $19 million or 15 cents a share a year ago.

MasterCard added worldwide purchase volume in the quarter rose 13% from a year ago to $727 billion. As of December 31, the company had issued 1.9 billion MasterCard and Maestro-branded cards.

Net revenue grew as processed transactions jumped 20% to 9.2 billion and cross-border volumes climbed 17% and worldwide purchase volume during the quarter increased 13%.

Qualcomm Inc ((QCOM)) jumped 5.7% or $3.67 to $67.20 after the communications products maker said total revenue in the fourth quarter ending in December surged 29% to $6.02 billion from $4.68 billion in the same period of last year. Net income in the quarter soared 36% to $1.91 billion or $1.09 per diluted share compared to $1.40 billion or 81 cents a share a year ago period.

United Parcel Service, Inc ((UPS)) slipped 1.2% or 98 cents to $80.25 after the courier service provider reported revenue in the fourth quarter ending in December grew 3% to $14.57 billion from $14.17 billion in the same period of last year. Net loss in the quarter swung to $1.75 billion or $1.83 per diluted share compared to net income of $725 million or 74 cents a share a year ago earlier.

In a separate press release of yesterday, United Parcel confirmed withdrawal of offer for TNT Express NV.