Higher Unemployment Sets NY in Lower Mood

Elena
03 Aug, 2007
New York City

U.S. stock futures declined Friday, as jobs data reignited worries that weakness in the housing sector will continue spreading. A Labor Department report showed slowing jobs growth in July and the highest unemployment rate since January. Nonfarm payrolls expanded by 92,000 in July, lower than the 133,000 expected by economists. The unemployment rate gained to 4.6% from 4.5% in the previous month.

[R]09:00AM U.S. stock futures pointed lower Friday on slower jobs growth in July.[/R]

U.S. stock futures declined Friday, as jobs data reignited worries that weakness in the housing sector will continue spreading. A Labor Department report showed slowing jobs growth in July and the highest unemployment rate since January. Nonfarm payrolls expanded by 92,000 in July, lower than the 133,000 expected by economists. The unemployment rate gained to 4.6% from 4.5% in the previous month.

In corporate news, American Home Mortgage ((AHM)) dropped 41% after it revealed plans to close its operations Friday and cut about 7,000jobs. Procter & Gamble Co. ((PG)) posted 19% earnings rise in Q2 and said it will repurchase up to $30 billion in shares over the next three years. The consumer products giant attributed its quarterly growth to new products. It earned 67 cents a share, up from 55 cents a year earlier on 8% sales growth, beating estimates.

Take-Two Interactive ((TTWO)) fell 16% in pre-open trade after the company said it would delay the release of one of its games. Of major European companies, British Airways reported a 75% jump in Q1 profit to 269 million pounds from 154 million pounds, although revenue fell 2% to 2.19 billion pounds. S&P 500 futures slipped 2.9 points at 1,478.90 and Nasdaq 100 futures dropped 6 points at 1,974.00. Dow industrial futures fell 27 points.


[R]8:15AM American Home Mortgage dropped 41% after it revealed plans to close its operations Friday.[/R]

American Home Mortgage Investment Corp ((AHM)) tumbled 41% standing out as one of the biggest victims of the struggling U.S. credit market. The lender revealed plans to close most operations on Friday and reduce nearly 7,000 jobs. The company said its employee base will be reduced to about 750 workers, down from the 7,409 it reported at the end of 2006.

American Home originated $59 billion in loans in 2006 mostly to people with better credit than risky subprime borrowers. Nearly half of those mortgages were adjustable-rate loans, with an interest rate that can be adjusted upward. According to experts, company will have to seek bankruptcy protection, and no later than Monday.


[R]7:00AM New York, 8:00PM Tokyo – Nikkei closed 1.8% lower for the week. After the close Toyota reports 32% rise in earnings on sales gain of 16%.[/R]

Nikkei 225 in Tokyo closed or 4.25 or 0.03% to 16,979.86. For the week Nikkei lost 1.81% and Topix lost 1.6%. Despite a week of widening credit problems in the U.S. markets in Asia and Europe stabilized. The yen jumped above 119 for a dollar helping export sensitive stocks.

Sumitomo Realty & Development Company jumped 4.5% after the company reported first quarter earnings gain of 54% to 30 billion yen. The net income increase at the company has tracked rising real estate values in Tokyo and other locations in Japan. Central Tokyo has seen prices gain sharply in the last one year on tight inventory supplies. Mitsui Fudosan and Mitsubishi Estates gained 1.5%. Mitsubishi Estate income jumped three times on higher condo prices in Tokyo.