Stocks Rise on 1% Gain in Retail Sales

123jump.com Staff
12 Jun, 2008
New York City

U.S. stocks advanced in the morning trading after a better than expected rise in retail sales in May. Sales rose 1% in May and increased 2.5% from a year ago. Weekly claims of unemployment rose 25,000 at the end of last week. The news of better than expected rise in retail sales lifted the U.S. stocks higher. Lehman replaces its finance and operating chiefs, the stocks falls. European stocks edged higher after an unsolicited bid from InBev for Anheuser Busch.

[R]10:00AM New York – U.S. stocks advance after the release of retail sales and unemployment claims data. South Africa joins other developing nations and raises interest rate.[/R]

Lower than expected rise in unemployment claims and relatively strong retail sales lifted market averages in the first thirty minutes of trading. Lehman replaced its chief executive officer and chief operating officer after stock lost nearly one third of its value in one month. Lehman fell at the opening. South Africa raised its interest rate by 0.5% to 12% as inflation surges above 10%. Brazil, India and Russia have raised rates and Indonesia and Philippines are likely to increase rates.

Unemployment claims at the end of last week rose 25,000 to 384,000 and the 4-week moving average was 371,500, increase of 2,500 from the prior week’s revised average of 369,000. The advance seasonally adjusted insured unemployment rate was 2.4% for the week ending May 31, an increase of 0.1 percentage point from the prior week''s unrevised rate of 2.3 percent.

Retail sales in May rose 1% from April to $385.4 billion, an increase of 2.5% from a year ago. Total sales for the March through May 2008 period were up 2.6% from the same period a year ago. The March to April 2008 percent change was revised from -0.2% to 0.4%.

InBev NV, the Belgian and Brazilian beer company made an unsolicited offer for Anheuser Busch for $65 per share or $46.6 billion. The offer is at 14% premium from the closing price on Wednesday or 18% from its peak price in October 2002. The combined company will have revenue of $36 billion and Anheuser Busch with nearly 50% of the U.S. market will significantly add to its global footprint.

Europe market update

European stocks traded mixed at mid-day, the European Statistical office reports industrial production rises in the euro area. The key indices in Germany and France rise.

The CAC 40 gained 0.15% in mid-day to 4,667.82. In Germany the DAX 30-index advanced 18.90 points or 0.28% to 6,669.16. Stocks in Switzerland advanced as the Swiss Market index gained 22.29 points or 0.31% to 7,189.59. The FTSE 100 gained 35.70 points or 0.62% to 5,759.00.

99 Cents Only Stores, discount retailer said fourth quarter revenues rose 4.33% to $290.5 million from $277.9 million a year ago. Net loss in the quarter was $4.4 million or 6 cents per diluted share compared to net loss of $1 million or 2 cents per share, a year ago.

Retail sales rose 5.1% to $280.8 million, while bargain wholesale revenue declined 9.3% to $9.8 million. However, the company''s gross margin was hurt by $15.5 million in inventory shrink more than triple the amount in the same quarter last year and $5.5 million higher than the company expected.

99 Cents Only Stores ((NDN)) in the last one year traded as high as $14.89 in July 2007 and as low as $6.05 in January 2008.