JDfn Daily Digest - October 9, 2008
Initial claims for jobless benefits dropped 20,000 to a seasonally adjusted 478,000, in line with Wall Street economists. The department said Hurricanes Ike and Gustav were responsible for adding about 20,000 claims on a seasonally adjusted basis. That's down from approximately 45,000 the previous week.
Inventories at U.S. wholesalers rose 0.8 percent in August, higher than what analysts had expected, while sales suffered their largest drop in more than a year and a half. Wall Street analysts expected inventories to gain by only 0.5 percent.
Reports that the Bush administration is considering taking ownership stakes in a number of U.S. banks has helped to restore a relative calm over global financial markets. The aim of such a move would be to thaw the lending freeze that threatens to push the world's economy into recession.
The head of the International Monetary Fund told reporters ahead of the fund's annual meeting that the global economic crisis is "very serious" but can be solved with quick, forceful and cooperative policies.
U.S. fixed-rate mortgages declined in the latest week. The national average interest rate on the benchmark 30-year, fixed-rate loan averaged 5.94%, down from last week's 6.10% and the year-ago 6.40%.
American International Group (AIG) will get an additional $37.8 billion loan from the Federal Reserve, which is invoking its emergency powers to combat financial market stress. AIG already has an $85 billion line of credit with the Fed. As of last week, AIG had used $60 billion of this loan.
Boeing (BA) and its machinists union may come back to the bargaining table within a few days. News reports in The Wall Street Journal said that the two sides had had "informal contacts." Boeing's machinists union went on strike in September to protest a proposed labor contract they said fell short on health-care benefits and job security.
Marathon Oil (MRO) said it has completed the sale of its 50% ownership interest in Pilot Travel Centers LLC to Pilot Corp. and CVC Capital Partners, a leading global private equity firm, in a transaction valued at approximately $700 million.
M/I Homes Inc. (MHO) said new contracts for homes as well as homes delivered both fell during the third quarter. New contracts were down 19 percent from the third quarter last year. Homes delivered fell 29 percent.
Scheduled U.S. Economic Reports (Friday)
Trade Balance (Aug), Import Price Index (Sep)
In Earnings News
IBM's (IBM) profit beat analysts forecast by 4 cents per share and the company reaffirmed its full-year earnings guidance. Both were strong signs that IBM's core businesses are holding up well despite the deteriorating U.S. economy and IBM's large customer base in the crippled financial services industry.
International Speedway Corp. (ISCA) reported its third-quarter profit quadrupled from results depressed by special items a year ago. The company reported a profit of $38.8 million, or 79 cents per share, up from a profit of 18 cents per share, during the same period last year. Analysts were expecting 71 cents.
Yum Brands Inc. (YUM) predicted solid 2009 profit growth overseas and in its sluggish U.S. business as the operator of KFC, Taco Bell and Pizza Hut expressed confidence in weathering economic turbulence. The company expressed confidence in achieving 5 percent profit growth in 2009, predicting a turnaround at KFC, a cooling of commodity inflation and improved cost management.
RPM International (RPM) reported a 1.8% rise in fiscal first quarter profit as it also said it's likely to face a tougher year than previously anticipated. For the quarter ended Aug. 31, RPM recorded net income of $69.5 million, or 54 cents per share, up from $68.3 million, or 53 cents per share, in the year-ago quarter. Analysts projected earnings of 54 cents per share.
Scheduled Earnings Reports (Friday)
General Electric, Pfizer, Biomet, Emmis Communications, Move Gallery, Host Marriott, Infosys, Chase
Stocks in the News
National City Corp (NCC) is talking with several banks about a possible sale.
Huntsman Corp (HUN) traded higher after Hexion Specialty Chemicals Inc. said that affiliates of Apollo Management L.P. agreed to contribute $540 million in capital to aid in closing Hexion's deal with Huntsman.
Walgreen Co. (WAG) said it withdrew its $75-a-share bid for Longs Drug Stores Corp.
MetLife Inc (MET) said it priced a secondary offering of 75 million shares at $26.50 a share, or about $2 billion.
Hot Topic (HOTT) said sales at stores open at least one year slid 1.8% in September, compared with a fall of 2.9% in September 2007.
Brown Shoe Co. (BWS), which operates the Famous Footwear, said same-store sales plunged 7.3 percent in September.
Inventories at U.S. wholesalers rose 0.8 percent in August, higher than what analysts had expected, while sales suffered their largest drop in more than a year and a half. Wall Street analysts expected inventories to gain by only 0.5 percent.
Reports that the Bush administration is considering taking ownership stakes in a number of U.S. banks has helped to restore a relative calm over global financial markets. The aim of such a move would be to thaw the lending freeze that threatens to push the world's economy into recession.
The head of the International Monetary Fund told reporters ahead of the fund's annual meeting that the global economic crisis is "very serious" but can be solved with quick, forceful and cooperative policies.
U.S. fixed-rate mortgages declined in the latest week. The national average interest rate on the benchmark 30-year, fixed-rate loan averaged 5.94%, down from last week's 6.10% and the year-ago 6.40%.
American International Group (AIG) will get an additional $37.8 billion loan from the Federal Reserve, which is invoking its emergency powers to combat financial market stress. AIG already has an $85 billion line of credit with the Fed. As of last week, AIG had used $60 billion of this loan.
Boeing (BA) and its machinists union may come back to the bargaining table within a few days. News reports in The Wall Street Journal said that the two sides had had "informal contacts." Boeing's machinists union went on strike in September to protest a proposed labor contract they said fell short on health-care benefits and job security.
Marathon Oil (MRO) said it has completed the sale of its 50% ownership interest in Pilot Travel Centers LLC to Pilot Corp. and CVC Capital Partners, a leading global private equity firm, in a transaction valued at approximately $700 million.
M/I Homes Inc. (MHO) said new contracts for homes as well as homes delivered both fell during the third quarter. New contracts were down 19 percent from the third quarter last year. Homes delivered fell 29 percent.
Scheduled U.S. Economic Reports (Friday)
Trade Balance (Aug), Import Price Index (Sep)
In Earnings News
IBM's (IBM) profit beat analysts forecast by 4 cents per share and the company reaffirmed its full-year earnings guidance. Both were strong signs that IBM's core businesses are holding up well despite the deteriorating U.S. economy and IBM's large customer base in the crippled financial services industry.
International Speedway Corp. (ISCA) reported its third-quarter profit quadrupled from results depressed by special items a year ago. The company reported a profit of $38.8 million, or 79 cents per share, up from a profit of 18 cents per share, during the same period last year. Analysts were expecting 71 cents.
Yum Brands Inc. (YUM) predicted solid 2009 profit growth overseas and in its sluggish U.S. business as the operator of KFC, Taco Bell and Pizza Hut expressed confidence in weathering economic turbulence. The company expressed confidence in achieving 5 percent profit growth in 2009, predicting a turnaround at KFC, a cooling of commodity inflation and improved cost management.
RPM International (RPM) reported a 1.8% rise in fiscal first quarter profit as it also said it's likely to face a tougher year than previously anticipated. For the quarter ended Aug. 31, RPM recorded net income of $69.5 million, or 54 cents per share, up from $68.3 million, or 53 cents per share, in the year-ago quarter. Analysts projected earnings of 54 cents per share.
Scheduled Earnings Reports (Friday)
General Electric, Pfizer, Biomet, Emmis Communications, Move Gallery, Host Marriott, Infosys, Chase
Stocks in the News
National City Corp (NCC) is talking with several banks about a possible sale.
Huntsman Corp (HUN) traded higher after Hexion Specialty Chemicals Inc. said that affiliates of Apollo Management L.P. agreed to contribute $540 million in capital to aid in closing Hexion's deal with Huntsman.
Walgreen Co. (WAG) said it withdrew its $75-a-share bid for Longs Drug Stores Corp.
MetLife Inc (MET) said it priced a secondary offering of 75 million shares at $26.50 a share, or about $2 billion.
Hot Topic (HOTT) said sales at stores open at least one year slid 1.8% in September, compared with a fall of 2.9% in September 2007.
Brown Shoe Co. (BWS), which operates the Famous Footwear, said same-store sales plunged 7.3 percent in September.
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