U.S. stocks, unable to maintain gains made earlier in the week, were flat amid concerns that the U.S. economic recovery is losing momentum. Those worries wiped away the enthusiasm of strong second-quarter earnings reports of companies from Exxon to Sony along with other encouraging economic reports.
On Friday, after a government report showed that U.S. economic growth slowed in the second quarter, the U.S. dollar dropped below 86 yen for the first time this year, and the yield on the two-year U.S. Treasury note fell to an all-time low of 0.5461%.
U.S. economic news
U.S. economy slows; government says recession worse than believed
The U.S. economy slowed in the second quarter as growth rose at an annualized rate of 2.4%. The expansion was supported to a greater degree by business investments and exports than by consumer spending, which continued to play a smaller role in the recovery. For instance, business spending increased 21.9%, while consumer spending rose only 1.6%. In the first quarter, the economy grew by 3.7%.
The U.S. Department of Commerce reported that the recession was deeper, and subsequent recovery slower, than earlier estimated. The government revised downward its earlier estimates of gross domestic product for seven of the 12 quarters of 2007, 2008, and 2009, primarily because consumer spending grew more slowly and homebuilding fell more sharply than previously estimated. The overall depth of the most recent recession surpassed any other since the late 1940s. GDP fell by 4.1% between the fourth quarter of 2007, when the recession officially began, and the second quarter of 2009, when many economists believe it ended. The previous estimate for the overall decline was 3.7%.
Better-than-expected U.S. home prices
Home prices rose in May but were expected to lose momentum with the expiration of federal tax credits.
U.S. labor market slow to improve; consumer confidence falls
The number of Americans filing first-time claims for unemployment insurance fell to 457,000 last week. Claims dropped 11,000, while the number of people receiving unemployment benefits rose. Amid these still-weak job markets and pessimism about business conditions in the coming months, the Conference Board said its Consumer Confidence Index fell to 50.4 in July, the second consecutive monthly decrease.
U.S. global and corporate news
Basel team moves to define capital
International regulators and central bankers participating in the Basel Committee on Banking Supervisions agreed on key aspects of new global standards aimed at constraining risk at the world's largest banks. Details on what counts as capital were ironed out. Limits were placed on the degree to which banks can count assets such as deferred taxes, mortgage serving rights, and minority interest toward minimal capital levels. That limitation will effectively force banks to reinforce their balance sheets with common equity.
Oil producers post impressive results
Higher energy prices and stronger refining markets helped buoy earnings at oil producers in the second quarter. Exxon's earnings jumped 91% as commodity prices rose and refining profits and production surged. Royal Dutch Shell posted a 15% rise as oil and gas production rose 5% and a restructuring aimed at trimming costs was completed early. Chevron's earnings more than tripled as the oil company benefited from increased production and prices as well as a stronger market for refined products. French oil company Total posted a 43% increase in profits on the back of stronger production, higher oil prices, and a stronger dollar.
Sony announced strong quarterly results and a more bullish full-year outlook. The company raised its full-year profit forecast 20%. Meanwhile, Panasonic revised its projection by 70%. Both companies posted first-quarter earnings that exceeded analysts’ estimates.
Merck reported a 50% decline in second-quarter profits as merger-related and restructuring costs offset a near doubling in sales, resulting from its takeover of Schering-Plough. That profit still beat analysts' expectations.
Global economic news
Eurozone's economic prospects improve
European confidence in the economic outlook rose in July to the highest level in more than two years, and German unemployment declined for a thirteenth month as exports sustained a recovery in the region. Growth in Europe's services and manufacturing industries accelerated in July.
U.K. consumer confidence falls
U.K. consumer confidence fell more than forecast in July as the prospect of government spending cuts undermined optimism on economic recovery. An index of sentiment released by the market research firm GfK NOP fell to its lowest level in 11 months.
India's central bank raises rates
India's central bank raised interest rates more than anticipated in a move to quell double-digit inflation.
Japan's recovery still mixed
Japan's factory output slid 1.5% in June from the previous month, and its jobless rate rose to 5.3%, the highest level since November.
Friday, July 30, 2010
Friday, July 23, 2010
U.S. Economic News Week Ending July 23, 2010
Stocks and bonds had a seesaw week in response to conflicting economic and earnings reports. By Wednesday, the market’s mood was dour as U.S. Federal Reserve Board Chairman Ben Bernanke shared a somber economic outlook without announcing any action plan to ease the situation. However, on Thursday and Friday the picture turned brighter, leading stock prices to rebound along with U.S. Treasury yields. At midweek, the yield on the two-year Treasury bill had hit an all-time low, and the yield on the 10-year Treasury note fell to its lowest point in a year. The week ended on an inconclusive note, with a sense of skepticism about the rigor of the much-anticipated European bank stress test.
In a very positive sign, about five in six companies in the Standard &Poor's 500 Stock Index surpassed their earnings expectations. The market’s turning point was prompted by indications of a European economic rebound as eurozone consumer confidence, retail sales, and purchasing activity all rose. By Friday morning, major U.S. stock indices were all at least 2% higher for the week. The Dow Jones Global Index advanced 2.5%.
U.S. home sales decline
Sales of existing homes in the United States slid by 5.1% in June, in the aftermath of a government tax credit program that ended in April. Year over year, existing home sales rose 9.8% in June. Housing starts also dropped 5.0% in June, to a seasonally adjusted 549,000, the U.S. Department of Commerce reported.
Weekly jobless claims rise
Initial claims for unemployment benefits jumped 37,000 to 464,000 in the week ended July 17. The four-week moving average, which smoothes volatility and can give a better view of the overall trend, rose 1,250 to 456,000.
Wages lag inflation for year
Weekly wages for U.S. workers failed to keep up with the pace of inflation over the past year, according to a report issued by the U.S. Department of Labor. Median weekly earnings rose to $740, from $734 a year earlier, an increase of 0.8%, while the Consumer Price Index climbed 1.8%.
U.S. and global corporate news
Caterpillar’s profits, sales pick up
Strong sales by industrial company Caterpillar drove a 91% increase in profits as dealers restocked their inventories of heavy machinery amid a pickup in demand for construction equipment in Asia and North America.
UPS delivers much larger profit
In an indication of a healthy resumption of economic activity, package shipper United Parcel Services reported a 90% rise in earnings and revenue growth of 13%, driven by Asian trade flows and a moderate U.S. economic recovery. UPS and its rival FedEx are seen as key barometers of international trade flows.
Ford’s new focus pays off
Automaker Ford reported a 13% increase in second-quarter earnings as its strategy to trim the number of cars and trucks it makes and to offer more features and charge higher prices paid off. A turnaround in Ford’s North American operations was key, as the group turned in a pretax profit of $1.9 billion, reversing an $899 million loss a year earlier. This was Ford’s fifth consecutive quarterly profit and its best earnings report in six years.
3M earnings rise
Manufacturer 3M posted a 43% rise in earnings as its sales rebounded to prerecession levels, benefiting from new products along with a growth in demand in emerging markets and in its niches in automotive manufacturing and consumer electronics.
Apple profit soars
Computer and consumer electronics firm Apple recorded a 78% surge in profit on very strong sales growth, including early sales of its iPad tablet computer and its latest version of the popular iPhone. Apple’s sales revenue for the quarter rose 61%.
Nokia hurt by smartphone competition
Nokia reported a 40% decline in second-quarter profit. The world’s largest mobile-phone maker had its hands full as rival Apple’s iPhone ate away at its market share in the high-end segment.
Roche profit jumps 58%
Swiss firm Roche Holding, the world’s largest maker of cancer medicines, reported a sharp rise in profits for the first half of its year because of healthy drug sales and robust growth in the sales of the company’s cancer-fighting drugs.
Xerox earnings jump 62%
Printer and copier maker Xerox posted a 62% increase in profits, surpassing expectations on improving demand in developing markets and from small and midsized businesses. The company reported growth in all business segments.
Global economic news
European bank stress test released
All eyes were on Europe this week, as the long-awaited stress tests for 91 European banks were released Friday. The stress test results were met with initial skepticism over whether they were rigorous enough, and the tests themselves may have failed to ease uncertainty about the health of the European banking industry. All but seven of the 91 banks passed the test. The seven included five Spanish banks, one German bank, and one Greek bank. This was better than the market’s expectation that about 90% of banks would pass, as reported in The Wall Street Journal. Banks that fail the test will need to raise money from investors or governments. Most observers believe the amount of capital raised will leave banks adequately funded.
Eurozone economic activity picks up
Activity picked up in both the manufacturing and service sectors in the eurozone, according to a survey by financial information firm Markit. The preliminary composite Purchasing Managers Index (PMI) rose to 56.7 from 56.0 in June. The manufacturing and services PMIs both rose and had been expected to decline. Meanwhile, the euro has risen about 8% against the U.S. dollar in recent weeks, reflecting increased confidence in this regional economy. However, the euro’s rise makes exports from Europe more expensive in global markets.
U.K. economy grows for third straight quarter
The U.K. economy grew 1.1% from the first to the second quarter this year, and it grew 1.6% when compared with the second quarter of 2009. This is the third consecutive quarter of U.K. economic expansion after a deep recession and the fastest pace of growth since the first quarter of 2006.
German business confidence hits three-year high
German business confidence turned strongly higher in July, registering a leap of 4.4 points to 106.2 in the Ifo compound index. Economists polled by Dow Jones Newswires had expected a decline to 101.5. Business confidence in Germany is now at its highest since 2007, and the increase in confidence was the greatest since German reunification in 1990.
In a very positive sign, about five in six companies in the Standard &Poor's 500 Stock Index surpassed their earnings expectations. The market’s turning point was prompted by indications of a European economic rebound as eurozone consumer confidence, retail sales, and purchasing activity all rose. By Friday morning, major U.S. stock indices were all at least 2% higher for the week. The Dow Jones Global Index advanced 2.5%.
U.S. home sales decline
Sales of existing homes in the United States slid by 5.1% in June, in the aftermath of a government tax credit program that ended in April. Year over year, existing home sales rose 9.8% in June. Housing starts also dropped 5.0% in June, to a seasonally adjusted 549,000, the U.S. Department of Commerce reported.
Weekly jobless claims rise
Initial claims for unemployment benefits jumped 37,000 to 464,000 in the week ended July 17. The four-week moving average, which smoothes volatility and can give a better view of the overall trend, rose 1,250 to 456,000.
Wages lag inflation for year
Weekly wages for U.S. workers failed to keep up with the pace of inflation over the past year, according to a report issued by the U.S. Department of Labor. Median weekly earnings rose to $740, from $734 a year earlier, an increase of 0.8%, while the Consumer Price Index climbed 1.8%.
U.S. and global corporate news
Caterpillar’s profits, sales pick up
Strong sales by industrial company Caterpillar drove a 91% increase in profits as dealers restocked their inventories of heavy machinery amid a pickup in demand for construction equipment in Asia and North America.
UPS delivers much larger profit
In an indication of a healthy resumption of economic activity, package shipper United Parcel Services reported a 90% rise in earnings and revenue growth of 13%, driven by Asian trade flows and a moderate U.S. economic recovery. UPS and its rival FedEx are seen as key barometers of international trade flows.
Ford’s new focus pays off
Automaker Ford reported a 13% increase in second-quarter earnings as its strategy to trim the number of cars and trucks it makes and to offer more features and charge higher prices paid off. A turnaround in Ford’s North American operations was key, as the group turned in a pretax profit of $1.9 billion, reversing an $899 million loss a year earlier. This was Ford’s fifth consecutive quarterly profit and its best earnings report in six years.
3M earnings rise
Manufacturer 3M posted a 43% rise in earnings as its sales rebounded to prerecession levels, benefiting from new products along with a growth in demand in emerging markets and in its niches in automotive manufacturing and consumer electronics.
Apple profit soars
Computer and consumer electronics firm Apple recorded a 78% surge in profit on very strong sales growth, including early sales of its iPad tablet computer and its latest version of the popular iPhone. Apple’s sales revenue for the quarter rose 61%.
Nokia hurt by smartphone competition
Nokia reported a 40% decline in second-quarter profit. The world’s largest mobile-phone maker had its hands full as rival Apple’s iPhone ate away at its market share in the high-end segment.
Roche profit jumps 58%
Swiss firm Roche Holding, the world’s largest maker of cancer medicines, reported a sharp rise in profits for the first half of its year because of healthy drug sales and robust growth in the sales of the company’s cancer-fighting drugs.
Xerox earnings jump 62%
Printer and copier maker Xerox posted a 62% increase in profits, surpassing expectations on improving demand in developing markets and from small and midsized businesses. The company reported growth in all business segments.
Global economic news
European bank stress test released
All eyes were on Europe this week, as the long-awaited stress tests for 91 European banks were released Friday. The stress test results were met with initial skepticism over whether they were rigorous enough, and the tests themselves may have failed to ease uncertainty about the health of the European banking industry. All but seven of the 91 banks passed the test. The seven included five Spanish banks, one German bank, and one Greek bank. This was better than the market’s expectation that about 90% of banks would pass, as reported in The Wall Street Journal. Banks that fail the test will need to raise money from investors or governments. Most observers believe the amount of capital raised will leave banks adequately funded.
Eurozone economic activity picks up
Activity picked up in both the manufacturing and service sectors in the eurozone, according to a survey by financial information firm Markit. The preliminary composite Purchasing Managers Index (PMI) rose to 56.7 from 56.0 in June. The manufacturing and services PMIs both rose and had been expected to decline. Meanwhile, the euro has risen about 8% against the U.S. dollar in recent weeks, reflecting increased confidence in this regional economy. However, the euro’s rise makes exports from Europe more expensive in global markets.
U.K. economy grows for third straight quarter
The U.K. economy grew 1.1% from the first to the second quarter this year, and it grew 1.6% when compared with the second quarter of 2009. This is the third consecutive quarter of U.K. economic expansion after a deep recession and the fastest pace of growth since the first quarter of 2006.
German business confidence hits three-year high
German business confidence turned strongly higher in July, registering a leap of 4.4 points to 106.2 in the Ifo compound index. Economists polled by Dow Jones Newswires had expected a decline to 101.5. Business confidence in Germany is now at its highest since 2007, and the increase in confidence was the greatest since German reunification in 1990.
Thursday, July 22, 2010
U.S. Economic News Week Ending July 16, 2010
U.S. stocks erased early week's gains as the kickoff of second-quarter earnings season failed to meet expectations. Reports suggesting that U.S. economic recovery may be losing momentum also weighed on investor sentiment. Some market uncertainly was lifted, however, after the U.S. Congress passed a financial regulation bill that represented the largest expansion of government power over banking and markets since the 1930s. The bill will shift the financial industrys focus to the regulatory agencies charged with writing rules to implement the measure.
Fed downgrades U.S. growth assessment
U.S. Federal Reserve Board officials downgraded their expectations for the U.S. economy and said that more central bank action might be necessary if economic conditions were to worsen appreciably. Fed officials said they expect growth to be slower this year than previously expected and inflation to remain subdued through 2012. They also estimated the job market would continue to deteriorate through 2012.
Inflation muted
U.S. inflation remained muted in June; but the core measure that excludes the volatile food and energy prices posted its largest gain since October 2009. The seasonally adjusted consumer price index slid 0.1% last month after a decline in energy prices. Core consumer prices, which are closely watched by the Fed, were up 0.2% as prices for apparel, medical care, and cigarettes rose.
U.S. data shows U.S. economic recovery losing momentum
The recovery in U.S. manufacturing lost momentum in July, according to various surveys. The news intensified fears about the health of the U.S. economy. The Philadelphia Fed index of manufacturing fell, as did the New York Fed's Empire State index. The data suggest that manufacturing is still growing but not fast enough to create many jobs. That being said, the number of people filing for unemployment insurance fell by a seasonally adjusted 29,000 to 429,000 for the week ended July 10.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell more than expected in July as it reached the lowest level in a year. A lack of confidence could further restrain consumer spending, which accounts for 70% of the economy, and limit the speed of the economic recovery.
U.S. exports rose 2.4% in May from April, and imports increased by a stronger 2.9%, pushing the U.S. trade deficit to its widest level in 18 months. The worse-than-expected deficit prompted some economists to lower their U.S. growth estimate as the deficit suggests that the U.S. produced less than had been anticipated.
Retail sales fell in June, one month after businesses began increasing inventories to put more products on their shelves. Typically inventories grow during a recovery as businesses prepare for more sales.
U.S. and global corporate news
BofA and Citigroup beat earnings estimates
Bank of America beat estimates as pressure from overdue loans abated and the company benefited from lower credit costs and the sale of noncore assets. Profits increased 3.1% for the quarter even as revenues declined. Citigroup's profit dropped 38% as stock and bond trading revenue fell but still beat analysts' estimates.
GE ends nine-quarter losing streak
General Electric's profit rose 14% in the April-to-June period, ending a nine-quarter losing streak. The company benefited from the stabilization of its GE Capital unit and improvements in its health care division.
Mattel's profits more than double
Mattel's profits more than doubled as sales and margins improved, but the toy company's results still fell short of expectations.
Intel and Google underline tech recovery
Intel swung to a profit of nearly $3 billion as sales soared 34%. Google's earnings missed estimates even though its profits and revenues increased amid a broad recovery in online advertising. However, its search business showed signs of slowing growth.
Global economic news
Chinese economy slows
China's economic growth rate slowed to 10.3% in the second quarter as government efforts to cool the housing markets and infrastructure investment took hold. Housing prices in China fell in June for the first time in 16 months, marking a long-awaited turnaround in the nation's overheated market.
Moody's downgrades Portugal
Moody's downgraded Portugal's debt rating two notches to A1 and cited the weak growth and climbing debt levels as the cause.
Eurozone posts larger-than-expected deficit
The eurozone posted a larger-than-expected trade deficit in May as imports rose more than exports. The deficit was 3.4 billion compared with a 300 million surplus in April. The figures show that trade flows involving eurozone nations have picked up sharply from last year, when flows seized up in response to the financial crisis and global recession. However, the deficit suggests that trade may not make a large contribution to eurozone growth despite the weakness of the euro.
Fed downgrades U.S. growth assessment
U.S. Federal Reserve Board officials downgraded their expectations for the U.S. economy and said that more central bank action might be necessary if economic conditions were to worsen appreciably. Fed officials said they expect growth to be slower this year than previously expected and inflation to remain subdued through 2012. They also estimated the job market would continue to deteriorate through 2012.
Inflation muted
U.S. inflation remained muted in June; but the core measure that excludes the volatile food and energy prices posted its largest gain since October 2009. The seasonally adjusted consumer price index slid 0.1% last month after a decline in energy prices. Core consumer prices, which are closely watched by the Fed, were up 0.2% as prices for apparel, medical care, and cigarettes rose.
U.S. data shows U.S. economic recovery losing momentum
The recovery in U.S. manufacturing lost momentum in July, according to various surveys. The news intensified fears about the health of the U.S. economy. The Philadelphia Fed index of manufacturing fell, as did the New York Fed's Empire State index. The data suggest that manufacturing is still growing but not fast enough to create many jobs. That being said, the number of people filing for unemployment insurance fell by a seasonally adjusted 29,000 to 429,000 for the week ended July 10.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell more than expected in July as it reached the lowest level in a year. A lack of confidence could further restrain consumer spending, which accounts for 70% of the economy, and limit the speed of the economic recovery.
U.S. exports rose 2.4% in May from April, and imports increased by a stronger 2.9%, pushing the U.S. trade deficit to its widest level in 18 months. The worse-than-expected deficit prompted some economists to lower their U.S. growth estimate as the deficit suggests that the U.S. produced less than had been anticipated.
Retail sales fell in June, one month after businesses began increasing inventories to put more products on their shelves. Typically inventories grow during a recovery as businesses prepare for more sales.
U.S. and global corporate news
BofA and Citigroup beat earnings estimates
Bank of America beat estimates as pressure from overdue loans abated and the company benefited from lower credit costs and the sale of noncore assets. Profits increased 3.1% for the quarter even as revenues declined. Citigroup's profit dropped 38% as stock and bond trading revenue fell but still beat analysts' estimates.
GE ends nine-quarter losing streak
General Electric's profit rose 14% in the April-to-June period, ending a nine-quarter losing streak. The company benefited from the stabilization of its GE Capital unit and improvements in its health care division.
Mattel's profits more than double
Mattel's profits more than doubled as sales and margins improved, but the toy company's results still fell short of expectations.
Intel and Google underline tech recovery
Intel swung to a profit of nearly $3 billion as sales soared 34%. Google's earnings missed estimates even though its profits and revenues increased amid a broad recovery in online advertising. However, its search business showed signs of slowing growth.
Global economic news
Chinese economy slows
China's economic growth rate slowed to 10.3% in the second quarter as government efforts to cool the housing markets and infrastructure investment took hold. Housing prices in China fell in June for the first time in 16 months, marking a long-awaited turnaround in the nation's overheated market.
Moody's downgrades Portugal
Moody's downgraded Portugal's debt rating two notches to A1 and cited the weak growth and climbing debt levels as the cause.
Eurozone posts larger-than-expected deficit
The eurozone posted a larger-than-expected trade deficit in May as imports rose more than exports. The deficit was 3.4 billion compared with a 300 million surplus in April. The figures show that trade flows involving eurozone nations have picked up sharply from last year, when flows seized up in response to the financial crisis and global recession. However, the deficit suggests that trade may not make a large contribution to eurozone growth despite the weakness of the euro.
Friday, July 9, 2010
U.S. economic news for the week ended July 9, 2010
U.S. stock markets were able to snap their seven-day losing streak, gaining nearly 5% by week's end, as investors looked enthusiastically to the kickoff next week of second-quarter earnings season. The gains came as the International Monetary Fund boosted its global growth outlook and U.S. retail sales soared to their strongest levels in four years.
U.S. economic news
Retailers record strong growth; jobless claims fall; service sector growth slows
News that U.S. retail sales are growing at the fastest pace in four years added to positive investor sentiment this week. The International Council of Shopping Centers said that sales probably expanded at an average monthly rate of 4% in the first five months of the retail year that began January 31. Other data were consistent with signs of a gradual improvement in labor market conditions. Initial unemployment insurance claims fell 21,000 last week, to 454,000.
The U.S. service sector grew more slowly in June as business leaders worried about the state of the labor market, according to the Institute for Supply Management's overall index of nonmanufacturing activity. The Institute's non-manufacturing employment index moved to 49.7 from 50.4, indicating a contraction within the sector.
U.S. and global corporate news
State Street earnings upgrade kicks off second-quarter enthusiasm
State Street kicked off the earnings season enthusiasm this week when it said it will report a second-quarter operating profit that is well above forecasts, putting it on track to hit its full year guidance. The company said that its results were helped by "momentum" in its servicing fee revenue as well as improvement in trading-services fee revenue. Official earnings will be reported on July 20.
China renews Google license
Google shares surged on Friday after the Chinese government renewed a license Google needed to continue to use its Chinese Web address. The renewal came after Google made a compromise with Chinese regulators and will enable Google to continue to provide Web search and local products to users in China . The dispute began in January after Google announced it would no longer comply with China 's self-censorship rules because of the government tightening free speech limits and a series of cyber attacks that Google said originated in China .
Total to buy UTS
France 's Total agreed to buy UTS energy for $1.42 billion as it sought to boost its Canadian oil sands portfolio.
Merck to cut 15,000 jobs
Merck will close eight research labs and eight manufacturing plants as part of a previously announced plan to reduce operations after it acquired Schering Plough last year. The cuts are part of a plan to reduce 15%, or about 15,000 jobs, of the combined company's work force following the acquisition.
Global economic news
IMF ups world growth forecast
The International Monetary Fund said the world economy will likely grow faster than expected, but as major risks remain the pace of growth is likely to slow. The IMF raised its global growth forecast to 4.6% from the 4.2% projection made in April.
U.S. economic news
Retailers record strong growth; jobless claims fall; service sector growth slows
News that U.S. retail sales are growing at the fastest pace in four years added to positive investor sentiment this week. The International Council of Shopping Centers said that sales probably expanded at an average monthly rate of 4% in the first five months of the retail year that began January 31. Other data were consistent with signs of a gradual improvement in labor market conditions. Initial unemployment insurance claims fell 21,000 last week, to 454,000.
The U.S. service sector grew more slowly in June as business leaders worried about the state of the labor market, according to the Institute for Supply Management's overall index of nonmanufacturing activity. The Institute's non-manufacturing employment index moved to 49.7 from 50.4, indicating a contraction within the sector.
U.S. and global corporate news
State Street earnings upgrade kicks off second-quarter enthusiasm
State Street kicked off the earnings season enthusiasm this week when it said it will report a second-quarter operating profit that is well above forecasts, putting it on track to hit its full year guidance. The company said that its results were helped by "momentum" in its servicing fee revenue as well as improvement in trading-services fee revenue. Official earnings will be reported on July 20.
China renews Google license
Google shares surged on Friday after the Chinese government renewed a license Google needed to continue to use its Chinese Web address. The renewal came after Google made a compromise with Chinese regulators and will enable Google to continue to provide Web search and local products to users in China . The dispute began in January after Google announced it would no longer comply with China 's self-censorship rules because of the government tightening free speech limits and a series of cyber attacks that Google said originated in China .
Total to buy UTS
France 's Total agreed to buy UTS energy for $1.42 billion as it sought to boost its Canadian oil sands portfolio.
Merck to cut 15,000 jobs
Merck will close eight research labs and eight manufacturing plants as part of a previously announced plan to reduce operations after it acquired Schering Plough last year. The cuts are part of a plan to reduce 15%, or about 15,000 jobs, of the combined company's work force following the acquisition.
Global economic news
IMF ups world growth forecast
The International Monetary Fund said the world economy will likely grow faster than expected, but as major risks remain the pace of growth is likely to slow. The IMF raised its global growth forecast to 4.6% from the 4.2% projection made in April.
CEBS releases stress test details
The Committee of European Banking Supervisors (CEBS) released details on "stress tests" for 91 European banks. The CEBS tests are designed to assess how banks will be able to absorb losses on loans and government bonds. It laid out the key features included in these tests that will be carried out by the CEBS in cooperation with the European Central Bank. The results are scheduled to be published on July 23. Lenders that account for 65% of the EU banking industry will be tested. Regulators are relying on the tests to restore public confidence in banks amid concerns that some lenders do not have enough capital to withstand a default by a European country.
Canada creates more jobs than expected
Canada created five times more jobs than expected in June, and its jobless rate fell to 7.9%, the lowest since January 2009. The country has now restored most of the jobs lost since 2008. This week the International Monetary Fund called the job market one of the strongest contributors to the Canadian recovery.
The Committee of European Banking Supervisors (CEBS) released details on "stress tests" for 91 European banks. The CEBS tests are designed to assess how banks will be able to absorb losses on loans and government bonds. It laid out the key features included in these tests that will be carried out by the CEBS in cooperation with the European Central Bank. The results are scheduled to be published on July 23. Lenders that account for 65% of the EU banking industry will be tested. Regulators are relying on the tests to restore public confidence in banks amid concerns that some lenders do not have enough capital to withstand a default by a European country.
Canada creates more jobs than expected
Canada created five times more jobs than expected in June, and its jobless rate fell to 7.9%, the lowest since January 2009. The country has now restored most of the jobs lost since 2008. This week the International Monetary Fund called the job market one of the strongest contributors to the Canadian recovery.
BOE, ECB keep interest rates unchanged
The Bank of England and European Central Bank kept interest rates unchanged this week. The BOE also kept its bond stimulus plan in place as it tries to prevent the economy from falling into recession during the country's biggest budget squeeze since World War II. ECB President Jean-Claude Trichet said the eurozone economy would perform "much better" in the second quarter than the first and suggested that the ECB could lean toward cutting back a bond-buying program it began in May to help tackle the region's sovereign debt crisis. The IMF this week said the ECB may have to step up its bond purchases to convince investors it will not allow market tensions to escalate.
The Bank of England and European Central Bank kept interest rates unchanged this week. The BOE also kept its bond stimulus plan in place as it tries to prevent the economy from falling into recession during the country's biggest budget squeeze since World War II. ECB President Jean-Claude Trichet said the eurozone economy would perform "much better" in the second quarter than the first and suggested that the ECB could lean toward cutting back a bond-buying program it began in May to help tackle the region's sovereign debt crisis. The IMF this week said the ECB may have to step up its bond purchases to convince investors it will not allow market tensions to escalate.
Bank of Korea raises rates
The Bank of Korea increased its base interest rate for the first time since August 2008 as its economy rebounded to pre-crisis levels with the unemployment rate at 19-month lows.
The Bank of Korea increased its base interest rate for the first time since August 2008 as its economy rebounded to pre-crisis levels with the unemployment rate at 19-month lows.
U.S. economic news for the week ended July 2, 2010
U.S. economic news
U.S. unemployment rate drops, jobless numbers grow The official U.S. unemployment rate fell to 9.5% in June from 9.7% in May, in a report released Friday morning by the Labor Department. The U.S. economy shed 125,000 jobs in June, mainly driven by the elimination of temporary census jobs. Private sector jobs grew by 83,000. While the news was not rosy, it was better than had been expected and caused a minor rebound in the major U.S. stock indices Friday morning.
Weekly jobless claims climb
Weekly initial jobless claims rose 13,000 to 472,000 in the week ended June 26. The four-week moving average, which smooths the data’s volatility, rose 3,250 to 466,500.
Weekly initial jobless claims rose 13,000 to 472,000 in the week ended June 26. The four-week moving average, which smooths the data’s volatility, rose 3,250 to 466,500.
U.S. consumer confidence declines
Consumer confidence fell substantially in June as concerns grew about the U.S. economic recovery. The Conference Board’s index of consumer confidence for June declined to 52.9 from 62.7 in May, far below the 62.5 reading economists had expected in a survey conducted by Dow Jones Newswire.
Consumer confidence fell substantially in June as concerns grew about the U.S. economic recovery. The Conference Board’s index of consumer confidence for June declined to 52.9 from 62.7 in May, far below the 62.5 reading economists had expected in a survey conducted by Dow Jones Newswire.
U.S. manufacturing activity grows more slowly
U.S. factory activity slowed in June. The Institute for Supply Management index dropped to 56.2 from 59.7. This measure indicates that manufacturing activity was growing but at a slower pace. The ISM business barometer slipped to 59.1 in June from 59.7 in May.
U.S. factory activity slowed in June. The Institute for Supply Management index dropped to 56.2 from 59.7. This measure indicates that manufacturing activity was growing but at a slower pace. The ISM business barometer slipped to 59.1 in June from 59.7 in May.
Pending home sales plummet
U.S. pending home sales fell 30% in May with the termination of the federal tax credit program that had given a key boost to the housing market. The National Association of Realtors index for pending sales of existing homes dropped to 77.6 from 110.9 in April. Pending home sales in May were down almost 16% from a year earlier.
U.S. pending home sales fell 30% in May with the termination of the federal tax credit program that had given a key boost to the housing market. The National Association of Realtors index for pending sales of existing homes dropped to 77.6 from 110.9 in April. Pending home sales in May were down almost 16% from a year earlier.
Automakers’ sales stall
New vehicle sales in the United States decelerated in June, providing another signal that the economy could be stalling. According to Autodata , U.S. auto sales fell about 4.7% from May to June. Sales fell 14% for Toyota , 13% for General Motors, 12% for Chrysler, and 11% for Ford, levels that exceeded the typical annual May-to-June 3% sales decline. However, all automakers reported increases from a year earlier.
New vehicle sales in the United States decelerated in June, providing another signal that the economy could be stalling. According to Autodata , U.S. auto sales fell about 4.7% from May to June. Sales fell 14% for Toyota , 13% for General Motors, 12% for Chrysler, and 11% for Ford, levels that exceeded the typical annual May-to-June 3% sales decline. However, all automakers reported increases from a year earlier.
U.S. and global corporate news
General Mills’ profit declines
Packaged food company General Mills reported a 41% decline in its fourth-quarter earnings, and its sales fell 2% from the year-earlier period, which included an extra week. However, excluding the extra week, earnings fell only 5%, and sales rose 4%.
Packaged food company General Mills reported a 41% decline in its fourth-quarter earnings, and its sales fell 2% from the year-earlier period, which included an extra week. However, excluding the extra week, earnings fell only 5%, and sales rose 4%.
Monsanto earnings fall
Agricultural biotechnology company Monsanto posted a 45% drop in its third-quarter profit, hurt by weed-killer competition and a backlash by farmers against high-priced genetically modified seeds. Sales fell 6.3% for the quarter.
Agricultural biotechnology company Monsanto posted a 45% drop in its third-quarter profit, hurt by weed-killer competition and a backlash by farmers against high-priced genetically modified seeds. Sales fell 6.3% for the quarter.
Global economic news
Factory growth continues but gains slow globally
Manufacturing activity expanded globally in June, but the pace of growth slowed in most countries. Only Greece , Hungary , and South Africa had a contraction in manufacturing, while Germany , Brazil , Italy , Russia , and Poland saw a pickup in the pace of growth in their purchasing manager indices, according to The Wall Street Journal. Countries that recorded slower growth included the United States , China , the United Kingdom , Japan , France , and Spain .
Manufacturing activity expanded globally in June, but the pace of growth slowed in most countries. Only Greece , Hungary , and South Africa had a contraction in manufacturing, while Germany , Brazil , Italy , Russia , and Poland saw a pickup in the pace of growth in their purchasing manager indices, according to The Wall Street Journal. Countries that recorded slower growth included the United States , China , the United Kingdom , Japan , France , and Spain .
Japan’s economy slows slightly
Industrial output in Japan fell a seasonally adjusted 0.1% in May, due largely to a 1.7% slowdown in exports, which were hurt by the fading impact of economic stimulus measures, recalls from Toyota and other Japanese automakers, and strikes at Chinese factories. Japanese industrial output had risen the three previous months.
Industrial output in Japan fell a seasonally adjusted 0.1% in May, due largely to a 1.7% slowdown in exports, which were hurt by the fading impact of economic stimulus measures, recalls from Toyota and other Japanese automakers, and strikes at Chinese factories. Japanese industrial output had risen the three previous months.
Eurozone economic recovery falters
The Conference Board’s Leading Economic Index for the eurozone fell 0.5% to 109.7 in May, its first decline in 14 months. However, the LEI for the eurozone is still almost 15% higher than its trough in March 2009.
The Conference Board’s Leading Economic Index for the eurozone fell 0.5% to 109.7 in May, its first decline in 14 months. However, the LEI for the eurozone is still almost 15% higher than its trough in March 2009.
Consumer confidence climbs in eurozone
Consumer confidence rose slightly in June in the Eurozone, according to the European Commission’s overall Economic Sentiment Indicator, which rose to 98.7 from 98.4. Economists had forecast a decline to 98. However, consumer confidence in the United Kingdom fell in June to its lowest level since last August.
Consumer confidence rose slightly in June in the Eurozone, according to the European Commission’s overall Economic Sentiment Indicator, which rose to 98.7 from 98.4. Economists had forecast a decline to 98. However, consumer confidence in the United Kingdom fell in June to its lowest level since last August.
German unemployment ebbs for the 12th straight month
Despite problems facing other European countries, Germany continues to make progress on its economic recovery, as German unemployment fell for a twelfth consecutive month in June. The unemployment rate in Europe ’s largest economy declined to 7.5% from 7.7% in May. The number of jobless fell by 88,000 to 3,153 million, according to the Federal Labor Agency. However, when adjusted for seasonal swings, the jobless rate was 7.7%, unchanged from May, and the number of jobless declined by only 21,000.
Despite problems facing other European countries, Germany continues to make progress on its economic recovery, as German unemployment fell for a twelfth consecutive month in June. The unemployment rate in Europe ’s largest economy declined to 7.5% from 7.7% in May. The number of jobless fell by 88,000 to 3,153 million, according to the Federal Labor Agency. However, when adjusted for seasonal swings, the jobless rate was 7.7%, unchanged from May, and the number of jobless declined by only 21,000.
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