U.S Economic News for week ending October 21, 2011

Stocks wavered throughout the week as investors watched for news that European leaders were producing a viable plan to stabilize European economies and banks. Better-than-expected corporate earnings reports from many companies buoyed markets.
U.S. and global economic news

European leaders struggle to seal debt deal
Throughout the week European policymakers captured the attention of investors as they worked to come up with a deal to contain the European debt and banking crisis. Finance ministers met in Brussels on Friday to lay the groundwork for an October 23 gathering of government leaders that was to have been the deadline for a solution to the debt crisis. However, another summit was scheduled for October 26 after Germany and France, on Thursday, said that the European Union needed more time to seal a "global and ambitious" accord.

Moody's cuts Spain's debt rating, warns France
Moody's Investors Service downgraded Spain's government bond rating two notches in response to the country's fading growth prospects. The credit rating agency also warned France about its credit rating, noting that France in the months ahead will face challenges such as the possible need to support other European sovereigns or its own. Those challenges are exerting pressure on the stable outlook of France's AAA-debt rating.

China's economic growth slows
China's economy in the third quarter grew 9.1% from a year earlier, the slowest pace since 2009. The news drove global stocks lower amid investor fear that Europe's debt crisis would hinder the global recovery. The economy grew 9.5% in the second quarter of this year.

U.S. existing home sales fall 3%
The National Association of Realtors reported that existing home sales fell 3% in September to a 4.91 million annual rate. The median home price dropped 3.5% from a year ago and about one in five real estate agents polled said contracts had been cancelled. U.S. home construction rose in September, with work beginning on 658,000 homes.

U.S. and global corporate news

Big U.S. banks report mixed results as earnings season heats up
Morgan Stanley saw a $2.15 billion profit for the third quarter. Goldman Sachs reported a rare quarterly loss, and Bank of America lost its title as the biggest U.S. bank by assets to JPMorgan Chase. Microsoft saw 6.1% gains in its net income helped by sales of its Office product. Intel's profit rose 17%, and the company reported its sixth straight quarter of record sales. General Electric's earnings climbed 11% in the third quarter as the finance unit's gains were able to override tighter profit margins in the energy business. Schlumberger, the world's largest oil field services provider, reported third-quarter profits that missed expectation as income from Asia and the Middle East declined. Philip Morris International, the largest publicly traded tobacco company, reported a 30% increase in profit. Higher shipment levels and increased cigarette prices in Asia helped the company beat profit estimates.

iPhone helps Verizon double profits; AT&T suffers as it loses sole carrier status
Verizon's profit doubled in the third quarter as consumers bought its iPhone and Android devices. AT&T’s profit fell 70.6% in the third quarter from a year ago as net income dropped to $3.62 billion from $12.3 billion in the same quarter last year. Last year’s income was boosted by the sale of a subsidiary and a tax settlement. The company, which this year lost the exclusive contract with Apple to carry the iPhone, said it added less than one-half the number of contract customers than it did a year earlier. Also hurting it bottom line, iPhone activations slowed to 2.7 million, nearly one million fewer than in the second quarter. Meanwhile, Apple's profit climbed 54% but missed expectations because it sold fewer-than-expected iPhones.

Groupon tempers IPO
Groupon, the largest online coupon site, is seeking an $11.4 billion valuation from its initial public offering. That is less than one-half the amount discussed with banks earlier this year. The company will offer 30 million shares of Class A common stock at $16 to $18 each.