Stocks rally on hopes for more stimulus
A rise in jobless claims and a dip in consumer prices spark speculation of further monetary easing from the Fed. The Spanish 10-year bond yield soars as contagion fears mount. Nokia will cut 10,000 jobs.
By Andrea Tse
Stocks rose Thursday as new data on inflation and weekly unemployment claims renewed hopes for more economic stimulus from the Federal Reserve.
Investors also continued to keep a close eye on Europe, worrying that Greek general elections Sunday could lead to the country's exit from the euro and trigger disorder across the eurozone.
The Labor Department on Thursday reported that U.S. initial jobless claims for the week ended June 9 rose to 386,000, up from the previous week's upwardly revised 380,000. Economists had predicted 375,000. The four-week moving average was 382,000, an increase of 3,500 from the previous week's 378,500. Continuing claims for the week ended June 2 were 3.278 million, a decrease of 33,000 from the preceding week's 3.311 million.
The Labor Department also reported that the consumer price index fell by 0.3% in May, matching expectations, with the core price index, excluding food and energy, rising 0.2%. Year over year, the CPI fell to 1.7% and the core CPI remained unchanged at 2.3%.
"The worse the numbers are in the U.S., the greater the pressure the Federal Reserve will have to increase their monetization plan," Chad Morganlander, a money manager at Stifel Nicolaus & Co., told Bloomberg. "There's a modest amount of optimism that the Greek vote will bode well for the markets. Investors are sitting on their hands waiting for Sunday’s vote."
Late Wednesday, Moody's downgraded Spain's debt rating to just a notch above junk, pending a review for another potential downgrade, citing the country's mounting debt burden, ailing economy and challenges tapping into the capital markets.
The downgrade follows Spain's request for a 100 billion-euro credit line from Europe to shore up its banking system. The Spanish 10-year bond yield topped 7%.
With Spanish contagion fears abounding and concerns that Italy will be the next eurozone country to request a bailout, Italy was able to raise its target 4.5 billion euros in a bond auction Thursday but at soaring borrowing costs.
In corporate news, Nokia (NOK) plans to cut 10,000 jobs globally and close plants by the end of 2013 in an effort to save costs. Nokia said Thursday it plans to close its core manufacturing plant in Finland and shut down other research and development projects.
The company also said its second-quarter loss from its smartphone business would be larger than expected. Nokia said it would record additional restructuring charges by the end of next year of about 1 billion euros.
Smithfield Foods (SFD), the meat processor, reported fourth-quarter earnings of $79.5 million, or 49 cents a share, down from year-earlier earnings of $98.4 million, or 59 cents. Analysts had expected the company to post quarterly earnings of 53 cents a share. Sales rose 3% to $3.21 billion. Analysts were forecasting sales of $3.26 billion.
United Technologies (UTX) said its board approved an increase of 11.5% to the company's quarterly dividend, increasing it to 53.5 cents a share.
Costco (COST) is purchasing Controladora Comercial Mexicana's 50% stake in Costco de Mexico for about $760.4 million.
More from TheStreet.com
This is getting ugly, with almost no positive news to build on, why is the market up today? Is this just another round of pump and dump?
Bailing out Wall Street was the worse thing we could have ever done, and bailing out GM was the second worse. While it is true that Romney probably won't do much to change this fleecing, we have to start somewhere.
"A month after the U.S. Treasury sold $24 billion in 10 Year bonds at what was then a record low yield of 1.86%, the U.S. government once again approaches that mysterious primary dealer-repo nexus with the latest offer U.S. banks can't refuse: a $21 billion reopening. What is notable about today's auction is that in about 40 minutes, the auction will price at a record low yield of just about 1.63%, or 23 bps lower to the last record yield. Where things get patently surreal, however, is when one takes a look at today's POMO operation conducted by the Fed (remember those). Because as can be seen on the table below from the NY Fed, at 11 AM today, so precisely 2 hours before when the Treasury will complete its own sale, bought $4.8 billion of... wait for it... 10 Year bonds." (And, you thought QE and POMO were over probably.)
Two hours later the Treasury auctioned $21 billion in 10 year bonds at a yield of 1.622%. You can put 2 and 2 together, but this is the type of stuff which for the most part is done behind the curtain and away from the MSM and financial media more absorbed with Jaime Dimon. Call it what you will-three card Monte, Ponzi or just plain manipulation."
MAY DAY MAY DAY
Sell Sell Sell folks
The economy is back into a recession and the firing of Americans has started all over again.
This time it will be worse as the government and the Federal Reserve are out of bullets.
Ireland has to be bailed out again it is asking the IMF for a huge amount of monies.
Spain has collapsed and Greece is well on the way out of the EU.
If they rig the election in Greece and keep in the austerity party Athens will go up in smoke as the people revolt in a civial war.
Pretty much Italy is following in Spain's foot steps just weeks behind. And France is having a very hard time with it's bills as it is also in a recession.
SELL SELL SELL people the crash is here now.
"Stocks turned higher after a weak open Thursday as new data on inflation and weekly unemployment claims renewed hopes for more economic stimulus from the Federal Reserve." The stock market manipulators are pinning their "hope" on an ever worsening economy being the impetus for a freebie handout from the government courtesy of Joe Schmoe's tax payments. These a-holes are getting rich by peddling "Hope" to drive up the market today knowing there will be no "Change" and it will drop tomorrow.
Alright .... let's spend more money that we don't have. At this point, it is senselesss to think that we can pay back our debts. So, let's just run them higher and higher. Then we can claim bancruptcy, the dollar will devalue again. We can sell more stuff to China and soon we'll be using the Yen and everyone will be in Chinese language classes. Probably a great business venture. "Learn Chinese ... just $999.00"
Way to go Barry. In four years, you've totally screwed up everything that this country has stood for for the last 300 years......
It would be good news if Greece left the Euro zone. Their economy is only about 3% of the total GDP. Their membership is hardly worth the trouble these lazy fools cause.
And the argument about contagion? If other countries like Spain and Italy fall, then so be it. Keeping one more (or less) rotten apple in the barrel won't change the outcome.
And Dimon's congressional appearance was a joke. All he had to field was softball questions from people who have no knowledge about finance. Also consider that JPM has a net worth around a trillion. Now 4 or 5 billion of that amount is trivial, but when a CEO isn't aware of losses like this, it is time for the stockholders to send him packing.
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[BRIEFING.COM] The major averages began the new trading week on a slightly lower note with small caps leading the weakness. The Russell 2000 shed 0.3% while the S&P 500 slipped less than a point with six sectors ending in the red.
Equity indices began the day in negative territory with only the Nasdaq (-0.04%) making a very brief appearance in the green. After sliding through the first hour of action, the major averages reversed and spent the remainder of the session climbing off ... More
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