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
"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."
Yeah......Today is Senior's golf day, I'm getting ready to leave.. Doda.
I've jerked my back out of whack again this year, inconsistent; Week to week game can be in the 30s, next week in the 40s.......Have trouble playing any doubles(18)...And not playing 18 h. scrambles.
I'm not going to win any Championships this year.....
You all have a nice day in the Markets.......And a nice day.
CPI drop is attributed to the lowering of energy prices according to sources....
Guess that is probably in some locales? Maybe not everywhere.
April reading was flat on CPI......And the Core CPI has been +0.2%
If it keeps going at this rate.....Us old folks won't get a raise on SS this year.....
CPI is expected to drop 0.20% in May.....1st. Time in 2 years....Who do we give credit to ????
Obama or Bush ?.......Maybe the Repub Congress(House) hear ye, hear ye.
And Stockton CA. is going Bankrupt or going to file?? Are they the First of many ??
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[BRIEFING.COM] The major averages ended higher across the board as the S&P 500 advanced 0.8%.
Equities climbed steadily since the opening bell as investors prepared for tomorrow's policy decision from the Federal Reserve. Although chatter in recent weeks has included speculation the Fed would look to taper its asset purchases, today's broad gains suggest investors expect mostly reassuring words from Chairman Bernanke at tomorrow's press conference.
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