Stocks trim losses, but growth worries remain
After a weak retail sales report, one strategist sees a 'meaningful downshift in household spending.' Citi's earnings beat estimates. US business inventories and New York manufacturing tick higher.
By Andrea Tse
Stocks recovered some morning losses Monday but remained down after a worse-than-expected retail sales report stoked concerns about a stalling economy.
The Commerce Department reported worse-than-expected U.S. retail sales for June. Sales fell 0.5%, compared with the 0.2% increase economists were expecting and after a 0.2% decline in May.
The report marks "a meaningful downshift in household spending momentum after the buoyancy seen in the past two years," said Millan Mulraine, a senior U.S. strategist at TD Securities. "The general tone of this report was disappointing, and it suggests that consumers are beginning to retrench spending in a meaningful way."
Excluding the more volatile auto sales component, retail sales fell 0.4%, compared with the flat figure that economists were expecting and after falling 0.4% in May.
At the same time, the New York Federal Reserve reported a read of 7.39 for the July Empire State Manufacturing Survey, up from 2.29 previously and better than the expected 4.
The Commerce Department reported that business inventories rose in May as auto dealers restocked to meet demand, according to Reuters. Inventories increased by 0.3% to $1.58 trillion after rising by a downwardly revised 0.3% in April. Economists had expected inventories to rise by 0.2%. Retail inventories outside of autos were up 0.6%, Reuters said.
Stocks soared Friday, snapping a long losing streak, as investors cheered in-line China gross domestic product data, a mild read on domestic inflation and a better-than-expected earnings report from JPMorgan Chase (JPM).
In corporate news Monday, Citigroup (C) reported second-quarter earnings of $2.95 billion, or 95 cents a share, on revenue of $18.64 billion. The average analyst estimate was for a profit of 89 cents a share on revenue of $18.76 billion. Excluding one-time items, the bank earned $3.08 billion, or $1 per share, in the latest quarter. Also, news surfaced over the weekend that Citigroup reportedly plans to seek permission to increase its dividend by the end of this year. The bank has had a minimal penny-per-share quarterly payout since the financial crisis.
Shares of Par Pharmaceutical (PRX) soared early Monday after the company agreed to be acquired by buyout firm TPG for $1.9 billion. The deal values Par shares at $50 each in cash, a premium of more than 35% to Friday's close at $36.58. Under the terms of the deal, Par, a Woodcliffe, N.J., maker of both generic and proprietary drugs, now enters a go-shop period that allows it to solicit a superior proposal from third parties through Aug. 24. If another offer doesn't materialize, the transaction is expected to close in 2012, subject to customary approvals and closing conditions.
Credit card companies MasterCard (MA) and Visa (V) announced an agreement late Friday to settle class-action litigation with U.S. retailers. Visa said it's paying $4.4 billion, while MasterCard said its share of the cash portion of the settlement is $790 million. Visa expects to record a $4.1 billion charge in the June-ended quarter in relation to the settlement. The agreement settles claims by retailers that credit card companies conspired to fix the fees they charge retailers and opens the door for retailers to begin charging consumers extra to use credit cards.
Chip-maker Texas Instruments (TXN) was downgraded to "underperform" from "market perform" at FBR Capital Markets as part of a larger call on semiconductor makers ahead of the second-quarter reporting season. The firm, which also dropped its 12-month price target to $24.50 from $30, said it sees "more downside risks" for Texas Instruments than for other chip stocks "trading near trough valuations."
More from TheStreet
Christian Egyptians are refusing to meet with Hilary because they feel the Obama administration is backing Islamist parties - gee, ya think? This is the same administration that welcomed the Arab Spring and worked behind the scenes to make sure the Muslim Brotherhood had a spot at the table. Also the same administration that has done nothing to garner the release of the doc in Pakistan that gave us Bin Laden on a silver platter. At least Rand Paul is building a coalition to cut off funding if the Pakistanis don't cooperate.
The 10 yr yield down to 1.45% - so ridiculous.
HMMM Dogmatic. A democrat demonizing a republican for playing by the rules two Democratic Presidents enacted into practice. Clinton and NAFTA and Obama allowing illegals free entry into this country. And this numbskull alledging Romney outsourced and hired illegals. Am I the only one who sees this nonsense?
The polls are now showing a virtual tie between Obama & Romney. As a ultra conservative democrat (yes-I know that's hard for some to understand; much like basic economics) we need someone who has a deep responsibility for their fellow man as well as fiscal responsibility to our country to not to tax, spend, debase our way to prosperity. Wealth comes from people, not government.
BTW: Did you go to church Sunday Fat Cat ? you're being nice to people.
I hope I made my point clear in my previous post. The economic and social failures
of the past 3 decades have been poor management and operations of
both the public and private sectors. It has been a combined effort with greed and
corruption leading the way on both sides.
We need for them to pull together in the same direction, not in opposite directions.
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[BRIEFING.COM] The time is drawing near for the FOMC to release its latest policy directive. It will be done at the top of the hour; and the major indices are mixed at the bottom of the hour.
Market participants are expecting the policy directive to read very similarly to the last directive. Any new nuggets of information, therefore, that suggest the Fed is angling to prepare the market for the fed funds rate to go up sooner rather than later would be a source of ... More
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