Dow Drops 350 points Despite Decreased Inflation and Jobless Claims

Weekly Wrap Up

The markets trended down most of the week, totally negating any gains from the previous week. By the end of the week, the Dow Jones had dropped over 350 points, and the NYSE lost almost 300 points. The biggest economic concern was fear over how deeply the United States would be impacted by the financial crisis in Europe; although some other economic news brought hope, including decreases in both inflation and jobless claims.In corporate news, Warren Buffett announced that he purchased 5% ownership of IBM (IBM: Charts, News), store employees at Target (TGT: Charts, News) protested lengthened holiday hours that will require them to work on Thanksgiving, and Internet site announced a $100 million IPO.
There was a mix of gains and losses, with companies such as Abercrombie & Fitch (ANF: Charts, News) and Heinz (HNZ: Charts, News) showing weaker earnings, while other companies including Wal-Mart (WMT: Charts, News) and Dick's Sporting Goods (DKS: Charts, News) saw increased profits. More Market News

Economic News

San Francisco Fed Warns of High Recession Risk for U.S.
The outlook is growing grimmer for the U.S. economy, as the risk of a new recession fueled by European troubles has risen, a new paper from the Federal Reserve Bank of San Francisco argues.In the analysis released Monday, the central bank researchers say the U.S. economy is particularly vulnerable to shocks right now. If something were to strike the nation at this time of already weak growth, contracting gross domestic product would be hard to avoid. The most obvious recession trigger is the worsening and unresolved government debt crisis currently roiling Europe, the authors note. (Source: Wall Street Journal) Click here to read the full article

Drop in US inflation strengthens hand of the Fed's doves
The consumer price index declined 0.1pc in the month after gaining 0.3pc in September, according to figures from the Labor Department released yesterday. An almost 4pc decline in the price of petrol accounted for much of the overall fall.The Fed has publicly promised to keep interest rates at a record low level until at least the middle of 2013. But a battle is raging between officials at the central bank who want to take more measures to shore up the recovery and those anxious any extra steps will only stoke inflation. (Source: The Telegraph) Click here to read the full article

Jobless claims fall to lowest level since April
The number of people applying for jobless benefits fell last week to the lowest level in seven months, suggesting slow but gradual improvement in the U.S. labor market.Initial claims for unemployment compensation fell by 5,000 to a seasonally adjusted 388,000, the Labor Department said Thursday. Applications from two weeks ago were revised up to 393,000 from an original reading of 390,000. Economists surveyed by MarketWatch had expected new requests for jobless benefits to climb to 397,000 in the week ended Nov. 12. (Source: MarketWatch) Click here to read the full article

Business News

Target Employees Protest Thanksgiving Hours
Anthony Hardwick says he resents working at Target Corp. (TGT: Charts, News) on Thanksgiving and has garnered more than 37,000 signatures on an online protest petition. Target, Macy’s Inc. (M: Charts, News), Gap Inc. (GPS: Charts, News), Kohl’s Corp. (KSS: Charts, News), Toys "R" Us Inc. and Best Buy Co. (BBY: Charts, News) all plan to open at midnight or earlier on Thanksgiving in an attempt to goose sales that the National Retail Federation says may rise just 2.8 percent this holiday season, or about half as much as last year.Hardwick, 29, who says he has been a Target parking attendant in Omaha, Nebraska, for three years, began the petition two weeks ago on the website after learning that he and his coworkers would be required to start at 11 p.m. Nov. 24 for a 10-hour shift. (Source: Bloomberg) Click here to read the full article

J.C. Penney’s next act
It’ll hardly come as breaking news that middle-income consumers are struggling. Unless you’re J.C. Penney (JCP: Charts, News). The midtier department-store operator posted a net loss for the most recent quarter. On an adjusted basis, it earned money and beat Wall Street expectations, but the forecast for the crucial fourth quarter was tepid.Also attracting attention were comments from Executive Chairman Mike Ullman. "While our more affluent customers continued to respond well to J.C. Penney’s attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter," Ullman said. He added that Ron Johnson, the new chief executive, and his team were "developing strategies for the next phase of J.C. Penney’s transformation." (Source: MarketWatch) Click here to read the full article

Technology Focus

Buffett Buys IBM Near Peak
Berkshire Hathaway Inc.’s (BRK.B: Charts, News) Warren Buffett, who spent more than $10 billion on International Business Machines Corp. (IBM: Charts, News) stock, paid near-record prices for the shares, recalling his winning 1988 investment in Coca-Cola Co (KO: Charts, News).Berkshire began buying IBM shares this year after Buffett read the Armonk, New York-based company’s annual report and saw the firm "through a different lens," the billionaire told CNBC today in an interview. IBM had doubled in New York trading in the 27 months prior to the Feb. 22 release of its yearly 10-K filing. Coca-Cola had doubled in the four years through the end of 1987, and has risen more than 10-fold since. (Source: BusinessWeek) Click here to read the full article

Netflix, Green Mountain Coffee: Is Headed Down The Same Road?
Netflix (NFLX: Charts, News) and Green Mountain Coffee Roasters (GMCR: Charts, News) got some "valuation religion" in a fast way recently. I am going short (CRM: Charts, News) for the same reason. Now, my distaste for the company is nothing new, I have written about it in the past. With earnings coming out this week even a good quarter can’t save the rest of 2011 for them.Nothing has changed for the company since then other than a deal for Assistly ($50M). The company is still losing money on a GAAP basis, insiders are still selling shares as fast as they get them and the company has still made the switch from reporting GAAP EPS to reporting "non GAAP" because, well, that’s the only way they can show a profit. The stock still trades at over $120/share. (Source: Seeking Alpha) Click here to read the full article

Your Money

$75,000 Can Buy Happiness
The search to define happiness has consumed a lot of human energy. Until recently, we've had little to show for it -- some songs, a few poems, and a Charles Schulz cartoon about happiness being a warm puppy -- but nothing of much practical use. The best life evaluations come from people who went to college, got married, and have good jobs.To get practical results, you need scientists. Fortunately, two of the best are now on the case: Angus Deaton, Ph.D., a renowned economist, and Daniel Kahneman, Ph.D., a Nobel prize-winning psychologist, both from Princeton University. Dispensing with romantic imagery, Dr. Deaton and Dr. Kahneman looked for happiness in numbers. More specifically, they analyzed responses to the Gallup-Healthways Well-Being Index (GHWBI), a daily survey that asks roughly 1,000 U.S. residents a battery of questions about their wellbeing. (Source: Business Insider) Click here to read the full article

Americans Getting More Worried About Retirement
Three separate surveys released this week show rising levels of anxiety among Americans over when -- or whether -- they'll be able to stop working.On Tuesday, Ameriprise Financial released a study that examined retirement readiness among people aged 40 to 75 in the nation's largest cities. Respondents were less confident about their ability to retire than they were last year. The financial services company also found increased reports of anxiety and depression surrounding retirement. (Source: Daily Finance) Click here to read the full article

Published on Nov 18, 2011
By InvestorGuide Staff

Copyrighted 2020. Content published with author's permission.

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