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| Weekly Wrap Up |
The major stock markets started out pretty strong last week, posting solid gains on Monday; the Dow Jones and NYSE each gained over 200 points. And although the indices posted daily losses throughout most of the rest of the week, each of the major indices finished the week out on the positive side. Most of the weekly gains were very small, although the NYSE managed to gain over 125 points during the week. The week's economic news was balanced between the good and bad - housing starts dropped 13%, but homebuilder confidence increased. A credit card reform bill was passed, and the manufacturing index improved, but not as much as analysts had hoped. Finally, the nation's unemployment rate was reported to be 8.9%, the highest value in 25 years. In corporate news, there was a standard mix of good and bad, profits and losses. Lowe's (LOW: Charts, News, Offers), Home Depot (HD: Charts, News, Offers), Hewlett-Packard (HPQ: Charts, News, Offers), Sears (SHLD: Charts, News, Offers), and Gap (GPS: Charts, News, Offers) all reported better than expected profits. General Motors (GM: Charts, News, Offers) finalized decisions with the United Auto Workers union, as the company tries to avoid bankruptcy. The CEO of AIG (AIG: Charts, News, Offers) announced that he was stepping down, and a few more companies announced that they were cutting jobs, including Hewlett-Packard and American Express (AXP: Charts, News, Offers). Crude oil futures rose approximately $5 throughout the week, closing at $61.67 per barrel. The dollar fell, and is at its weakest level against the Euro since January. The markets were closed yesterday for the Memorial Day holiday. More Market News
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| Economic News |
The Senate approved a bill Tuesday to reform much-criticized credit card practices, putting such changes one step closer to being signed into law by President Obama. The bill passed in the Senate imposes restrictions on fees and interest rate hikes on existing debt. It also requires issuers to apply credit card payments in a way that doesn't keep consumers mired in debt for years. The legislation will go back to the House before it reaches the president, and action is expected this week. The Obama administration has said restrictions are needed to protect consumers from "abusive and deceptive" credit card practices. (Source: USA Today) Full Story
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A modest rebound in single-family home construction in April raised hopes Tuesday that the three-year slide in housing could be bottoming. But with the supply of unsold homes bulging, foreclosures rising and prices falling, no broad recovery is expected until next spring at the earliest. The Commerce Department said construction of new homes and apartments fell 12.8 percent last month to a seasonally adjusted annual rate of 458,000 units -- the lowest pace on records going back a half-century. (Source: MSNBC) Full Story
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The number of newly laid-off Americans requesting unemployment insurance dropped slightly last week after spiking due to auto layoffs, while continuing jobless claims moved closer to 7 million. Jobs are likely to remain scarce through next year and maybe beyond that even though the overall economy seems to be picking up. Fresh evidence of improvement came Thursday from a private research group. It said its index of leading indicators rose in April for the first time in seven months. The Labor Department said Thursday that initial claims for jobless benefits fell to a seasonally adjusted 631,000, down from a revised figure of 643,000 the previous week. (Source: Yahoo! Finance) Full Story
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| Business News |
Bank of America Corp. (BAC: Charts, News, Offers) Chief Executive Officer Kenneth Lewis expects more mergers among U.S. banks as the economy stabilizes, and said his bank won’t be among the participants. "Merger activity will pick up for others," Lewis said in a speech in London today. "At Bank of America, we’ve got enough on our hands right now." Lewis, who spent more than $120 billion on acquisitions since becoming CEO in 2001, is still trying to quell investor doubts about his most recent purchases, which led to his ouster as chairman last month. The Charlotte, North Carolina-based bank bought home lender Countrywide Financial Corp. last July and brokerage Merrill Lynch & Co. in January as the financial industry was teetering near collapse. (Source: Bloomberg) Full Story
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The United Auto Workers union has agreed on a tentative deal with the government and General Motors Corp. (GM: Charts, News, Offers) that would cut labor costs and change the way a union-run trust for retiree health care is funded. The union announced the deal in a short statement issued Thursday that gave no details, which were withheld pending meetings with members to explain the terms. The move is a key step toward GM’s efforts to restructure outside of bankruptcy court. The company, which has received $15.4 billion in federal loans, faces a June 1 government-imposed deadline to restructure or be forced into bankruptcy protection. (Source: MSNBC) Full Story
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Sears Holdings Corp (SHLD: Charts, News, Offers) posted a surprise first-quarter profit against a year-ago loss, as it cut advertising and jobs to offset lower sales, and said it extended the maturity of some debt, sending its shares up 21 percent. The owner of Sears department stores and Kmart discount stores agreed with bankers to extend the maturity of $2.4 billion of its credit facility until June 22, 2012. Like many retailers, especially those that run big department stores, Sears, which is controlled by hedge fund manager Edward Lampert, has seen sales hit by the recession. (Source: Reuters) Full Story
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| Technology Focus |
Hewlett-Packard Co. (HPQ: Charts, News, Offers) cut its full-year sales outlook and announced another round of job cuts Tuesday as it reported that weak PC sales contributed to a 17% drop in quarterly profit. But the company also said it was starting to see some improvement in consumer sentiment. "We see some encouraging signs, and we saw some slight improvements with the U.S. consumer. I'm just not ready to call it better," said Chief Executive Mike Hurd on a conference call with analysts. HP has benefited from its belt-tightening efforts but Hurd said that "the vast majority of cost savings are ahead of us." (Source: CNN Money) Full Story
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Financial software maker Intuit Inc (INTU: Charts, News, Offers) posted quarterly results on Wednesday that beat Wall Street projections on higher sales of TurboTax tax preparation programs, sending its shares up 3 percent.
TurboTax sales rose 18 percent to $777 million during the quarter as consumers bought its software before the mid-April U.S. tax-filing deadline, buoyed by an increase in use of its Web-based version.
Chief Executive Brad Smith said that Intuit gained 6 points of market share in the online tax preparation market and that the number of customers grew by 36 percent.
But it cut its forecast for full-year TurboTax sales, blaming a decision late last year to offer some electronic filing services at no charge for customers of the PC version of the product to bring pricing in line with that of rival H&R Block Inc (HRB: Charts, News, Offers). (Source: Reuters) Full Story
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Design and engineering software maker Autodesk Inc. (ADSK: Charts, News, Offers) posted a net loss for its fiscal first quarter Thursday, hurt by a sharp revenue drop, goodwill impairment and restructuring charges.
The company also said it plans to cut about 430 jobs and close some facilities.
For the three months ended April 30, the company posted a loss of $32.1 million, or 14 cents per share, down from a profit of $94.6 million, or 41 cents per share, in the same period a year earlier.
Excluding a goodwill impairment charge of $21 million and restructuring charges of $16.5 million, adjusted earnings were 18 cents per share in the latest quarter.
Revenue fell 29 percent to $425.8 million from $598.8 million.
Analysts, on average, were expecting a profit of 8 cents per share on sales of $419.1 million, according to a poll by Thomson Reuters. (Source: Yahoo Finance) Full Story
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| Your Money |
It's being touted as a big win for consumers - but the new credit card legislation that President Obama signed into law Friday hardly means that cardholders can start swiping that plastic worry-free.
In fact, as the new rules kick in (most will go into effect nine months after the president signs the bill, while others will kick in as early as 90 days afterward) and banks start curtailing the abusive practices this legislation reins in, other practices will likely emerge that can hurt consumers just as badly. "The pendulum may have swung in the wrong direction", says Dennis Moroney, research director and senior analyst for TowerGroup, a research and advisory-services firm focused exclusively on the financial-services industry. "The banks now have to respond to these changes."
You may not like that response. (Source: Yahoo Finance) Full Story
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