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| Weekly Wrap Up |
Wall Street continued its streak from last week, posting significant weekly gains for all the major indices. On Thursday, the Dow Jones closed above 9,000, a level which it hadn't seen since January. By the end of the week, the Dow Jones gained almost 350 points, the NYSE gained almost 300, and the Nasdaq gained almost 80. Investors paid close attention to the wide variety of economic and earnings reports that were issued this week. Economics news was mixed, with a better than expected number of home resales, but also a jump in jobless claims and a drop in consumer sentiment. Additionally, the minimum wage was increased, but many analysts expect little change to actually come from this. Tech stocks dominated the corporate news, and some negative earnings reports kept the Nasdaq at a slightly lower level than some of the other indices. Microsoft (MSFT: Charts, News, Offers) sales plummetted, and Amazon's (AMZN: Charts, News, Offers) profits unexpectedly fell. Luckily for Amazon, their disappointing earnings were somewhat overshadowed by their earlier announcement that they will be purchasing shoe-retailer Zappos. Goldman Sachs (GS: Charts, News, Offers) continued to impress the public as they bought back their TARP warrants, which at $1.1 billion has been called a fair price. Crude oil futures rose significantly throughout the week, closing over $68 a barrel, although gasoline demand has remained unseasonably weak. More Market News
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| Economic News |
Minimum wage workers get a raise
The nation's lowest-paid workers are getting a raise.
The federal minimum wage increase that went into effect Friday raises the lowest allowable wage for hourly workers from $6.55 to $7.25 an hour. It's the final stage of a three-year plan to increase the minimum wage.
Economists say the nearly 11 percent raise will provide a substantial boost in spending power for some workers but also could hurt some small businesses and job seekers because it will make the cost of hiring and retaining workers more expensive. Overall, however, many expect the economic effect to be minimal, in part because so few employers actually pay workers that low rate. (Source: MSNBC) Click here to read the full article
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Home Resales in U.S. Increased More Than Forecast
Home resales in the U.S. rose in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices.
Purchases climbed 3.6 percent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, the National Association of Realtors said today in Washington. Median prices fell 15 percent.
The gain in sales confirms Federal Reserve Chairman Ben S. Bernanke's remarks this week that the worst housing slump in eight decades appears to be moderating. A record drop in household wealth, due in part to the plunge in property values, and mounting unemployment are among the reasons rebounds in housing and the economy are likely to be drawn out. (Source: Bloomberg) Click here to read the full article
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Jobless claims bounce up
The number of Americans filing for initial unemployment insurance rose last week, but the jump could be due to continued volatility from the auto industry meltdown.
There were 554,000 initial jobless claims filed in the week ended July 18, up 30,000 from an upwardly-revised 524,000 the previous week, the Labor Department said in a weekly report released Thursday.
The number was slightly lower than the 557,000 consensus estimate of economists surveyed by Briefing.com.
The 4-week moving average of initial claims was 566,000, down 19,000 from the previous week's revised average of 585,000.
In a research note, Ian Shepherdson of High Frequency Economics noted the jump "reflects the seasonal adjustment problems" seen last week when initial claims hit a 6-month low. (Source: CNN Money) Click here to read the full article
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Consumer sentiment drops in final July reading
U.S. consumer sentiment fell in July, according to a survey released Friday by the University of Michigan and Reuters, dragged down by a big drop in expectations about the economy.
Sentiment rose to a revised 66.0 from a reading of 64.6 in early July, but was down from the June reading of 70.8.
Economists surveyed by MarketWatch were expecting consumer sentiment to rise slightly to 65.5.
Analysts said the report highlights depressed levels of confidence as well as likely slow growth ahead. (Source: MarketWatch) Click here to read the full article
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| Business News |
Caterpillar 2Q profit falls 66 pct on weak demand
Caterpillar Inc.'s (CAT: Charts, News, Offers) second-quarter profit tumbled on slumping sales of heavy equipment and the cost of staff cuts, but it saw signs that the global economy is starting to stabilize after a prolonged slide.
The company boosted its 2009 profit forecast, citing evidence that government stimulus plans, particularly in China, are beginning to work. The company's global reach and diverse products -- from bulldozers to mining trucks to cargo ship engines -- give a snapshot of industrial strength.
The optimistic forecast lifted shares nearly 8 percent in Tuesday trading.
"There is still a great deal of economic uncertainty in the world, but we are seeing signs of stabilization that we hope will set the foundation for an eventual recovery," Caterpillar Chairman and CEO Jim Owens said in a statement. (Source: Yahoo Finance) Click here to read the full article
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Red Ink Stains Bank and Banker
John J. Mack has spent a long, storied career helping to build Morgan Stanley into a modern Wall Street powerhouse. But suddenly, the lights have dimmed inside the House of Mack, leaving its hard-charging leader fighting for his legacy.
The challenges confronting Mr. Mack and his bank were thrown into sharp relief on Wednesday, when the venerable Morgan Stanley (MS: Charts, News, Offers) reported its third consecutive quarterly loss. The red ink - $159 million from continuing businesses in the second quarter - was deeper than analysts predicted.
It was a stinging blow for Mr. Mack, 64. Only last week, Morgan Stanley’s perennial rival, Goldman Sachs (GS: Charts, News, Offers), wowed Wall Street with record profits. And as his bank nursed its latest losses Wednesday, Goldman pulled even further ahead. It said it would pay $1.1 billion to buy back warrants issued to the Treasury Department last October, at the height of the crisis, and thus fully extricate itself from Washington’s grip. (Source: NY Times) Click here to read the full article
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Volkswagen Approves Porsche Merger Plan, Qatar Stake
Volkswagen AG agreed to combine with Porsche SE after the departure of the sports-car maker’s Chief Executive Officer Wendelin Wiedeking capped a 4-year-long feud for control of the two German manufacturers.
An integration of Volkswagen with the 911 sports-car maker will benefit both automakers in the global market, VW Chief Executive Officer Martin Winterkorn said in Stuttgart, Germany. A Qatar fund will acquire 17 percent of VW, becoming the third- largest investor in the Wolfsburg-based company.
Volkswagen and Porsche, which said on May 6 that they were in talks to merge, were at loggerheads about ways to cut Porsche’s 10 billion euros ($12.8 billion) of debt. Wiedeking agreed today to step down after 16 years as CEO. (Source: Bloomberg) Click here to read the full article
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| Technology Focus |
Apple Reports Third Quarter Results
Apple (AAPL: Charts, News, Offers) today announced financial results for its fiscal 2009 third quarter ended June 27, 2009. The Company posted revenue of $8.34 billion and a net quarterly profit of $1.23 billion, or $1.35 per diluted share. These results compare to revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share, in the year-ago quarter. Gross margin was 36.3 percent, up from 34.8 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue. "We're making our most innovative products ever and our customers are responding," said Steve Jobs, Apple's CEO. "We're thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year."
"We're extremely pleased to report record non-holiday quarter revenue and earnings and quarterly cash flow from operations of $2.3 billion," said Peter Oppenheimer, Apple's CFO. Click here to read the full article
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Amazon's Expanding With Deal for Zappos
Amazon.com (AMZN: Charts, News, Offers) is trying the shoe retailer Zappos.com on for size.
The companies announced on Wednesday that Amazon was acquiring Zappos, based in Henderson, Nev., for 10 million shares of Amazon stock, worth nearly $900 million at its current level.
Amazon also said it would give Zappos employees an additional $40 million in cash and stock.
The acquisition is the largest in Amazon’s history.
Online shoe sales hit $4.3 billion last year, up from $3.3 billion in 2007, according to Forrester Research.
Zappos, a private company founded 10 years ago, has won fans with perks like free shipping and personalized service. It is the largest player in that market. (Source: NY Times) Click here to read the full article
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Yahoo: "Most Significant" Change Fails to Wow
Yahoo (YHOO: Charts, News, Offers) boss Carol Bartz calls its redesign the "most significant change in our home page since the company's inception." It's also a big step backward for web design.
What she's managed to create is a place for folks who have no online life and need to be told how to find one, while looking at lots of ads, of course. Maybe that's what Yahoo is supposed to be about, but it's not what most users want.
Unveiled Tuesday, the design is actually better than what it replaces, but only incrementally so. Some people look at it and don't even notice the changes.
Why I noticed, after opting in, is that the page still has too many ads and is not fully customizable. This page reminds us that Yahoo isn't at all subtle about why it exists: To sell you things. Like we need the help. (Source: PC World) Click here to read the full article
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Microsoft Shares Plunge On Windows Decline
Microsoft (MSFT: Charts, News, Offers) said sales of its core Windows operating system declined 29% in its fiscal fourth quarter due to weakness in the personal computer market and deferred Windows 7 revenues.
Microsoft shares were off more than 8% in early Friday trading on the news.
For the three months ended June 30, Windows sales were $3.1 billion, compared to $4.4 billion in the same period a year ago. Windows sales were off 13% for the full fiscal year, falling to $14.7 billion from $16.9 billion the year prior.
"Client revenue decreased primarily as a result of PC market weakness, especially PCs sold to businesses," Microsoft said Thursday. (Source: Information Week) Click here to read the full article
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| Your Money |
What health reform means for you
Lawmakers are still far from consensus on how to fix the health care system. So it's too soon to know exactly what reform would mean for individual Americans.
But a picture has started to emerge from two key bills put out by Democrats in the House and Senate. A third bill is expected soon from the Senate Finance Committee.
The first two bills propose:a national insurance exchange on which insurers would compete for consumers' business;
- a public health plan that would compete with private insurers on that exchange;
- and subsidies for financially strapped Americans eligible to buy health insurance on the exchange.
Both bills would also set minimum standards for health insurance policies and require insurers to guarantee coverage for those with pre-existing conditions. (Source: CNN Money) Click here to read the full article
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