The markets closed lower this week with weak retail sales and failing crude prices on investors’ minds. Stocks began the shortened week off in red largely due to a selloff in technology and commodity shares. Lower crude prices had investors focused on the fact that a global slowdown is not only reducing demand for oil, but may also be hurting tech companies. The market had one of its worst days in months on Thursday as stocks plummeted on dismal sales from retailers and an unexpected jump in unemployment claims. The Dow Jones Industrial Average lost over 340 points to close at 11,188.23 on Thursday. Stocks cut losses and ended mixed on Friday after a rally in the financial sector pulled the market off of session lows. Stocks were already slated to edge lower at the start of the session, but news that major retailers reduced their spending last month due to higher food and gas prices accelerated the market’s decline. The Labor Department reported that the number of new claims rose to 444,000 from a revised 429,000 the previous week. Wal-Mart (WMT: Charts, News, Offers) was one of the few retailers that reported stronger-than-expected August sales. A number of automakers reported disappointing sales figures. Ford Motor Co. (F: Charts, News, Offers)said its August sales dropped more than 26%. General Motors Corp. (GM: Charts, News, Offers) said its sales fell 20.4% in August on lower demand. Technology stocks were also heavily hit this week with Dell (DELL: Charts, News, Offers) continuing to weigh heavily on the Nasdaq as it is trying to sell a number of computer factories around the world with the hopes of cutting costs and increasing productivity. This week Coca-Cola (KO: Charts, News, Offers) said it will buy Chinese juice maker China Huiyuan Juice Group Ltd. In a $2.5 billion all-cash deal. The week closed mixed as U.S. light crude oil for October delivery fell $1.78 to $106.11 a barrel on the New York Mercantile Exchange. More Market News
Federal regulators on Wednesday accused two former Wall Street brokers of defrauding their customers by making more than $1 billion in unauthorized purchases of securities tied to subprime mortgages. The Securities and Exchange Commission alleged in a civil lawsuit that two former Credit Suisse Securities brokers led corporate customers to believe that auction-rate securities being purchased in their accounts were backed by federally-guaranteed student loans and were safe like cash. The SEC said the securities were backed by subprime mortgages, collateralized debt obligations and other high-risk investments. The agency is seeking unspecified restitution and civil fines against the brokers, Julian Tzolov and Eric Butler, who were suspended by Credit Suisse last year. (Source: CNN Money) Full Story
The U.S. jobless rate unexpectedly jumped in August to a nearly five-year high as employment fell for an eighth-straight month, raising the risk of recession as households face a struggling labor market and a high inflation rate. The data, which included a modest rise in wages, suggest Federal Reserve officials will hold interest rates steady this month and at subsequent meetings at least through the end of the year and perhaps well into 2009. Nonfarm payrolls, which are calculated by a survey of establishments, declined 84,000 in August, the Labor Department said Friday. The pullback was broad-based, including manufacturing, construction and service industries. June and July were revised to show bigger declines. June's revision was particularly large, to a 100,000 loss in jobs from a prior estimate of just 51,000. (Source: Wall Street Journal) Full Story
U.S. manufacturing activity slipped in August and construction spending dropped to the lowest level in seven years in July as consumer spending and housing show no signs of reviving. The Institute for Supply Management said Tuesday its reading for the nation’s manufacturers fell to 49.9 from 50 in July. The August number met economists’ prediction of a reading of 49.9, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR. A reading below 50 signals contraction. The index has hovered near the 50 “boom-bust” line all year. The group’s inflation index hit a six-month low, however. For the first time in months, there were many items on the list of commodity costs coming down, as prices for copper, corn, fuel oil, natural gas and soybean oil fell. (Source: MSNBC) Full Story
Lender GMAC Financial Services said Wednesday it will close all of its 200 retail offices and lay off about 5,000 employees as part of plan to reduce its mortgage lending and servicing operations because of the housing market downturn. The majority of the layoffs are slated for GMAC's (GJM: Charts, News, Offers)mortgage lending division, Residential Capital LLC, or ResCap, and will reduce work force at the unit by 60 percent, the company said. "While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment," Tom Marano, ResCap's chairman and CEO, said in a statement. "Conditions in the mortgage and credit markets have not abated and, therefore, we need to respond aggressively by further reducing both operating costs and business risk." (Source: Forbes.com) Full Story
Ciena (CIEN: Charts, News, Offers)reported a fiscal third-quarter profit that was halved from a year ago, and shares tumbled on a weaker-than-expected sales outlook for the current quarter. The Linthicum, Md., communications-equipment maker said it had a profit of $11.7 million, or 12 cents a share, falling from $28.3 million, or 29 cents a share, in the year-ago quarter. Excluding items, Ciena had a profit of 37 cents a share in the quarter. Revenue jumped 24% from a year earlier to $253.2 million, and was up 4.5% sequentially. Wall Street was expecting a profit of 37 cents a share on revenue of $253.6 million, according to Thomson Reuters. (Source: TheStreet) Full Story
Boeing Co (BA: Charts, News, Offers)faces a walkout by 27,000 workers on Friday after members of its largest labor union rejected the planemaker’s contract offer and voted to strike unless a compromise is reached in time. The International Association of Machinists (IAM) said 87 percent of its members had voted to strike from midnight on Wednesday but would hold off for 48 hours to allow last-ditch talks to prevent an economically damaging strike. "This is a fairly common tactic to avoid going to a strike," said Victor Schachter, an expert on labor disputes who heads the employment group at law firm Fenwick & West. (Source: MSNBC) Full Story
Korea Development Bank said Tuesday it is in the hunt for troubled U.S. investment bank Lehman Bros. LEH, confirming weeks of speculation over its intentions for a Wall Street institution that many suspect could use a capital injection. Min Euoo-sung, the governor of state-owned KDB, said that discussions were underway "to form a consortium with private banks as (we) believe it is more desirable to acquire Lehman Brothers jointly rather than alone." "It is difficult to say how the talks will progress in the future as we have not been able to narrow differences with the Lehman side over prices," he added in Korean-language comments to reporters, according to the bank's public relations office. (Source: USA Today) Full Story
Samsung Electronics Co. is pursuing an acquisition of U.S. computer memory card maker SanDisk Corp. (SNDK: Charts, News, Offers), a South Korean online business newspaper reported Friday. Both Samsung and SanDisk neither confirmed nor denied the report. But SanDisk's shares climbed more than 26 percent in morning trading Friday. "We are considering various opportunities regarding SanDisk but nothing has been decided," Samsung spokesman James Chung said. He did not elaborate. "SanDisk periodically has conversations with multiple parties, including Samsung, regarding a variety of potential business opportunities," SanDisk said in a statement. "We evaluate all of these opportunities, but maintain a policy of not commenting on market rumors or speculation." (Source: BusinessWeek) Full Story
Even the mighty Nokia (NOK: Charts, News, Offers) is not immune to the global downturn rattling the handset market. The Finnish manufacturer warned on Friday that it was losing market share to aggressive competition in emerging markets, while at the same time weak consumer confidence was adding to the overall pain in the industry. Nokia's warning sent its shares plummeting 10.8%, or 1.70 euros ($2.43), to 14 euros ($19.97), at the close in Helsinki on Friday. The company said on Friday afternoon in Europe that it expected its market share for the third quarter of 2008 to be lower than the 40.0% reported in the second quarter, whereas back in July it had actually predicted flat sequential growth. Nokia's chief financial officer, Rick Simonson, said that the drop would be "slightly lower." (Source: Forbes.com) Full Story
Bluetooth doesn’t mean just those odd-looking headsets cell phone users don when they’re walking around city streets. The technology is playing a greater role in automobiles, with more cars having factory-installed Bluetooth for hands-free calls, as well as a growing number of aftermarket devices that do the same thing and transmit digital music files to a car’s stereo system.The coming years may bring Bluetooth streaming of video to back-seat entertainment units, and perhaps Bluetooth sensors in vehicles that will let drivers know when their tire pressure is too low. (Source:MSNBC) Full Story
