Top 10 News Items 2/1-2/5: 9.7% Unemployment Rate Surprises the Market, Dow Breaks 10,000, But Recovers, Troubles at Toyota Continue
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Here is a recap of the top news items from this week on Wall Street:
1. The always-anticipated jobs Friday didn't disappoint this month, showing a surprise improvement in the unemployment rate. The heavily-tracked macro indicator fell to 9.7% in January, better than the 10% economists had been expecting. U.S. companies cut 20,000 nonfarm payroll jobs last month, while more workers were given overtime hours instead of new hires being added to the workforce. The drop in employment was due in large part to the decline in construction jobs and government positions.
2. After rising to as high as 10,729 less than a month ago, the Dow Jones average tumbled below the 10,000 level this week as concerns related to US and European debt weighed on stocks. Strong downside on Thursday pushed the index below this psychological level just minutes before the closing bell, and, after a volatile session on Friday, the average actually retook the 10,000 level late on Friday.
3. Troubles at Toyota (NYSE: TM) continued this week as the company announced (following a production halt of the automakers 8 top models last week) that it will recall the Prius in Japan and the US due to brake issues. The company's President Akio Toyoda offered a "heartfelt" apology to anyone who drives a Toyota. Also affecting shares of Toyota this week, the US Transportation Secretary, Ray LaHood, in a press meeting, told consumers to "stop driving" their Toyota's if they are having concerns. LaHood later corrected himself, saying that he meant to recommend taking the car into a dealer.
4. President Barack Obama proposed a budget Monday of $3.8 trillion, including $100 billion in additional stimulus spending to help maintain the momentum of the fragile economic recovery. The proposal forecasts that the deficit this year will reach a record level of $1.6 trillion and represents 10.6 percent of the U.S. gross domestic product. The plan will impose more than $800 billion in higher taxes against those earning $250,000 annually to help reduce the shortfall. Taxes will also be raised for banks that were bailed out by the government, as well as oil, gas and coal industries.
5. Moody's sent another shot across the bow today on the United States' Aaa rating, saying unless major efforts are taken the rating could at some point be cut. The comments are in response to the $3.8 trillion budget presented by President Obama on Monday. Moody's said that over the next decade the country needs to take further measures to reduce the budget deficit, or the economy needs to rebounds more vigorously, or it will "put pressure on the Aaa government bond rating."
6. The Q4 earnings season seems to be trickling to a close this week. Some highlights were: ExxonMobil (NYSE: XOM), Dow Chemical, (NYSE: DOW), UPS (NYSE: UPS), Pfizer (NYSE: PFE), Comcast (Nasdaq: CMCSA), Cisco (Nasdaq: CSCO), MasterCard (NYSE: MA) and Visa (NYSE: V).
7. Retail sales for the month of January came in this week. Some highlights were: a slight miss at Target (NYSE: TGT), a beat and raised guidance at Macy's (NYSE: M), and solid results all around at Children's Place (Nasdaq: PLCE).
8. Auto sales were also issued this week. Ford (NYSE: F) reported a 25% rise in sales during January, GM saw a 14% jump and Toyota reported a 19% decline.
9. Two nearly-forgotten retailers, Barnes & Noble (NYSE: BKS) and Borders (NYSE: BGP), saw heavy interest this week. First, Ron Burkle's Yucaipa disclosed that it is looking to raise its stake in the book retailer to up to 37%. Then, commenting on Burkle's move, famed hedge fund manager Bill Ackman admitted that he likes Borders more and the stock rallied nearly 40%.
10. On the M&A front, Monster Worldwide (NASDAQ: MWW) reached an agreement with Yahoo! Inc. (NASDAQ: YHOO) to buy the jobs-wanted site HotJobs for $225 million. Although traders did not respond well to the news, the deal is looking good for Monster. Among other advantages, the purchase will give Yahoo! users content from Monster under the terms of a three-year commercial traffic agreement. The deal will have Monster making performance-based annual payments to Yahoo! based on the interest and number of clicks by Yahoo! users.
1. The always-anticipated jobs Friday didn't disappoint this month, showing a surprise improvement in the unemployment rate. The heavily-tracked macro indicator fell to 9.7% in January, better than the 10% economists had been expecting. U.S. companies cut 20,000 nonfarm payroll jobs last month, while more workers were given overtime hours instead of new hires being added to the workforce. The drop in employment was due in large part to the decline in construction jobs and government positions.
2. After rising to as high as 10,729 less than a month ago, the Dow Jones average tumbled below the 10,000 level this week as concerns related to US and European debt weighed on stocks. Strong downside on Thursday pushed the index below this psychological level just minutes before the closing bell, and, after a volatile session on Friday, the average actually retook the 10,000 level late on Friday.
3. Troubles at Toyota (NYSE: TM) continued this week as the company announced (following a production halt of the automakers 8 top models last week) that it will recall the Prius in Japan and the US due to brake issues. The company's President Akio Toyoda offered a "heartfelt" apology to anyone who drives a Toyota. Also affecting shares of Toyota this week, the US Transportation Secretary, Ray LaHood, in a press meeting, told consumers to "stop driving" their Toyota's if they are having concerns. LaHood later corrected himself, saying that he meant to recommend taking the car into a dealer.
4. President Barack Obama proposed a budget Monday of $3.8 trillion, including $100 billion in additional stimulus spending to help maintain the momentum of the fragile economic recovery. The proposal forecasts that the deficit this year will reach a record level of $1.6 trillion and represents 10.6 percent of the U.S. gross domestic product. The plan will impose more than $800 billion in higher taxes against those earning $250,000 annually to help reduce the shortfall. Taxes will also be raised for banks that were bailed out by the government, as well as oil, gas and coal industries.
5. Moody's sent another shot across the bow today on the United States' Aaa rating, saying unless major efforts are taken the rating could at some point be cut. The comments are in response to the $3.8 trillion budget presented by President Obama on Monday. Moody's said that over the next decade the country needs to take further measures to reduce the budget deficit, or the economy needs to rebounds more vigorously, or it will "put pressure on the Aaa government bond rating."
6. The Q4 earnings season seems to be trickling to a close this week. Some highlights were: ExxonMobil (NYSE: XOM), Dow Chemical, (NYSE: DOW), UPS (NYSE: UPS), Pfizer (NYSE: PFE), Comcast (Nasdaq: CMCSA), Cisco (Nasdaq: CSCO), MasterCard (NYSE: MA) and Visa (NYSE: V).
7. Retail sales for the month of January came in this week. Some highlights were: a slight miss at Target (NYSE: TGT), a beat and raised guidance at Macy's (NYSE: M), and solid results all around at Children's Place (Nasdaq: PLCE).
8. Auto sales were also issued this week. Ford (NYSE: F) reported a 25% rise in sales during January, GM saw a 14% jump and Toyota reported a 19% decline.
9. Two nearly-forgotten retailers, Barnes & Noble (NYSE: BKS) and Borders (NYSE: BGP), saw heavy interest this week. First, Ron Burkle's Yucaipa disclosed that it is looking to raise its stake in the book retailer to up to 37%. Then, commenting on Burkle's move, famed hedge fund manager Bill Ackman admitted that he likes Borders more and the stock rallied nearly 40%.
10. On the M&A front, Monster Worldwide (NASDAQ: MWW) reached an agreement with Yahoo! Inc. (NASDAQ: YHOO) to buy the jobs-wanted site HotJobs for $225 million. Although traders did not respond well to the news, the deal is looking good for Monster. Among other advantages, the purchase will give Yahoo! users content from Monster under the terms of a three-year commercial traffic agreement. The deal will have Monster making performance-based annual payments to Yahoo! based on the interest and number of clicks by Yahoo! users.
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