Top 10 News Items 5/29-6/1: Stocks Crushed as Friday's Jobs Report Disappoints; Treasury Yields Mark New Record Lows; Euro Headline Risk Remains
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Below is a recap of the top news items from this week on Wall Street:
1. US stocks plunged on Friday, marking one of the sharpest down days (274 points on the Dow) in quite some time, following May payroll data which came in well below expectations. About 69,000 jobs were added in the non-farm sector, 82,000 were added in the private sector, and 12,000 were added in the manufacturing sector. Economists were expecting nonfarm additions of 150,000, private sector additions of 164,000 and manufacturing jobs to be up about 15,000 positions. Figures for the month of April were revised sharply lower: from 115,000 initially to just 77,000 in the nonfarm sector, from 130,000 to 87,000 in the private sector and from 16,000 to 9,000 in the manufacturing sector. The unemployment rate rose to 8.2%.
2. Yields in the bond market hit record lows this week as investors are fleeing equities in exchange for the safety of debt. The 30-year bond yield fell to a record low of 2.5089 percent, while the ten-year yield plunged below 1.5 percent for the first time ever to 1.437 percent.
3. Headlines coming out of the Euro area continued to weigh on US markets this week, however, America's emerging issues now seem to be having a go at stealing traders attention. The euro tumbled against the dollar, German bund yields nosedived (the two-year bund is now trading in negative territory) and continued turmoil in Greece created a situation where collapse of the nation's electrical and natural gas systems may soon be imminent. On Friday, data out of Spain's manufacturing sector dipped to a three-year low, and data out of neighbor France was only slightly better. The unemployment rate in the Eurozone hit a record high of 11 percent in April. Word of bank recapitalization earlier in the week gave investors some hope, however, that was quickly snuffed out.
4. Shares of Research In Motion (Nasdaq: RIMM) fell nearly 8 percent on Wednesday after the company was halted late Tuesday to announce an operating loss in Q1 and the hiring of bankers in order to review options for the company. RIM's CEO Thorsten Heins said, "The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this, and likely result in an operating loss for the quarter." The Street was looking for EPS of 43 cents at the time.
5. Facebook (Nasdaq: FB) shares fell 9.6 percent on Tuesday, another 2 percent on Wednesday, bounced 5 percent on Thursday, and sunk another 6-plus percent on Friday. Shares are now down more than 33 percent since the May 18th open around $42. Around the Street this week, analysts seemed to take a bullish stance amid the recent weakness.
6. Stocks fell in morning trade Thursday following a Chicago Purchasing Managers Index which came in well below the Street: at 52.7, vs. the consensus estimate of 56.8. The prior month reading was 56.2.
7. GM (NYSE: GM) shares jumped nearly 7 percent on Friday following mid-day news the company offered some 42,000 retirees and beneficiaries lump sum payments. While the plan would create a special $2.5-$3.5 billion charge, it would also reduce the automakers pension obligation by a whopping $26 billion. Click here to see the full details.
8. Auto sales for the month of May were reported this week, showing a very strong bounce as slowdowns related to last year's Japanese earthquake and tsunami have now passed through most of the system. GM reported an 11 percent rise in auto sales during the month, while Ford (NYSE: F) saw a 13 percent rise. Toyota (NYSE: TM) reported a jaw-dropping 87 percent surge.
9. On the M&A front: Talbots (NYSE: TLB) announced it will be taken private by Sycamore Partners for $2.75/share in cash. The stock jumped 90 percent on Thursday. Pep Boys (NYSE: PBY) announced its deal with The Gores Group will not go through. PBY shares tumbled about 20 percent on Wednesday.
10. The US's retailers issued same-store sales figures this week. Some highlights: Target (NYSE: TGT) comps up 4.4 percent, Gap (NYSE: GPS) comps up 2 percent, Saks (NYSE: SKS) comps up 4 percent, TJX (NYSE: TJX) comps up 8 percent, and Costco (Nasdaq: COST) reported a 4 percent rise.
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1. US stocks plunged on Friday, marking one of the sharpest down days (274 points on the Dow) in quite some time, following May payroll data which came in well below expectations. About 69,000 jobs were added in the non-farm sector, 82,000 were added in the private sector, and 12,000 were added in the manufacturing sector. Economists were expecting nonfarm additions of 150,000, private sector additions of 164,000 and manufacturing jobs to be up about 15,000 positions. Figures for the month of April were revised sharply lower: from 115,000 initially to just 77,000 in the nonfarm sector, from 130,000 to 87,000 in the private sector and from 16,000 to 9,000 in the manufacturing sector. The unemployment rate rose to 8.2%.
2. Yields in the bond market hit record lows this week as investors are fleeing equities in exchange for the safety of debt. The 30-year bond yield fell to a record low of 2.5089 percent, while the ten-year yield plunged below 1.5 percent for the first time ever to 1.437 percent.
3. Headlines coming out of the Euro area continued to weigh on US markets this week, however, America's emerging issues now seem to be having a go at stealing traders attention. The euro tumbled against the dollar, German bund yields nosedived (the two-year bund is now trading in negative territory) and continued turmoil in Greece created a situation where collapse of the nation's electrical and natural gas systems may soon be imminent. On Friday, data out of Spain's manufacturing sector dipped to a three-year low, and data out of neighbor France was only slightly better. The unemployment rate in the Eurozone hit a record high of 11 percent in April. Word of bank recapitalization earlier in the week gave investors some hope, however, that was quickly snuffed out.
4. Shares of Research In Motion (Nasdaq: RIMM) fell nearly 8 percent on Wednesday after the company was halted late Tuesday to announce an operating loss in Q1 and the hiring of bankers in order to review options for the company. RIM's CEO Thorsten Heins said, "The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this, and likely result in an operating loss for the quarter." The Street was looking for EPS of 43 cents at the time.
5. Facebook (Nasdaq: FB) shares fell 9.6 percent on Tuesday, another 2 percent on Wednesday, bounced 5 percent on Thursday, and sunk another 6-plus percent on Friday. Shares are now down more than 33 percent since the May 18th open around $42. Around the Street this week, analysts seemed to take a bullish stance amid the recent weakness.
6. Stocks fell in morning trade Thursday following a Chicago Purchasing Managers Index which came in well below the Street: at 52.7, vs. the consensus estimate of 56.8. The prior month reading was 56.2.
7. GM (NYSE: GM) shares jumped nearly 7 percent on Friday following mid-day news the company offered some 42,000 retirees and beneficiaries lump sum payments. While the plan would create a special $2.5-$3.5 billion charge, it would also reduce the automakers pension obligation by a whopping $26 billion. Click here to see the full details.
8. Auto sales for the month of May were reported this week, showing a very strong bounce as slowdowns related to last year's Japanese earthquake and tsunami have now passed through most of the system. GM reported an 11 percent rise in auto sales during the month, while Ford (NYSE: F) saw a 13 percent rise. Toyota (NYSE: TM) reported a jaw-dropping 87 percent surge.
9. On the M&A front: Talbots (NYSE: TLB) announced it will be taken private by Sycamore Partners for $2.75/share in cash. The stock jumped 90 percent on Thursday. Pep Boys (NYSE: PBY) announced its deal with The Gores Group will not go through. PBY shares tumbled about 20 percent on Wednesday.
10. The US's retailers issued same-store sales figures this week. Some highlights: Target (NYSE: TGT) comps up 4.4 percent, Gap (NYSE: GPS) comps up 2 percent, Saks (NYSE: SKS) comps up 4 percent, TJX (NYSE: TJX) comps up 8 percent, and Costco (Nasdaq: COST) reported a 4 percent rise.
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