Top 10 News Items 5/31-6/3: Friday's Jobs Reports Disappoints Already Reduced Expectations; Groupon Files IPO; Moody's Warns of Potential US Govt Downgrade
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Here is a recap of the top news items from this week on Wall Street:
1. The Friday jobs report came in much worse-than-expected Friday, sending stocks on a course toward yet another declining week. The U.S. economy added 54,000 nonfarm jobs during the month of May, down from a revised reading of 232,000 jobs gained during April and sharply below the 165,000 gain economists had been expecting. Private sector jobs rose 83,000 and manufacturing jobs fell 5,000. The unemployment rate edged higher from 9.0 percent to 9.1 percent, 20 basis points above the economist estimate of 8.9 percent.
2. Groupon filed its much-anticipated IPO Thursday afternoon with the SEC and is seeking to raise up to $750 million. The daily deal website plans to list its shares under the ticker symbol "GRPN," although they didn't disclose which exchange they plan to list on. Morgan Stanley, Goldman Sachs and Credit Suisse were tapped to lead the hot deal.
3. Moody's said Thursday the ratings agency could cut the US government's ratings unless further progress on the debt limit is seen. From the Moody's report: "Moody's had previously indicated that its stable outlook on the Aaa rating was based on the assumption that meaningful progress would be made within the next eighteen months in adopting measures to reverse the country's upward debt trajectory. The debt limit negotiations represent a real near-term opportunity for agreement on a plan for fiscal consolidation. If this current opportunity passes, Moody's believes that the likelihood of anything significant being accomplished before the next presidential election is reduced, in part because the two parties each hopes to capture both a congressional majority and the presidency in the 2012 election, after which the winning party could achieve its own agenda."
4. Shares of Nokia (NYSE: NOK) plunged 20 percent this week (with 14 percent of the move coming on Tuesday) as the company reduced its second quarter Devices & Services outlook to "substantially" below its previous outlook range of €6.1-€6.6 billion. The company cited lower than expected average selling prices and mobile device volumes.
5. Goldman Sachs (NYSE: GS) shares were under pressure this week as Manhattan's District Attorney Cyrus Vance subpoenaed the bank over its activities heading into the credit crunch. The subpoena is in regards to a recent report from the Senate's Permanent Subcommittee on Investigations (often referred to as the "Levin report") which alleges Goldman Sachs mislead purchasers of mortgage-related securities.
6. For-Profit education stocks rallied sharply this week following an update on gainful employment rules which turned out to be "much less onerous" than expected.
7. Shares of Sino-Forest (OTC: SNOFF) absolutely crumbled this week following a negative report from Muddy Waters. While the stock was halted for more than a session on the Toronto Exchange, OTC shares traded lower in the US. The stock closed 83 percent lower. John Paulson's Paulson & Co. is the largest owner of the company, holding nearly 35 million shares, or about 14%.
8. Data on housing confirmed the US market is now double dipping. The S&P/Case-Shiller index of home prices fell 0.23 percent from February and 3.61 percent from March of last year to 138.16. The declines were slightly more than expected: economists had been looking for a month-over-month decline of 0.2 percent and an annual decline of 3.4 percent.
9. The latest data from the Conference Board showed US consumers are losing confidence in the economic recovery. The Board's Consumer Confidence Index fell to 60.8 in May, down from 66.0 from April. The reading was also worse than the 66.6 economists had expected.
10. US retailers posted monthly same-store sales figures on Thursday of this week. Some highlights include: Macy's (NYSE: M), Costco (Nasdaq: COST), Pier 1 (NYSE: PIR), Limited (NYSE: LTD), BJ's (NYSE: BJ), Gap (NYSE: GPS), Nordstrom (NYSE: JWN), JCPenney (NYSE: JCP), Saks (NYSE: SKS), Target (NYSE: TGT).
1. The Friday jobs report came in much worse-than-expected Friday, sending stocks on a course toward yet another declining week. The U.S. economy added 54,000 nonfarm jobs during the month of May, down from a revised reading of 232,000 jobs gained during April and sharply below the 165,000 gain economists had been expecting. Private sector jobs rose 83,000 and manufacturing jobs fell 5,000. The unemployment rate edged higher from 9.0 percent to 9.1 percent, 20 basis points above the economist estimate of 8.9 percent.
2. Groupon filed its much-anticipated IPO Thursday afternoon with the SEC and is seeking to raise up to $750 million. The daily deal website plans to list its shares under the ticker symbol "GRPN," although they didn't disclose which exchange they plan to list on. Morgan Stanley, Goldman Sachs and Credit Suisse were tapped to lead the hot deal.
3. Moody's said Thursday the ratings agency could cut the US government's ratings unless further progress on the debt limit is seen. From the Moody's report: "Moody's had previously indicated that its stable outlook on the Aaa rating was based on the assumption that meaningful progress would be made within the next eighteen months in adopting measures to reverse the country's upward debt trajectory. The debt limit negotiations represent a real near-term opportunity for agreement on a plan for fiscal consolidation. If this current opportunity passes, Moody's believes that the likelihood of anything significant being accomplished before the next presidential election is reduced, in part because the two parties each hopes to capture both a congressional majority and the presidency in the 2012 election, after which the winning party could achieve its own agenda."
4. Shares of Nokia (NYSE: NOK) plunged 20 percent this week (with 14 percent of the move coming on Tuesday) as the company reduced its second quarter Devices & Services outlook to "substantially" below its previous outlook range of €6.1-€6.6 billion. The company cited lower than expected average selling prices and mobile device volumes.
5. Goldman Sachs (NYSE: GS) shares were under pressure this week as Manhattan's District Attorney Cyrus Vance subpoenaed the bank over its activities heading into the credit crunch. The subpoena is in regards to a recent report from the Senate's Permanent Subcommittee on Investigations (often referred to as the "Levin report") which alleges Goldman Sachs mislead purchasers of mortgage-related securities.
6. For-Profit education stocks rallied sharply this week following an update on gainful employment rules which turned out to be "much less onerous" than expected.
7. Shares of Sino-Forest (OTC: SNOFF) absolutely crumbled this week following a negative report from Muddy Waters. While the stock was halted for more than a session on the Toronto Exchange, OTC shares traded lower in the US. The stock closed 83 percent lower. John Paulson's Paulson & Co. is the largest owner of the company, holding nearly 35 million shares, or about 14%.
8. Data on housing confirmed the US market is now double dipping. The S&P/Case-Shiller index of home prices fell 0.23 percent from February and 3.61 percent from March of last year to 138.16. The declines were slightly more than expected: economists had been looking for a month-over-month decline of 0.2 percent and an annual decline of 3.4 percent.
9. The latest data from the Conference Board showed US consumers are losing confidence in the economic recovery. The Board's Consumer Confidence Index fell to 60.8 in May, down from 66.0 from April. The reading was also worse than the 66.6 economists had expected.
10. US retailers posted monthly same-store sales figures on Thursday of this week. Some highlights include: Macy's (NYSE: M), Costco (Nasdaq: COST), Pier 1 (NYSE: PIR), Limited (NYSE: LTD), BJ's (NYSE: BJ), Gap (NYSE: GPS), Nordstrom (NYSE: JWN), JCPenney (NYSE: JCP), Saks (NYSE: SKS), Target (NYSE: TGT).
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