US FINANCIAL MARKET
- A 7.3% plunge in the Japanese stock market Thursday spilled into the rest of the world, overshadowing moderately better economic data in Europe and a slight decline in jobless claims in the U.S. Bourses in Frankfurt, London, Paris and Milan slumped more than 2%.
- Cash piles up as U.S. CEOs play safe with slow-growth economy. The buildup of cash and marketable securities accelerated in the first quarter to a record $1.73 trillion.
- Johnson & Johnson says it plans to submit more than 10 new treatments to regulators for approval and 25 applications for additional uses of approved drugs by 2017. It says its pharmaceuticals segment has launched 11 new products since 2009. They made up 17% of total pharmaceutical sales last year, which is up from 9% in 2011.
- Hewlett-Packard raised its 2013 earnings outlook after quarterly results beat low expectations. HP earned $1.1 billion, down 32% from $1.6 billion last year. HP’s revenue totaled $27.6 billion, down 10% from $30.7 billion last year.
- Lenovo, the world’s second-biggest maker of personal computers, reported a 90% gain in fourth-quarter profit after increasing its market share and boosting smartphone sales. Lenovo is developing mobile devices such as smartphones and tablets as it seeks to lure customers from Apple and Samsung and weather a global slump in demand for PCs.
- Ford will close its two Australian auto plants, ending production in the country in 2016. Ford began making cars in Australia in 1925 and is the third largest auto manufacturer in the country.
- PepsiCo said it is tweaking its drink-pricing strategy in some parts of the United States, as it aims to wean consumers off the habit of buying soda only when it is on sale.
- Ralph Lauren reported a 35% increase in fourth-quarter profit as the luxury retailer benefited from lower cotton prices. Revenue rose a slim 1.2% to $1.64 billion. The company expects sales to improve for the full year.
- L Brands, which owns stores including Victoria’s Secret and Bath and Body Works, reported that its fiscal first-quarter net income increased 14% and nudged up its outlook for the year.
- Perry Ellis’ fiscal first-quarter net income climbed 17% thanks in part to the sale of some assets.
- Tesla paid off its U.S. Department of Energy loan nine years earlier than required, using money raised last week in a stock and debt offering. The automaker said on Wednesday that it wired $451.8 million to repay the full loan with interest.
- China’s civil aviation regulator formally approved Boeing’s Dreamliner for use in the country.
US ECONOMY & POLITICS
- The average 401(k) retirement balance for U.S. workers hit a record high of $80,900 in the first quarter, a growth spurt of 75% since the stock market’s nadir in March 2009, Fidelity Investments said. Most of the recovery is linked to a stock market rally that has lifted the broad S&P 500 Index 145% since the close of trading on March 9, 2009.
- The Federal Reserve’s monetary stimulus is helping the economy recover but the central bank needs to see further signs of traction before taking its foot off the gas pedal, Fed Chairman Ben Bernanke told Congress. But minutes from the Fed’s most recent meeting released on Wednesday showed the bar was still relatively high.
- The central bank is currently buying $45 billion in Treasury bonds and $40 billion in mortgage-backed debt each month to keep borrowing costs low and encourage investment, hiring and economic growth.
- The number of Americans applying for unemployment benefits fell 23,000 last week to 340,000, a level consistent with solid job growth. The four-week average ticked down just 500 to 339,500. More than 4.7 million Americans were receiving unemployment benefits the week that ended May 4, down 23% from nearly 6.2 million a year earlier. The United States still has 2.6 million fewer jobs than it did when the recession began in December 2007.
- Sales of new U.S. homes rose 2.3% in April to an annualized pace of 454,000 homes from 444,000 in March. Sales in April were 29% higher than a year ago. Home prices climbed to record high levels. The median sales price for a new home was $271,600, up 14.9% from a year ago. In April, the inventory of new homes on the market rose 3.3% to 156,000 units, the highest since October 2011.
- Overdue student loans reached an all-time high as students struggle to find work after college. There are $1 trillion in outstanding student loans, the largest category of consumer debt besides mortgages.
- The weekly Bloomberg Consumer Comfort Index advanced last week.
EUROPE & WORLD
- Asia shares slide, Nikkei down 7.3%, as Japan bond yields rise, China factories weaken.
- Yields on 10-year Japanese government bonds briefly topped 1% for the first time in a year on Thursday.
- Chinese factory activity shrank in May for the first time in seven months. China’s flash HSBC Purchasing Managers’ Index (PMI) entrenched fears recovery. It fell to 49.6 from 50.4 in April, slipping under the 50-point level demarcating expansion from contraction for the first since October.
- The euro zone PMI suggested the bloc’s economy is likely to contract again in the second quarter. Markit’s flash Eurozone Services PMI rose in May to 47.5, a three-month high, from 47.0 in April. The PMI has now spent 16 straight months below the 50 mark that divides growth and contraction.
- Britain’s economy resumed growth in the first quarter. GDP rose 0.3% in the period.
- Germany survey shows export risks are companies’ biggest concern.
TODAY in HISTORY
- South Carolina became the 8th state in United States (1788)
- The first nursery school in the United States was established in New York City (1827)
- The Baltimore and Ohio Railroad began the first passenger service in the United States (1830)
- Iowa State College, located in Ames, IA, established the first veterinary school in the U.S. (1879)
- The New York Public Library, at the time the largest marble structure ever built in the United States, was dedicated by President Taft in New York City after 16 years of construction (1911)
Sources: Reuters, Yahoo Finance, Google Finance, Bloomberg, CNN Money.
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly.