U.S. MARKET AVERAGES
Warm economic news, and warmer stock market.
Market got a triple dose of good economic news on employment, productivity and service sector health. Third quarter labor productivity was reported at 4.1%, the biggest rise for the year so far followed by 2.1% gain in second quarter of this year. Unemployment claims for the last week fell to 323,000 of which 19,000 claims were related to Hurricane Katrina, lowest since the week ending August 27, two days before Hurricane Katrina. Institute for Supply Management’s service industry index rose to 60 in October from 53.3 in September, ahead by 3% than expected.
Market had to digest some weaker than expected economic reports. Commerce Department reported factory orders declined 1.7% in September after rising 2.9% in August. Economist had expected the decline to be less than 1%. Crude oil climbed 3.5% during the day.
Same-store retail sales from nation’s top 60 retailers were better than expected. Sales at Wal-Mart, J C Penney, Costco and Nordstorm were better than expected and at Limited and Gap trailed below the estimates.
Yield on ten-year bond climbed from 4.61% to 4.67%.
MOVERS AND SHAKERS
Retailer
Wal-Mart Stores Inc. (
WMT: chart) reported an increase of 4.3% in same-stores sales for October. The company expects same-store sales growth of 3%-5% for November. Wal-Mart''s stock gained 0.9%.
Cable giant
Comcast Corp. (
CMCS: chart) posted third-quarter net income that came slightly below analyst expectations. The company’s stock added 2.5% yesterday, but is expected to be under pressure today.
ECONOMIC NEWS
Thursday morning, the Department of Labor released its report on
initial jobless claims in the week ended October 29, showing a decrease compared to the previous week.
The report showed that jobless claims fell to 323,000 from the previous week''s revised figure of 331,000. Economists had expected 330,000 jobless claims compared to the 328,000 originally reported in the previous week.
The Labor Dept. said that 18,000 of the new jobless claims were related to Hurricanes Katrina and Rita while an additional 1,400 were tied to Hurricane Wilma. With the increase, the hurricanes have now led to a total of 521,400 layoffs.
The data sheds some light on the October employment report that is due to be released on Friday. Economists expect the report to show that the U.S. economy added 110,000 jobs in October, while the unemployment rate is expected to remain at 5.1 percent.
The Federal Reserve is likely to be pleased with the Department of Labor''s
preliminary report on third quarter productivity, as it showed much better than expected productivity growth as well as an unexpected decline in unit labor costs.
The report showed that productivity in the non-farm business sector rose by 4.1 percent in the third quarter compared to the upwardly revised 2.1 percent growth seen in the second quarter. Economists had expected much more modest growth of 2.7 percent.
The Labor Dept. said that the third quarter productivity growth came as output rose by 4.2 percent while hours edged up only 0.1 percent. In the second quarter, output increased by 4.4 percent while hours rose by 2.2 percent.
The report also showed that third quarter unit labor costs unexpectedly fell 0.5 percent following downwardly revised growth of 1.8 percent in the second quarter. The decrease surprised economists, who had expected labor costs to increase by 1.6 percent.
The drop in unit labor costs came on the heels of increases in each of the previous four quarters and reflected a drop in labor costs in the durable goods sector. The decrease may help to offset some recent inflation concerns.
Hourly compensation rose at an annual rate of 3.6 percent in the third quarter compared to the 4 percent growth seen in the second quarter. Adjusted for inflation, hourly compensation fell 1.4 percent.
