US Shares and Dow Jones Index Financial Spread Betting News

Posted on | November 12, 2009 |

The trading floor was buzzing with activity this afternoon, as Wall Street managed to defy a negative start and rise on the back of better-than-expected jobless claims figures and a rally across technology shares.

The US session kicked off with a government report showing fewer Americans signing on for jobless benefits last week. This is an encouraging sign because it suggests that the US labour market may finally be at the threshold of a recovery.

The number of Americans filing for unemployment benefits for the first time (initial jobless claims) fell by 12,000 to 502,000 in the week ended November 7, the lowest since January and substantially better than Bloomberg’s median estimates for a drop to 510,000. The four-week moving average for initial jobless claims, a less volatile gauge, decreased 4,500 to 519,750.

Meanwhile, those continuing to claim jobless benefits for more than a week (continuing jobless claims) dropped by 139,000 to 5.63 million in the week ended October 31.

It is also interesting to know that President Barack Obama last week signed into law a plan to extend jobless benefits, provide tax credits to first-time homebuyers and tax refunds to money-losing companies.

Technology shares also contributed to upbeat sentiment today, with chip maker Advanced Micro Devices rallying 23% to $6.55 after rival Intel agreed to pay the company $1.25 billion as part of a legal settlement to end an ongoing dispute.

The settlement includes all antitrust litigation and patent cross-licence disputes. The companies also agreed to a new 5-year cross-license pact and will give up any claims of a breach from the previous agreement.

3Com Corp, a global enterprise networking solutions provider, soared nearly 32% to $7.50 after pc maker Hewlett Packard (HP) agreed to acquire the company for $2.7 billion, valuing 3Com at $7.9 a share. The move is certainly a strategic one for HP, as 3Com has many complimentary products, which will help HP expand its product base and literally become a one-stop shop for IT services.

In addition to this development, HP announced a profit, excluding one-off items, of $1.14 a share in the fiscal fourth quarter, topping Bloomberg’s average estimate of $1.11. Sales fell less than expected, down 8% to $30.8 billion over the same period.

HP also said it expects first quarter revenue to come in between $29.6 billion and $29.9 billion, and earnings per share to be between $1.03 and $1.05. Sales were ahead of Bloomberg’s median forecast of $29.2 billion while earnings were in line with expectations. HP’s share price edged 0.2% lower at $49.9.

Retail companies Wal-Mart and Kohl’s Corp were in the spotlight as well after unveiling stronger than expected quarterly results.

Wal-Mart gained 1.2% to $53.62 after reporting that third-quarter profits rose 3.2% as a result of heavy inventory rundowns. Net income came in at $3.24 billion, equivalent to 84 cents a share, beating Bloomberg’s average estimate of 81 cents a share. Revenue over the period advanced 1.1% to $99.4 billion.

Kohl Corp, meanwhile, reported third-quarter earnings that were also ahead of expectations and raised its full-year earnings guidance, saying it expects to earn between $2.98 and $3.08 a share.

All of the developments helped Wall Street move out of the red this afternoon. By 3:50pm (London time) the Dow Jones Industrial Average was 9.59 points (+0.09%) higher at 10300.85 while the broader S&P 500 was 1.53 points (+0.14%) in the black at 1100.04. The Nasdaq fared relatively better, however, up 6.55 points (+0.37%) to 1789.50.

Weighing on Wall Street today were the comments of China’s Premier Wen Jiabao, who spurred concern over the sustainability of the global economic recovery by saying that ‘a total recovery will be slow and bumpy process.’

To be quite frank, this is not really news and I would personally take advantage of any stock market weakness in the short term.

By Anthony Grech, Research Analyst, IG Index.

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