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China Quake Death Toll Could Hit 50,000; Initial Jobless Claims Edge Higher; CBS to Acquire CNet; GM Strikes Deal with Union; Fed Chair Urges Banks to Raise Capital; Industrial Output Sinks Led by Auto Industry; Profit Falls, Stocks Rise for Penney's; Multi-Billion Housing Rescue Package Close to Resolution
- China's central government said yesterday (Thursday) that this week's earthquake in Sichuan ultimately could result in 50,000 deaths, and catastrophe-modeling firms are estimating the disaster will trigger losses of up to $20 billion, MarketWatch.com reported. Monday's quake – which measured 7.9 in magnitude – is throwing a "harsh spotlight" on the widening gap between the rich and poor in China, particularly since the losses incurred by the country's lower-wage classes were mostly not covered by insurance, The Wall Street Journal reported.
- The number of U.S. workers filing for initial jobless benefits increased slightly more than expected in the week ended May 10, the Department of Labor said yesterday (Thursday). First-time jobless claims rose to 371,000, up from 365,000 for the week prior. Economists surveyed by Reuters had forecast the number of new claims at 370,000. The four-week moving average of new claims, considered by economists a more reliable gauge of labor trends, fell to 365,750 in the week ended May 10.
- CBS Corp. (CBS) announced yesterday (Thursday) that it would pay $1.8 billion to acquire CNet Networks Inc. (CNET) in a move expected to help CBS establish a foothold in new advertising markets while also helping with its effort to gain a higher profile on the Internet. CBS will pay $11.50 a share for the online provider of technology news and product reviews, a 45% premium to the price CNet traded at prior to the deal's announcement, MarketWatch reported.
- General Motors Corp. (GM) yesterday (Thursday) reached a tentative deal with striking workers at a plant in Delta Township, Mich., in what might be the first step towards ending a month-long walkout. However, , Dow Jones Newswire reported.
- At a conference on bank structure and competition in Chicago, U.S. Federal Reserve Chairman Ben S. Bernanke told banks to hold "generous" capital cushions and actively raise money. "I strongly urge financial institutions to remain proactive in their capital-raising efforts," Bernanke said. The Fed chair added that he has been encouraged by the success of many banks in raising new capital and he praised foreign-owned sovereign wealth funds for the positive role they were playing as suppliers of badly needed capital.
- U.S. industrial output fell by 0.7% in April from the month before, when output was up 0.2%, the Federal Reserve said. The latest drop was twice that forecast by analysts. The automotive sector saw its biggest drop in nearly a decade as consumer demand for new cars slowed, and a strike at General Motors cut output.
- First-quarter profit for J.C. Penney Co., Inc. (JCP) dropped 50% from last year, but beat Wall Street expectations, causing the department store operator's shares to rise more than 4% yesterday (Thursday). "I think it's good news in the sense that things have stabilized. It doesn't appear to be getting worse," Wayne Hood, a retail analyst with BMO Capital Markets, told Reuters.
- A multibillion-dollar housing rescue package is close to being resolved, two members of the U.S. Senate Banking Committee said yesterday (Thursday). "We're very, very close," Panel chairman Sen. Chris Dodd (D-Conn.) told CNBC. "There's really maybe one or two issues – maybe only one that's outstanding here that we need to resolve."