New Home Sales Plummet; Mexico Staves off U.S. Slowdown; Monsanto Reaps Big Rewards; MasterCard Pays AmEx $1.8 Billion; Buffett Concerned About Stagflation; Reduced Damages for Exxon; Nike Strong in Asia; More Cuts for Penney's
As the Federal Reserve pondered interest rates yesterday, the Commerce Department released data showing that sales of new single-family homes fell 2.5% in May from April, and more than 40% year-over-year. In a separate report, new orders for long-lasting U.S. manufactured goods were unchanged in May after two months of decline, Reuters reported.
Unlike our northern neighbor, Mexico has been fairly able to stave off the effects of the U.S. slowdown. Agustin Carstens, Mexico's finance minister, said that the Mexican economy grew more than 3% in the first half, Bloomberg reported. For the medium to long term, the government may reevaluate its gasoline subsidy, he said.
Monsanto Co. (MON) reported higher-than-expected quarterly profit and raised its full-year forecast yesterday (Wednesday). The company said revenue jumped 26% to a record $3.6 billion in the quarter ended May 31, and net income climbed 42% to $811 million. Monsanto also expects full-year net earnings of about $3.63 a share, up from the $3.15-$3.25 a share previously forecast.
MasterCardInc. (MA) will pay out $1.8 billion to American ExpressCo. (AXP) to settle an antitrust lawsuit. American Express had accused the credit and debit card processor of conspiring to keep some banks from issuing its credit cards. Last year, the company reached a $2.7 billion settlement with Visa Inc. in a similar suit, the Associated Press reported.
Billionaire investor Warren Buffett said yesterday (Wednesday) that he's concerned about "stagflation," or flat growth in the U.S. economy while inflation accelerates. "We're right in the middle of it right now," Buffett said in an interview on Bloomberg Television. "I think the 'flation' part will heat up and I think the 'stag' part will get worse."
With a 5-3 vote, the U.S. Supreme court reduced the punitive damages against Exxon Mobil Corp. (XOM) for the Valdez disaster that spilled 11 million gallons of oil off the Alaska coast in 1989. Stating the spill was due to recklessness and not intentional, the court cut the award to $507.5 million from $2.5 billion, Bloomberg News reported.
Nike Inc. (NKE) announced yesterday (Wednesday) that net profits rose on the strength of overseas sales, particularly in Asia, Reuters reported. Net income for the sports apparel manufacturer increased to $490.5 million, or 98 cents per share, in its fiscal fourth quarter, from $437.9 million, or 86 cents per share, for the same period the year prior. Revenue grew 16% for the quarter to $5.1 billion.
J.C. Penney Company Inc. (JCP) announced further cutbacks in new store openings in the face of a tough U.S. retail environment, the Triangle Business Journal reported. The struggling retailer said it would open just 20 new stores in 2009, down from the 36 planned for 2008, and reduce capital expenditures from $1 billion this year to just $650 million next year.