With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Jobless Claims Surprise; GDP Revised Up; AIG Makes Plans to Pay Back Feds; Palm Losses Mount, But Revenue Beats Street; Micron Loss Not As Much As Expected; Senator: Health Care Bill Could Cost $1 Trillion; GM Keeps 1,200 Jobs in Michigan
- Unemployment claims unexpectedly rose yesterday (Thursday), as the number of U.S. workers filing new claims jumped by 15,000 in the week ended June 20 to a seasonally adjusted 627,000, the Labor Department reported. The four-week moving average of initial claims, a less volatile measure, rose to 617,250 from 616,750, signaling the U.S. job market is stagnant.
- U.S. gross domestic product (GDP) contracted at a 5.5% annual rate in the first quarter after plunging at a 6.3% pace in the fourth quarter of 2008, the Commerce Department said yesterday (Thursday). That means the U.S. economy just went through its worst eight-month period in more than 60 years, according to MarketWatch. The government last month estimated GDP fell at a 5.7% pace in the quarter ended March 31.
- American International Group Inc. (NYSE: AIG) will repay part of its $40 billion debt to the U.S. government with $25 billion of preferred stock in two businesses Reuters reported. The two businesses – American International Assurance Co Ltd (AIA) and American Life Insurance Co (Alico) – will also be positioned for initial public offerings, should market conditions permit. AIG lost more than $99 billion in 2008 and U.S. taxpayers have committed up to about $180 billion to its rescue.
- Palm Inc.’s (Nasdaq: PALM) losses grew but it beat Wall Street’s revenue estimates for its quarter ended May 31. The company reported a net loss of $91.5 million, or 78 cents per share on revenues of $86.7 million. That compares to a net loss of $41 million, or 40 cents per share on revenue of $296.1 million for the same quarter last year. Analysts were expecting a loss of 62 cents per share on revenues of $80.6 million.
- Memory chipmaker Micron Technology (NYSE: MU) suffered a wider loss but beat analyst estimates for its quarter ended June 4. The company posted a net loss of $290 million, or 36 cents per share on revenues of $1.1 billion. That compares to a net loss of $236 million, or 30 cents per share on revenues of $1.4 billion in the same period the year before. Consensus estimates placed the loss at 43 cents per share on revenues of $1.1 billion.
- A key senator said the health care proposal submitted to Congress by the Obama administration could cost as much as $1 trillion, but Republicans added there was no agreement on even the outlines of a bill, The Associated Press reported. “We have options that would enable us to write a $1 trillion bill, fully paid for," Sen. Max Baucus, chairman of the Senate Finance Committee, told reporters. Baucus’ comments came one week after analysts estimated earlier proposals would cost $1.6 trillion over 10 years. While Baucus gave no details, others told The AP changes made in the proposal would lower the cost of government subsidies for those who cannot afford insurance, as well as scale back a planned 10-year series of rate increases for doctors serving Medicare patients. Almost 50 million Americans are without health coverage.
- Michigan has won a competition with two other states to build General Motors Corp.’s (OTC: GMGMQ) next subcompact car, based on the Chevrolet Spark, The Associated Press reported. The win will save about 1,200 jobs at the factory in Orion Township, which was due to close this year. All 17 members of Michigan's congressional delegation sent a letter to GM last week saying that the state's economic woes — including an unemployment rate that hit 14.1% in May — made the project important for Michigan.