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The major headlines in the stock market today include: Stocks try to hold on to a third straight week of gains, manufacturing slumps to three-year lows, jobless claims remain depressing, and these two stocks deserve a closer look.
- Stocks try to rally- It has been over a week since QE3 was announced and the markets recently have been sluggish. After a strong rally leading up to the announcement of QE3, stocks cooled off this week amid the continuing global uncertainty. Today's trading session opened with all three major indexes rising higher as they try to start September with three straight weeks of gains. If the markets hold on to their early gains it will be a solid start to the month. The bullish trend is threatened though as anxieties increase over the looming fiscal cliff and the ongoing trend of lousy economic data.
- Jobless claims troubling again- The labor market and unemployment are the main reasons the U.S. Federal Reserve cited in their decision to implement QE3. Yesterday's (Thursday) initial jobless claims back up that move but economists will want to see improved numbers in the near future if QE3 is ever going to be considered successful for the economy. Last week's jobless claims fell to 382,000 from the previous week's 385,000 but still missed economists' projections for initial claims around 375,000. Another troubling sign is that the four-week average which is considered a less volatile figure rose by 2,000 to 377,750, the highest level since June. "Businesses clearly remain reluctant to aggressively boost their workforces amid the current risks associated with the soft economy and significant uncertainty surrounding fiscal policy next year," Jim Baird, chief investment strategist at Plante Moran Financial Advisors told MarketWatch.
- Markit shows manufacturing weakest in 3 years - Manufacturing measured by the Markit Purchasing Managers Index remained at 51.5 in September. That was also the average for the third quarter and well below the 54.2 measure for last quarter. A reading above 50 indicates expansion but this number was not encouraging as it was the lowest quarterly average since the third quarter of 2009. "I don't think the economy is going anywhere fast. The jobs market is still very difficult and manufacturing, which was a key pillar of the recovery is beginning to crack," Ryan Sweet, a senior economist at Moody's Analytics in West Chester Pennsylvania told Reuters.
In the stock market, these two companies have started the day off strong:
- Darden Restaurants Inc. (NYSE: DRI) profit rises as same-store sales struggle- Darden, whose stores include Olive Garden and Red Lobster reported its fiscal first-quarter earnings on Friday. The company reported net income rose 4% to $110.8 million, or 85 cents per share, from $106.6 million, or 78 cents per share last year. Analysts had expected earnings of 83 cents per share. Overall revenue was up 5% to $2.03 billion from $1.94 billion a year ago, but Darden saw same-store sales fall at Red Lobster and Olive Garden. The rise in revenue was led by openings of new restaurants. DRI stock is up more than 4% and reached a new 52-week high today of $57.93.
- Oracle Corp. (Nasdaq: ORCL) income rises but misses sales estimates- Oracle, the world's third largest software maker, reported fiscal first-quarter earnings of $2.03 billion, or 41 cents a share, up from $1.84 billion, or 36 cents a year ago. But what is a concern is the company's falling hardware division that it acquired through the 2010 purchase of Sun Microsystems Inc. Revenue for hardware products dropped 24% and overall sales fell 2.3% to $8.18 billion, below the $8.42 billion estimate. "Hardware's going to continue to be a struggle for them," Pat Walravens, an analyst at JMP Securities LLC told Bloomberg News. "Sun was a big company, and it's going down." ORCL stock is up almost 1% after opening up more than 3%.
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- Bloomberg News:
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