What’s the Story

by CC August 8, 2012 8:59 am • Commentary


Stock index futures dipped in low volume on Wednesday following three days of gains on Wall Street as traders awaited more signals about central bank action in support of a stalling global economy.

Growing expectations the European Central Bank could act soon to contain the euro zone’s debt crisis and a Federal Reserve seen ready to take stimulus measures have triggered a recent rally in equities, with the S&P 500 up for a fifth week running and above 1,400, a level not seen since early May.


The productivity of U.S. workers grew mildly in April through June, reflecting a slow improvement in the overall economy, even as labor costs moved higher.

Nonfarm business productivity, the output per hour of all workers, rose at a 1.6% annual rate in the second three months of 2012, the Labor Department said Wednesday. Unit labor costs were up 1.7% during the period.

The productivity acceleration was just above expectations. Economists surveyed by Dow Jones Newswires had forecast that productivity would rise 1.3% in the quarter and labor costs would rise 0.6%.

The increase in productivity reflects a modest improvement in output as hours worked barely grew.

Unit labor costs rose because hourly compensation grew faster than productivity. Increasing labor costs can be a drag on corporate profits.



McDonald’s Corp. MCD -0.76% said Wednesday its global comparable sales were flat in July, while total systemwide sales fell 3.2% in the month. The Oak Brook, Ill., fast food chain said U.S. same-store sales fell 0.1% in the month while Europe dropped 0.6%. In the U.S., McDonald’s said promotional activity did not offset the effects of a sluggish economy. In Europe, McDonald’s faced “an increasingly difficult environment.” Shares of McDonald’s fell 2.3% in premarket trades. In Asia/Pacific, Middle East and Africa, McDonald’s said its July same-store sales dropped 1.5%

Shares of Ralph Lauren Corp. RL +1.98% fell nearly 7% in premarket trades Wednesday after the retailer said operating profit margins in its upcoming second-quarter results will drop by about 1.75% to 2.25% below the comparable period. The retailer cited incremental investment to support the its strategic growth objectives in the context of lower revenue. It expects second-quarter revenue to fall by a mid-single-digit percentage. Ralph Lauren’s first-quarter profit increased to $193 million, or $2.03 a share, from $184.1 million, or $1.90 a share, in the year-ago period. The retailer’s net sales rose to $1.55 billion from $1.49 billion. Wall Street analysts expected Ralph Lauren to earn $1.78 a share on sales of $1.58 billion, according to a survey by FactSet.

Priceline.com’s growth slowed markedly in the second quarter, with a surprisingly downbeat outlook underscoring how its robust gains in the European hotel market are falling prey to economic uncertainty. The online travel agency’s shares sank 15% to $579 after hours.

Dean Foods swung to a profit in the second quarter and said it would spin off a fast-growing unit that sells Horizon Organic dairy products and Silk soy milk. Shares surged 27% to $15.75 after hours.

Rackspace’s second-quarter profit rose 43% on surging revenue in its public-cloud business, easing concerns that the rollout of a new information-management system might interrupt the data-center provider’s historically robust growth. Shares jumped 12% to $55.07 after hours as revenue topped expectations.

CSG Systems International Inc.’s CSGS +0.59% second-quarter earnings rose 32% as revenue and margins improved. Shares rose 7.6% to $19.15 after hours as results beat analyst expectations and as the company raised its full-year guidance.

Exact Sciences Corp. EXAS -3.20% plans to offer and sell an undisclosed number of shares, subject to market conditions. Shares of the molecular diagnostic company slid 4.8% to $9.80 after hours.

Express Scripts Holding Co.’s ESRX +0.07% second-quarter earnings fell 49% as the pharmacy-benefit manager absorbed acquisition costs, but results topped Wall Street expectations and helped fuel a stronger forecast for the full year. Shares were up 7% at $59.95 after hours.

Software provider Kenexa Corp.’s KNXA +6.99% second-quarter loss widened slightly as operating expenses increased, though adjusted profit and revenue beat the company’s expectations. Shares climbed 9.9% to $29.10 after hours as Kenexa also raised its full-year guidance.

MYR Group Inc.’s MYRG +2.34% second-quarter profit surged as the company booked new contracts for the transmission industry. The company also said that its board has authorized a plan to buy back as much as $20 million in shares. Shares were up 5.5% to $18.02 after hours.

Sotheby’s BID +2.12% second-quarter earnings fell 33% as the auctioneer saw a decrease in net auction sales in the typically strong quarter. Shares slipped 7.7% to $28.40 after hours as results missed expectations.

Suburban Propane Partners L.P. SPH +0.10% said it plans to sell 6.3 million units representing limited-partner interests. Shares were off 3% to $39 after hours.

URS Corp.’s URS +0.45% second-quarter earnings fell 20% on charges related to its recent Flint Energy Services Ltd. acquisition. Shares rose 5% to $37.52 in after-hours trading as adjusted profit and revenue beat expectations.

Warner Chilcott PLC WCRX +6.98% said it has ceased discussions regarding potential offers for the company as it also unveiled a series of shareholder-friendly moves, including a special dividend. Shares sank 5.7% to $16.75 after hours.

Willbros Group Inc. WG -0.71% swung to a second-quarter profit on gains from discontinued operations and rising revenue. But following delays on two projects and execution problems on two others, the engineering-and-construction company’s operating profit fell short of its previous outlook. Shares fell 8.7% to $6.42 after hours.

Williams Partners L.P. WPZ +0.89% said it plans to offer 8.5 million units representing limited-partner interests, intending to use the proceeds in part to repay debt. Units slid 3.5% to $51.19 after hours.