What’s the Story

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

Reuters

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.

WSJ

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.

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Marketwatch

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.