What’s the Story

by CC September 6, 2012 9:18 am • Commentary


The European Central Bank agreed a new bond-buying program on Thursday to lower struggling euro zone countries’ borrowing costs which would serve as a “fully effective backstop”, ECB President Mario Draghi said on Thursday.

The ECB Governing Council agreed on the “modalities of outright monetary transactions”, Draghi told a news conference after the Council’s monthly policymaking meeting in Frankfurt.

Seeking to back up his pledge to do whatever it takes to preserve the euro, Draghi said the new bond-buying program, aimed at the secondary market, would “safeguard the monetary policy transmission in all countries in the euro zone area”.

It would address bond market distortions and the “unfounded” fears of investors about the irreversibility of the euro.

The scheme, which the Bundesbank is known to have opposed, would be a “fully effective backstop to prevent potentially destructive scenarios”, he said.

“We are strictly within our mandate,” Draghi said.


European stocks remained higher after the European Central Bank unveiled a range of new measures to support the euro-zone economy and left interest rates unchanged.

In the European afternoon, stocks held onto gains that built earlier in the morning on expectations of bold ECB action. Europe’s Stoxx 600 was 0.8% higher. The U.K.’s FTSE 100 was 0.6% higher, Germany’s DAX was up 1.2%, and France’s CAC-40 was 1.1% higher.

In the financially strained parts of Europe, Italy’s FTSE Mib was up 1.5 and Spain’s benchmark IBEX-35 added 1.2%.

Spain’s 10-year government bond yield was lower at 6.23%, while Italy’s corresponding bond yield was lower at 5.37%.

The euro pulled back from to a two-month high against the dollar to trade slightly lower on the day.

The euro traded at $1.2586, down from $1.2600 late Wednesday in New York. The dollar was at ¥78.82 compared with ¥78.39, while the euro was at ¥99.15, compared with ¥98.80.


Jobless claims decreased by 12,000 to 365,000 in the week ended Sept. 1, the fewest in a month, the Labor Department reported today in Washington. The median estimate of 48 economists surveyed by Bloomberg called for a drop to 370,000.


Companies added more workers than forecast in August, easing concern the U.S. job market may be stalling, a private report based on payrolls showed.

The 201,000 increase in employment, the biggest gain in five months, followed July’s revised 173,000 rise, Roseland, New Jersey-based ADP Employer Services said today. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 140,000.


Data-storage firm OCZ Technology Group Inc. (OCZ) cut its fiscal second-quarter revenue forecast, pointing to constraints in the supply of NAND flash memory, which is used in solid-state drives. Shares tumbled 24% to $4.05 premarket.

VeriFone Systems Inc.’s (PAY) fiscal third-quarter income rose 43% as the electronic-payments company’s revenue strengthened, led by its services business. Still, shares dropped 11% to $31.50 premarket after the company predicted weak fourth-quarter revenue.

Men’s Wearhouse Inc. (MW) turned in a 4.1% increase in fiscal second-quarter earnings as same-store sales grew for its namesake and Moores brands. Shares rose 9.9% to $35 premarket as earnings beat the retailer’s expectations and the company lifted its full-year view.

Realty Income Corp O -0.56%.(O) agreed to buy American Realty Capital Trust Inc ARCT +0.59%. (ARCT) for roughly $1.93 billion as the real-estate investment trust looks to diversify its portfolio outside the retail industry. Shareholders will get about 0.29 Realty Income share for each share of American Realty, valuing the company at $12.21 a share, a 2.1% premium over Wednesday’s close. Shares of American Realty were up 7% premarket, to $12.80.

Branded drug makerWarner Chilcott PLC WCRX +0.70% (WCRX) on Thursday detailed pending stock sales by private-equity owners Bain Capital Partners, J.P. Morgan Partners and Thomas H. Lee Partners, as well as members of its senior management. In total, the group of shareholders will sell 42.9 million shares, boosting Warner Chilcott’s public float by roughly 25%. Shares slid 9.4% to $12.85 premarket.

BreitBurn Energy Partners LP‘s BBEP +0.62% (BBEP) offering of 10 million common units representing limited-partner interests priced at $18.51 a piece, a 4% discount to its Wednesday close. Units fell 4.4% to $18.44 premarket.Enbridge Energy Partners LP EEP +0.30% (EEP) plans to offer roughly 14 million Class A units representing limited-partner interests. The oil and gas transporter’s shares slid 4.7% to $28.31 premarket.ABM Industries Inc ABM +1.43%.’s(ABM) fiscal third-quarter profit fell 55% as the company said lower government spending sapped revenue, while expenses rose.

Aircraft leasing and maintenance companyAAR Corp AIR -0.75%. (AIR) reported preliminary fiscal first-quarter results above analyst expectations, pointing to stronger commercial sales.

AeroVironment Inc AVAV +0.83%. (AVAV) swung to a worse-than-expected fiscal first-quarter loss as sales of its unmanned aircraft slipped.Enbridge Inc ENB.T +1.15%. (ENB, ENB.T) said President Al Monaco will take on the additional title of chief executive, effective Oct. 1, succeeding Patrick D. Daniel, who will retire at that time.Encana Corp ECA.T -0.97%. (ECA, ECA.T) said Wednesday an internal investigation concluded that the natural-gas producer didn’t engage in collusion with competitorChesapeake Energy Corp CHK +1.79%. (CHK) regarding Michigan land leasing in 2010.FuelCell Energy Inc FCEL 0.00%.’s (FCEL) fiscal third-quarter loss widened as the power-equipment maker’s product sales weakened and expenses increased. Results missed analyst expectations.Harry Winston Diamond Corp HW.T -0.08%.’s (HWD, HW.T) fiscal second-quarter earnings slumped 52% as the jewelry retailer reported weaker sales in both its mining and luxury brand segments. Earnings missed analyst expectations.H&R Block Inc HRB -1.66%.’s (HRB) fiscal first-quarter loss narrowed as the tax-preparer recorded fewer expenses but revenue missed analyst expectations.Home Loan Servicing Solutions Ltd HLSS -2.02%. (HLSS) said it is commencing a public offering of 11.5 million shares, intending to use the proceeds to buy the right to receive servicing and other fees and assets from Ocwen Loan Servicing LLC.Korn/Ferry International‘s KFY +1.33% (KFY) fiscal first-quarter earnings fell 32% as the company reported lower fee revenue at its executive-search business and as currency fluctuations hurt its overall revenue.M/I Homes Inc MHO -10.89%. (MHO) said its offering of 2.2 million common shares priced at $17.63, matching Wednesday’s closing price.Mitcham Industries Inc MIND +6.22%.’s (MIND) fiscal second-quarter profit surged as the seismic equipment supplier recorded a favorable tax impact, masking a decline in equipment leasing revenue. Earnings beat analyst expectations.Nordion Inc NDN.T +0.19%. (NDZ, NDN.T) swung to a fiscal third-quarter profit as the medical-technology company logged fewer one-time expenses, and sales grew modestly.SeaChange International Inc SEAC +4.53%. (SEAC) swung to a fiscal second-quarter loss as the video-gear maker’s sales fell and its profit margin narrowed.   Sigma Designs Inc SIGM +0.15%.’s (SIGM) fiscal second-quarter loss narrowed as the company’s revenue climbed with help from a recent acquisition.Snyder’s-Lance Inc LNCE +0.18%. (LNCE) has agreed to acquire Snack Factory LLC and certain affiliates for $340 million in cash, adding the fast-growing Pretzel Crisps brand to the snack company’s portfolio.Stewart Enterprises Inc STEI -1.18%.’s (STEI) fiscal third-quarter profit fell 20% as the funeral-services company logged fewer one-time gains, masking an increase in revenue.Supervalu Inc SVU +1.75%.(SVU) said it will close about 60 underperforming or “nonstrategic” stores this year, as the struggling supermarket operator looks to cut costs, which could make it attractive to a potential buyer.

The U.S. Department of Defense’s Tricare health plan has decided it won’t let its nearly 10 million beneficiaries who get drug coverage throughExpress Scripts Holding Co ESRX -0.33%. (ESRX) resume getting prescriptions filled atWalgreen Co WAG +0.50%. (WAG) outlets.

Wright Express Corp WXS -0.30%. (WXS) has agreed to acquire fueling company Fleet One from private equity firms for $369 million in cash as the payment processing company seeks to expand its presence in the heavy truck market in North America.Zillow Inc Z +2.29%. (Z) said it will offer 3.18 million Class A shares as the real-estate information provider raises funds for general purposes.