What’s the Story

by CC October 5, 2012 9:10 am • Commentary


Treasuries are falling and Wall Street stocks are on course to challenge fresh cyclical highs after the official US jobs report showed solid job creation and unemployment unexpectedly dropping, boosting hopes for the world’s biggest economy.

The FTSE All World equity index is advancing 0.2 per cent as the FTSE Eurofirst 300 sees a gain of 1 per cent.

Away from equities, however, the mood is more cautious. The dollar index is flat and commodities struggling for direction, with copper down 0.1 per cent to $3.78 a pound and Brent crude losing 15 cents to $112.43 a barrel.


The Labor Department said on Friday the unemployment rate, a key focus in the race for the White House, dropped by 0.3 percentage point to its lowest point since January 2009 as employers added 114,000 workers to their payrolls.

The drop in the unemployment rate reflected an even bigger surge in new jobs captured by a survey of households and came even as Americans returned to the labor force to resume the hunt for work. The workforce had shrank in the prior two months.

Payrolls for July and August were revised to show 86,000 more jobs created than previous reported, mostly to reflect increases in government employment.


Hewett-Packard [HPQ  14.94        ]– The stock has been downgraded to “neutral” from “buy” at Sterne Agee, saying the headwinds faced by the company are likely secular and structural in nature. The firm said it fears further downside surprises, even after the stock tumbled to a 9 1/2 year low this week.

Cisco Systems [CSCO  18.895        ] – The networking equipment company promoted executives Rob Lloyd and Gary Moore, naming them co-presidents. Analysts see the two as possible successors to CEO John Chambers when he eventually steps down.

ADP [ADP  58.90        ] – Goldman Sachs has upgraded the payroll service provider’s shares to “buy” from “neutral,” pointing to strong earnings power, superior capital allocation, and the type of structure that may make it a good defensive play in difficult economic times.

Zynga [ZNGA  2.815        ] – The social network game maker has cut its full-year outlook. Sentiment surrounding Zynga has already been hurt by a number of executive departures, and the company said the current quarter is “challenging” due to poorer-than-expected performance for certain games.

Facebook [FB  21.9475        ] – A panel of judges has approved a Facebook request that several dozen lawsuits against it, Nasdaq, and underwriters regarding its initial public offering be consolidated in New York’s Southern District. Separately, JPMorgan Chase is cutting earnings estimates for Facebook, based on Zynga’s earnings announcement.

Toyota Motor [TM  78.98        ] – The automaker reported its sales in China fell about 40 percent in September from a year earlier, opposite the trend that its rivals have seen. Analysts say Japanese brands have taken a hit in China because of territorial disputes between the two countries.

JPMorgan Chase [JPM  41.82        ] – JPMorgan executive Barry Zubrow is expected to leave his current job, according to a report in this morning’s Wall Street Journal. Zubrow is head of corporate and regulatory affairs, although the paper reported it’s possible he’ll remain with the bank in an advisory role.

Dish Network [DISH  32.27  —  UNCH    ] – The satellite television provider could lose programming from Gannett [GCI  18.33        ], which has threatened to pull its channels if Dish does not block the ad-skipping feature known as “AutoHop” on its digital video recorders.

Sony [SNE  11.74        ] – Sony has stopped sales of its Xperia tablet computers because of a manufacturing defect that can make the devices subject to water damage. The tablet went on sale in the U.S. on Sept. 7. Sony plans to fix the tablets already sold and said it doesn’t expect any significant impact on earnings.

Owen-Illinois [OI  19.36        ] – Goldman Sachs has upgraded the glass container company’s stock to “buy” from “neutral,” citing the company’s free cash flow and its new focus on debt reduction.

Morgan Stanley [MS  17.47        ] – Chief Executive Officer James Gorman told the Financial Times that more job cuts and lower bonuses are in store next year, as the company deals with profit pressures.

Wet Seal [WTSLA  3.14        ]  – The specialty retailer has reached an agreement with major shareholder Clinton Group, with four Wet Seal directors resigning and being replaced by Clinton Group nominees.

Constellation Brands [STZ  34.72        ] – The spirits maker reported fiscal second-quarter profit of $0.71 per share, well above estimates of $0.54. Its fiscal year outlook was also above current projections. Revenue did come up somewhat short of consensus.