Posts Tagged ‘Dow Jones’

June 2012: Jobs Fizzle

Monday, July 16th, 2012

80,000 was the number. 200,000 is what we need for this to feel like a recovery. And 8.2 is the number that keeps hanging on.  The nation’s unemployment rate was unchanged at 8.2% (that’s 13 million unemployed workers) for the second consecutive month, the Labor Department said Friday.  Businesses added just 84,000 jobs, while governments cut 4,000. Monthly job growth averaged 226,000 in the first quarter but slowed dramatically to an average 75,000 a month in the second quarter.

In response, the Dow Jones industrial average fell 124.20 points to close at 12,772.47, wiping out the Dow’s gain for the week, and Treasuries rose as investors moved their money into lower-risk assets. And the Presidential campaigns took the opportunity to issue a number of extrapolations and the usual host of inaccuracies and overreaches. The Democrats claimed that the unemployment rate has been trending down since hitting 10.10% in October 2009; what they forget to point out is that that’s because of the large numbers of discouraged workers – almost 1 million — who’ve stopped looking for jobs. The Republicans, on the other hand, said that the jobs report proves that the Obama administration’s policies haven’t worked, forgetting that the US was hemorrhaging 700,000 jobs a month when Obama took office. According to Politifact, Obama’s record is 22 consecutive months of private-sector job growth, beginning in Feb. 2010, during which the number of jobs grew by almost 3.16 million, or about 143,000 per month.

Putting the candidates aside, the reasons for the anemic job numbers have started to sound like a bad drinking-game song being played by the pundits as they make the circuit of the talk shows: The warm weather drew construction and manufacturing activity into January and February, but dampened spring hiring; the manufacturing sector contracted for the first time in three years in June;  retail sales were weak, Corporate profits fell in the first quarter of 2012,  the first decline since 2008, according to the Commerce Department; the European Central Bank cut interest rates – a sign of nervousness about their prospects; the end-of-year fiscal cliff sent ripples through the public and private sectors with its specter of higher taxes and reduced government spending; a lame-duck Congress couldn’t pass a Jobs Bill; Republican governors made draconian cuts and instituted public-worker layoffs at the state level; and the Administration didn’t put a big enough stimulus in place which is creating an undertow. Take your pick.

So, are there any bright spots? A few.  Friday’s report showed ticks upward in average hourly earnings (to $23.50, from $23.44 in May) and the length of the typical private sector workweek (34.5 hours, from 34.4). Also, a curious fact is that the number of teens in the workforce spiked by 140,000 to 4,528,000, or 3.2% of the entire U.S. workforce:  So why are teens making out so well in this first month of summer while everyone else, well, isn’t? The Daily Kos reports from 5 May 2012:  President Obama’s Jobs program, which is lining up commitments from the private sector and from government to create summer jobs and internships for young people, has announced commitments for 90,000 paying jobs, up from the 70,000 previously announced in January.

Wells Fargo Wagon Rolls onto Wall Street

Friday, April 10th, 2009

The Wells Fargo wagon delivered good news to Wall Street when the San Francisco-based bank announced a record first-quarter profit of approximately $3 billion, or 55 percent per common share.  Contrast these numbers with the fourth quarter of 2008, when Wells Fargo reported a $2.6 billion loss.

The news sent the Dow Jones Industrial Average soaring 3.1 percent to finish the day at 8,083.38, the highest closing since February 9.wellsfargo

Wells credited the outstanding results to healthy lending margins driven by low interest rates and the resulting boom in mortgage lending activity.  “Our business momentum is strong, and we expect our operating margins to remain at the top of our peer group,” said John Stumpf, Wells Fargo’s CEO.  Applications for mortgages surged during the first quarter; Wells reported $83 billion in applications for new and refinance home loans during March alone.

Wells is the nation’s largest mortgage servicer and a leading home loan originator, so it benefited from the refinancing boom driven by extremely low short-term interest rates and the government’s purchases of mortgage bonds.

Although this is evidence that the Obama administration’s efforts to jump-start the economy by freeing up credit are starting to work, it is only the hint of a beginning for banks with significant mortgage portfolios.  Wells and competitors such as Bank of America, Citigroup and JPMorgan Chase remain dangerously exposed to falling asset prices, especially for commercial and residential real estate.

Nothing Succeeds Like Success

Thursday, March 12th, 2009

Tuesday, March 10’s 379.44 stock market spike – the best finish since Thanksgiving – came on the heels of Citigroup, Inc.’s news that it had made a healthy profit during the first two months of 2009.  At the end of the day, the stock market had soared to a 6,926.49 close.

man-with-cigarSo, what did it?  It wasn’t a bold move by Treasury Secretary Timothy Geithner.  It wasn’t the American Recovery and Reinvestment Act.  It wasn’t hope.  It wasn’t a government plan.

The catalyst that triggered the 5.8 percent Dow Jones Industrial Average stock market rise was honest-to-God good news.  The revelation was in the form of a leaked memo written by Citigroup CEO Vikram Pandit stating that the banking giant had enjoyed its best financial performance in more than a year.  The memo, written to reassure the bank’s employees about its stability, said that Citigroup had recorded an operating profit of $8.3 billion before taxes and special items through the end of February.  This was Citigroup’s best performance since the third quarter of 2007 and puts it into a sound cash position.

The memo did not detail what the special items involved, but they could include credit losses and writedowns.  Still, the news kicked off a buying frenzy.  Worldwide financial stocks rose, with Citigroup up 38 percent for the day.

Broader indices like the Standard & Poors 500 index rose 43.07 to 719.60; NASDAQ soared 89.64 points to 1,358.28.