Layoffs Strike Lowest Level for 2012|
Outplacement consultancy Challenger, Gray & Christmas reported Thursday, layoffs
announced in July - led by the financial sector - declined 2% from June to
nearly 37,000, striking lowest level this year but, layoff plans may increase in
coming months. "The situation in Europe is far from being resolved and ongoing
weakness here could continue to take a toll on the financial sector," said John
Challenger, chief executive. "Employers may be in a pre-election holding
pattern. Historically, the fourth quarter tends to be the heaviest job cutting
period of the year," Challenger said. July's layoffs plans were down 45% from
The Commerce Department reported on Thursday that the number of people who filed
applications for unemployment benefits rose by 8,000 last week to a seasonally
adjusted 365,000. The four-week claims average, which is a more stable barometer
of labor-market trends and reduces seasonal volatility in the weekly data,
dropped 2,750 to 365,500, the lowest level since late March. Continuing claims
decreased by 19,000 to a seasonally adjusted 3.27 million in the week ended July
21. Nearly 5.96 million people received some form of state or federal benefit in
the week ended July 14, down 69,672 from the prior week.
During the trading session on Thursday, Facebook Inc. (FB) shares fell below
$20, hitting a record low for the third consecutive day. By mid-afternoon on
Thursday, Facebook shares were down 5% and trading in range of $19.90 per share.
Shares of Yelp, Inc. (YELP) were hosting an 18% gain into mid-afternoon trading
on Thursday, just a day after reporting better then expected results.
Knight Capital Group Inc. (KCG) shares got another smack down on Thursday,
lower by 59% into late afternoon trading after the market-making firm reported
on Thursday they it had suffered a pretax loss of $440 million after it exited
its entire erroneous trade position. On Wednesday morning, Knight’s trading
software was hit by a glitch which resulted in Knight sending numerous erroneous
orders in NYSE-listed securities into the market.
Abercrombie & Fitch Co. (ANF) shares were lower by 13% into mid-afternoon
trading on Thursday after the clothing retailer projected Q2 earnings would come
in below analyst estimates and that same-store sales in the quarter fell 10%.
The International Monetary Fund's executive board said on Thursday that the
Federal Reserve has room to ease monetary policy should the outlook deteriorate
but, a number of directors raised doubts that another substantial bond-purchase
plan would work. "A number of [IMF] directors observed that the effectiveness of
additional monetary policy easing could be limited in the prevailing very low
interest rate environment," the statement said. The IMF's executive board
released the statement after annual talks between the international financial
agency and the U.S. government. Many emerging market governments have criticized
the Fed's quantitative easing, saying it only served to drive down the dollar's
exchange rate. The IMF staff said further easing may weaken the dollar further
but, would have positive spillover from strengthening the U.S. economy and
hedging against downside risks.
On Thursday as expected, European Central Bank left its main refinancing rate
unchanged at 0.75%. Last month, the ECB cut the rate by a quarter of a
percentage point to its current level, a record low.
In his monthly news conference in Frankfurt on Thursday, European Central Bank
President Mario Draghi said that the ECB may undertake additional "outright open
market operations" and governments should stand ready to unveil rescue funds to
buy government bonds. Draghi stopped short of identifying specific new measures
to tackle Europe's debt crisis. At an investment conference in London last week,
Draghi pledged that the ECB was ready to do "whatever it takes" within its
mandate to preserve the euro although he declined to fully elaborate on his
pledge. Draghi, Europe's top banker, said no countries in the euro zone had
asked for support from the European Financial Stability Facility, the region's
rescue fund, and that there wasn't ground to take action anyway. "There has not
been one word about these remarks [the pledge in London] that should be a
surprise," Draghi said. "In my statement in London you will find the words
'within our mandate' several times," he said. Separately, Draghi said that it is
"crucial that efforts are maintained to restore sound fiscal positions."
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Aug 2, 2012