Encouraging economic news about jobs and better-than expected financial earnings reports have resulted in a mixed reaction from U.S. stocks and exchange traded funds (ETFs).
The Labor Department reported that new claims for unemployment insurance declined last week by 47,000 to 552,000, the lowest level it has been since January and much lower that the 575,000 predicted by economists. Some believe that the numbers are skewed because of the timing of automotive plant shutdowns.
In the financial sector, JP Morgan Chase (JPM) announced a 36% jump in second-quarter profits and reported earnings of $0.28/share. The company said that strengths in its core businesses of consumer and investment banking offset a jump in credit losses and enabled them to crush Wall Street’s expectations of $0.04/share. The uplifting news didn’t have much effect on the sector, as it sent the Financial Select Sector SPDR (XLF) down 1.6% in morning trading.
Things are not as sunny for small- and mid-size business lender CIT Group (CIT) whose shares tumbled more than 75% this morning as the government refused to bail them out and forced the company to file for bankruptcy. The effect of this bankruptcy on the financial industry is unknown, as CIT Group is relatively small and the recession has already been in full force.
Cell phone maker Nokia (NOK) reported a fall in second-quarter earnings of 66% as demand started to taper off for the company’s phones, which forced them to ship 15% fewer cellular phones than a year earlier. Quarterly earnings at Harley-Davidson (HOG) continue to fall on weaker sales and demand, forcing the motorcycle manufacturer to cut 1,000 jobs. The company reported second-quarter earnings of $0.08/share and fell far short from the $0.24/share that was forecast by analysts.