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US stock market daily report (October 10, 2012, Thursday)

Contributed by Millennium Traders

In its Beige Book report on economic activity, the Federal Reserve reported on Wednesday that the U.S. economy "expanded modestly" in late August and September, with housing becoming a bright spot and manufacturing somewhat improved. Modest growth was noted in 10 of the 12 Fed districts that reported. New York and Kansas City districts were the only districts reporting leveling off or slowing growth. The previous Beige Book showed nine districts experienced "modest" or "moderate" growth. The report was based on information collected on or before September 28.

Yum Brands Inc.'s (YUM) reported their Q3 income rose sharply by 23% as its Taco Bell, Pizza Hut and KFC chains continued to improve in the U.S.. The company reported sluggish growth in China due to economic conditions there. Into the early afternoon trading session, Yum shares were higher by 8% as the trading price nears the companies current, 52 week high. Yum raised its expectations for the year to 13% earnings-per-share growth, from previous 12% view. Yum recently has shown signs of a comeback in the oversaturated, depressed U.S. marketplace, after struggling domestically during 2011. The Doritos Locos Tacos, with a nacho cheese Doritos taco shell, has been a successful hit for Yum and they are now adding cool ranch and other Doritos-flavored shells. U.S. same-store sales for Taco Bell rose 7% in the latest quarter, followed by a 6% increase at Pizza Hut and a 4% boost at KFC. Yum remains focused on China and other emerging markets, where its chains are booming in urban areas. Often contributing half of its total profit, Yum's China business has been crucial for the company which is primarily comprised of KFC and Pizza Hut Casual Dining. Yum has nearly 18,000 stores in the U.S., compared with nearly 4,950 in China and 495 in India. In the recent quarter, 86% of Yum's new restaurant development was in emerging markets. World-wide, Yum was able to increase its profitability by 1.9 percentage points to 18.9% for the quarter. Yum forecast a charge of $25 million to $75 million in Q4 as a result from its offer to some former employees to voluntarily take an early payout of their pension benefits. The payments should reduce the ongoing volatility and administration expense related to its U.S. pension obligation, per the company. Yum posted a Q3 profit of $471 million or $1 a share, up from $383 million or 80 cents a share in 2011. Earnings rose to 99 cents from 83 cents, excluding refranchising impacts plus other items and revenue improved 9% to $3.57 billion.

The U.S. Labor Department reported Wednesday that job openings at U.S. workplaces ticked down to 3.56 million in August from 3.59 million in July. Job openings rose 13% compared to 2011 with private openings increasing 13% to 3.19 million and government openings rose 10% to 369,000. During August there were nearly 12.54 million unemployed people and nearly 3.5 potential job seekers for each opening, down from 3.6 in July. In August of 2011, there were nearly 13.92 million unemployed people with nearly 4.4 potential seekers per opening. In August, the number of separations such as quits and layoffs, rose to 4.35 million 4.09 million in July. The total number of hires increased to 4.39 million from 4.28 million. When the recession began in December 2007, there were more than 4 million jobs open and the level of hires was nearly 5 million.

In a joint statement, EADS NV (EPA:FR:EAD) and BAE Systems (LSS:UK:BA) reported that proposed merger talks, which began on September 12, collapsed on Wednesday, after European governments were unable to reconcile concerns over the proposed $45 billion deal. Discussions with the French and German governments had not reached a point where the firms could disclose the benefits of a merger and both EADS and BAE Systems said they believed the merger was based on "sound industrial logic". "We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders," said Ian King, chief executive at BAE Systems, in the statement.

Amidst chopping trading on Wednesday, Oil futures slipped back below $92 a barrel as the market weighed support from supply concerns fueled by continuing Middle East tensions against pressure from a weaker global oil-demand forecast. The Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for global oil demand in 2012, early in the day on Wednesday. Crude for November delivery (NMN:CLX2)  fell 59 cents or 0.6% to $91.78 a barrel on the New York Mercantile Exchange. On the heels of crude futures rallying 3.4% Tuesday, contract’s have been trading in and out of the red, tapping a high of $93.66 a barrel, to reach their best settlement level in more than a week. November Brent crude (IET:UK:LCOX2) climbed as high as $115.59 a barrel. In its monthly report Wednesday, OPEC said that world oil demand will grow by 800,000 barrels a day in 2012, down 100,000 barrels from its previous forecast.