Reports » US

US stock market daily report (September 07, 2012, Friday)

According to the Bureau of Labor Statistics, 96,000 net new jobs were added in August as the economy appears to be stuck in low gear, producing few new jobs and stagnant paychecks. The economy has created just 1.8 million jobs in 2012 however, the numbers are not nearly enough to give a job to everyone who wants to work. The decline in unemployment from 8.3% to 8.1% is due to a smaller labor force, not an increase in jobs. Twelve million Americans are still looking for work while another 7 million Americans that want a job, aren’t even looking. Weekly earnings have reportedly fallen for two consecutive months and have risen only 2% in 2012 so far, slightly faster than prices have risen. For Federal Reserve Chairman Ben Bernanke, the weak economic growth means a reluctant decision to employ another round of bond-buying by the Fed in an effort to give the economy just a little more fuel. The decision by the Fed to buy more government bonds - QE3 - from investors could come as early as next week. The Federal Reserve policy committee said in August that it would act unless it saw significant and sustainable acceleration in job growth which we have seen neither, in the past few months. QE3 by the fed will provide only a slight help, for the stalled economy. Fed Boss Bernanke would strongly prefer that Congress and the White House agree on fiscal policies that would help the economy - something that appears unimaginable, at least until after the election.

Jes Staley, chairman of JP Morgan (JPM) corporate and investment bank, said that the division has been gaining market share and that the firm remains committed to the universal banking model. Comments from Staley indicate he feels the IB has never been in a stronger position in terms of client breadth, technology and coordination with other JP Morgan businesses. Although summer trading remained thin, activity in debt capital markets was strong, with fixed income, currencies and commodities flow generated off the back of DCM activity. Staley said that for every dollar of DCM issuance activity, JP Morgan frequently receives $3-$5 of FICC trading revenues. "Electronic equities trading, commodities execution, international investment banking and international prime brokerage" were all listed as areas JP Morgan is currently focused on expanding in. JP Morgan remains committed to the universal banking model. Diversification helped JP Morgan remain profitable throughout the financial crisis. Staley highlighted that the investment bank firm has managed to keep 98% retention of its senior management over the last three years.

On Friday morning, Google (GOOG) saw its shares cross the $700 mark for the first time since December of 2007. The Web search giant is up more than 9% since the first of 2012, underperforming the 14% gain seen by the S&P 500 in that time frame. Since Google reported quarterly earnings on July 19 when the company showed better-than-expected earnings on improvements in its core advertising business, shares have climbed nearly 19%.

Chip-maker Intel (INTC) reported Q3 revenue will be lower than previously expected, citing weaker-than-expected demand in a challenging macroeconomic environment. The firm now expects revenue to be $13.2 billion, compared with its previous expectation of revenue between $13.8 billion to $14.8 billion. In the past few quarters demand for semiconductors has been shaky amid global economic woes, weaker consumer spending and shortages of hard-disk drives following flooding in Thailand. Broader economic worries have caught up with the Silicon Valley heavyweight as worries have emerged that emerging markets and data-center business could be slowing. Intel said on Friday they see customers reducing inventory in the supply chain versus the normal growth in Q3 inventory and also see softness in the enterprise PC market segment as well as a slowing emerging market demand. Expectations for Q3 gross margin is around 62%, down from previous expectation of around 63%. In July, Intel lowered its guidance for the full year, saying "growth will be slower than we anticipated due to a more challenging macroeconomic environment" and said its Q2 profit fell 4.3% as it logged a jump in operating expenses, masking an increase in revenue.