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US stock market daily report (September 24, 2012, Monday)

Contributed by Millennium Traders

Discover Bank (DFS) was ordered by the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau to refund approximately $200 million to more than 3.5 million customers plus, pay a $14 million fine over alleged deceptive telemarketing and sales tactics used by Discover to mislead consumers into paying for various credit card "add-on products." Discover (DFS) said settlement was made to “resolve previously disclosed matters related to the marketing of certain credit protection products sold by telephone.”

Shares of Facebook (FB) tripped Nasdaq's circuit breaker on Monday, with shares ending the trading session on Wall Street lower by 9%. The circuit breaker is meant to protect stocks from manipulation by short sellers. Early on in the trading session on Monday, Facebook shares fell by at least 10% from the previous session's closing price, triggering the Nasdaq system which imposes a restriction on prices at which a stock can be sold short.

According to outplacement consulting firm Challenger, Gray & Christmas, as retailers continue to remain cautious in the face of weak consumer confidence, seasonal hiring in retail is unlikely to significantly increase ahead of the holidays despite solid back-to-school sales. In its annual holiday hiring forecast, Challenger estimated that seasonal job gains are likely to be only slightly higher than 2011but still below pre-recession levels. Chief Executive John A. Challenger noted that while surveys of retailers show that they are hopeful for solid sales gains this year, recent consumer confidence readings have been relatively weak and unemployment remains high. "The mixed picture is likely to compel retail employers to proceed cautiously when it comes to hiring extra workers for the holiday season," he said. Challenger anticipates many retailers will maintain their workforce at 2011 levels and only if strong sales early in the season warrant it, will hire additional workers. In 2011, retail payrolls saw a non-seasonally adjusted net gain of 660,200 workers from October through December, a 1.9% gain from 2010. Challenger said "there is still too much uncertainty to expect seasonal employment gains to reach the level we saw in 2006, when retailers added nearly 747,000 extra workers at the end of the year." He also noted "we may never again reach the level of hiring achieved in 1999, at the height of the dot.com boom, when nearly 850,000 seasonal workers were added." Positive trends that could help retailers achieve expected sales gains include higher payroll employment during August, up more than 1.8 million workers from 2011. As of Q2, median weekly earnings increased to $773, compared to $756 per week during the same period during 2011. Challenger noted that Target (TGT) revealed plans to add fewer holiday workers to the tune of 80,000 to 90,000 seasonal workers, down from the 92,000 it hired in 2011. Kohl's (KSS) said it plans to increase its seasonal hiring this year to 52,700, up from 40,000 in 2011. Amazon.com (AMZN) said it would add 5,000 seasonal workers at its distribution facilities. Challenger also said it expects "big hiring plans" from United Parcel Service (UPS) and FedEx (FDX) which typically add extra workers to help handle the increased holiday shipping.

DigitalGlobe (DGI), earth imagery technology company as well as GeoEye (GEOY) satellite imagery company, have been asked by the U.S. Department of Justice for additional information on DigitalGlobe proposed acquisition of GeoEye. In July, DigitalGlobe revealed it had agreed to acquire GeoEye for about $450 million, turning the tables after GeoEye made public a bid for DigitalGlobe in May. DigitalGlobe has grappled with government spending cuts that have raised concerns about its sales prospects, as it caters to the U.S. government. In August 2010, the companies received 10-year contracts worth a combined $7.35 billion to fulfill U.S. intelligence needs. Federal spending cutbacks have raised concerns across the industry about sales prospects in the years ahead. The name of the combined companies would be DigitalGlobe and upon completion of the transaction, DigitalGlobe shareholders are expected to own nearly 64% of the entity. DigitalGlobe said it is cooperating with the DOJ on Monday and expects to close the transaction in Q4 of 2012 or Q1 of 2013.