Archive for April, 2009

Apple results ease Wall Street angst (AFP)

Thursday, April 23rd, 2009 | Finance News

NEW YORK (AFP) –
US stocks held in a narrow range Thursday after a strong profit report from iPod maker Apple helped ease Wall Street fears about the economy and other corporate sectors.

The Dow Jones Industrial Average drifted down 5.58 points (0.07 percent) to 7,880.99 in the first exchanges, following an 82-point loss Wednesday for blue chips amid a choppy session.

The tech-heavy Nasdaq composite edged up 1.94 points (0.12 percent) to 1,648.06 while the Standard & Poor's 500 broad-market index added 1.67 points (0.20 percent) to 845.22.

The market digested Apple's results from late Wednesday as the computer and tech giant reported its best second quarter ever and said chief executive Steve Jobs would return from medical leave as scheduled at the end of June.

"Apple's blow-out earnings report yesterday afternoon should give Wall Street a lift today," said Fred Dickson, market strategist at DA Davidson & Co.

"We take that as an indication that if you have the right product, packaged and marketed the right way, customers will buy them even in the midst of a deep recession."

But Dickson said Apple's upbeat report may not overcome fears about the overall economy.

"The stock market rally appears to be anticipating near-term improvement in the economy," he said.

"Our concern is that while signs of a bottom in the recession are beginning to develop, we wouldn't be surprised to see the recovery process take longer to unfold than the patience threshold of today's trigger-finger traders."

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SunTrust Banks has big loss but beats forecasts (Reuters)

Thursday, April 23rd, 2009 | Finance News

NEW YORK (Reuters) –
SunTrust Banks Inc (STI.N) posted its second straight quarterly loss, though results topped forecasts as deposit growth and higher mortgage lending offset charges tied to the collapsing real estate market.

The U.S. Southeast regional bank said its net loss applicable to common shareholders was $875.4 million, or $2.49 per share, compared with a profit of $281.6 million, or 81 cents, a year earlier.

Excluding a goodwill charge, Atlanta-based SunTrust said the loss was $160.6 million, or 46 cents per share. On that basis, analysts expected a loss of 64 cents per share, Reuters Estimates said.

Chief Executive James Wells said SunTrust saw "preliminary signs of improvement in several key areas," including a drop in early-stage loan delinquencies and higher core deposits. Mortgage banking revenue tripled from a year earlier.

Nevertheless, Wells said the economy is not out of the woods. "The operating environment remains difficult," he said. "While we know recovery will be forthcoming, we are not looking for things to turn around quickly."

Barclays Capital analyst Jason Goldberg wrote that SunTrust's "core" earnings appeared to be lower than forecast, after discounting some one-time gains. But he said "trends may be viewed as better than some expected."

Results included a $714.8 million goodwill charge, which SunTrust said reflected deteriorating real estate and economic conditions that reduced the value of mortgage and commercial real estate assets.

Shares of SunTrust rose 89 cents, or 5.8 percent, to $16.29 in morning trading on the New York Stock Exchange.

BAD LOANS INCREASE

The bank set aside $994.1 million for bad loans, up 78 percent from a year earlier, while net chargeoffs more than doubled to $610.1 million.

Loans that are not performing, or otherwise not accruing interest, increased by $701 million during the quarter to $4.64 billion, or 3.75 percent of total loans. Nonperforming assets totaled $5.25 billion.

Residential mortgages and home equity lines of credit accounted for 54 percent of nonperforming loans, with a large portion of the weakness in Florida, SunTrust said.

The bank posted a net loss of $815.2 million before accounting for payment of preferred stock dividends. Analysts expect the bank to lose money in every quarter this year.

SunTrust has taken $4.9 billion from the government's Troubled Asset Relief Program. The bank is one of 19 undergoing government "stress tests" to measure its need for capital in a deep recession. Test results are due May 4. Wells said he would like to return the TARP money "as soon as practical."

The bank's ratio of tangible common equity to tangible assets ended March at 5.82 percent, better than the 5 percent that some analysts prefer.

SunTrust ended March with $179.1 billion of assets. It operates 1,694 branches in 11 states and Washington, D.C.

Through Wednesday, the bank's shares had fallen 48 percent this year, compared with a 27 percent drop in the KBW Bank Index (.BKX).

(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn, Derek Caney and John Wallace)

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U.S. jobless claims up slightly above forecast (Reuters)

Thursday, April 23rd, 2009 | Finance News

WASHINGTON (Reuters) –
The number of U.S. workers filing new claims for jobless benefits rose 27,000 last week, the government said on a report on Thursday that showed the number of workers receiving benefits at a record high.

Initial claims for state unemployment insurance benefits increased to a seasonally adjusted 640,000 in the week ended April 18 from a revised 613,000 the prior week, the Labor Department said.

Analysts polled by Reuters had forecast 635,000 new claims versus a previously reported count of 610,000 the week before.

However, the number of people claiming benefits after drawing an initial week of aid advanced 93,000 to a more-than-forecast 6.137 million in the week ended April 11, the most recent week for which data is available.

It was the highest reading of so-called continued claims on record and the fourteenth consecutive week that this measure had increased. Analysts forecast continued claims would be 6.12 million.

The country's most severe recession in a generation has cost more than 5 million jobs since it began in late 2007 and economists fear this toll will keep rising as businesses slash payrolls to protect profits.

U.S. stock index futures pared gains after the data and U.S. government bond prices moved up from earlier lows.

"After the unexpected Easter-related drop in claims last week we expected a bigger rebound, taking claims back to their highs of around 670,000," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

"The failure to rise that high suggests either that the trend in claims is peaking or that the data are still affected by seasonal problems related to the holiday. We are inclined to take the latter view," he said.

The rise in continued claims pushed the uninsured unemployment rate to 4.6 percent from 4.5 percent the week before, the highest rate since January 1983.

A Labor Department official said there were no special factors affecting the data.

The four-week average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, declined somewhat to 646,750 from 651,000 the week before, but remained at elevated levels.

(Reporting by Alister Bull, Editing by Neil Stempleman)

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