(Updated with same-store sales data, jobless claims data, ECB rate decision, Plosser comments on inflation.)
Thursday's Early Headlines
- Retailers Post August Same-Store Sales Data. - Retail companies are releasing same-store sales data before the start of trading Thursday. Analysts are expecting an overall decline of 3.8%, according to Thomson Reuters. While that number is still weak, it would mark an improvement from July's 5.1% slide. As of 8:30 a.m. EDT, 50% of retailers had missed estimates compiled by Thomson Reuters, including Abercrombie & Fitch (ANF), Dillard's (DDS) and Children's Place (PLCE). On the positive side, Gap (GPS), Costco Wholesale (COST) and Aeropostale (ARO) topped estimates.
- Initial Jobless Claims Disappoint Economists - The Labor Department said initial jobless claims slipped to 570,000 last week from a revised 574,000 in the prior week, although that was higher than the 564,000 consensus. Continuing claims rose to 6.23 million from a revised 6.14 million, also higher than economists expected.
- Interest Rate Increases Could Be Rapid: Plosser. - Reuters reports that Philadelphia Federal Reserve President Charles Plosser said that the central bank may need to raise interest rates rapidly depending on how the recovery evolves. The Fed has to be prepared to move faster than some would expect, Plosser said, according to the report. He added that the start of a rate-hiking cycle would "probably not" come in the waning months of 2009.
- Oracle, Sun Deal Hits Regulatory Speed Bump. - European Commission officials have begun an antitrust probe into Oracle's (ORCL) $7.4 billion acquisition of Sun Microsystem (JAVA), delaying the merger. EC officials are most concerned about Oracle obtaining Sun's MySQL database and thus limiting the choice for database software. The EC now has 90 days, until Jan. 19, 2010, to either clear the deal or block it.
- Japan's Dainippon to Buy Sepracor. - Japanese drugmaker Dainippon Sumitomo Pharma will buy Sepracor (SEPR) for $2.6 billion, or $23 a share. The acquisition is seen as a way for Dainippon to gain access to Sepracor's sales force, as the Japanese company plans to file for U.S. marketing approval next year of its experimental schizophrenia drug Lurasidone.
- ECB Holds Interest Rates Steady. - As expected, the European Central Bank held rates at 1%. Jean-Claude Trichet, the head of the ECB, will hold a press conference Thursday, with traders looking for any mention on inflationary pressures.
- OECD Sees Faster Recovery for G-7 Economies. - Bloomberg reports that the Organization for Economic Cooperation and Development anticipates a "modest" recovery for the world's leading industrialized economies as it cut its estimate for their recession this year. The OECD said it expects the combined economy of the Group of Seven nations will shrink 3.7% this year, less than the 4.1% projected in June, the report said.
- Brazil's JBS Bids for Pilgrim's Pride. - The Wall Street Journal reports that Brazilian beef company JBS is set to announce next week the acquisition of Pilgrim's Pride for a price tag of roughly $2.5 billion, helping to pull the troubled Texas-based chicken company out of bankruptcy.
- YouTube in Talks to Stream Movie Rentals. - The Wall Street Journal reports that YouTube, a subsidiary of Google (GOOG), is talking to several movie studios about streaming movies on a rental basis. Negotiations with Lions Gate (LGF), Sony (SNE), Metro-Goldwyn-Mayer and Time Warner (TWX) are ongoing and no deals have yet to be completed, the report said. People familiar with the matter say rentals are likely to be priced at $3.99, the same as online stores run by Apple (AAPL) and Amazon.com (AMZN)
Thursday's Earnings Roundup
- Ciena (CIEN) reported an adjusted fiscal third-quarter loss of 5 cents a share, better than the consensus for a loss of 13 cents a share, according to Thomson Reuters. Revenue dropped nearly 35% from a year ago to $164.8 million, also coming in better than expectations. Looking ahead, the company expects fiscal fourth-quarter revenue to be flat with the third-quarter levels.
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