Month: September 2015

The dollar strengthened against its main rivals Friday despite a disappointing reading on August jobs growth. The Department of Labor reported that the U.S. economy created 173,000 jobs in August, missing a consensus estimate for 213,000 new jobs by a wide margin. But the report was actually a lot stronger than its headline number would suggest, said Andrew Dilz, a currency strategist at Tempus Inc. Job gains for July and June were revised up by a combined 44,000, which brought the unemployment rate down to 5.1%. “The Fed deems that [unemployment rate] full employment and that provides even more support to the case to hike interest rates,” Dilz said. The euro fell to $1.1105 in recent trade from $1.1130 ahead of the report. The dollar edged higher to 119.30 yen from 119.20 yen ahead of the report. The pound was little-changed at $1.5222.

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WASHINGTON (MarketWatch) – The average hourly wage paid to American workers rose 0.3% in August. The typical worker earned $25.09 an hour, up 8 cents from the prior month. From August 2014 to August 2015, hourly wages rose 2.2%. Annualized increases in pay have stuck to a tight range of 1.9% to 2.2% since 2012. The amount of time people worked each week edged up 0.1 hours to 34.6 in August. The labor-force participation rate was unchanged at 62.6%.

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WASHINGTON (MarketWatch) – The U.S. economy created a modest 173,000 new jobs in August to mark the smallest gain in five months, but the unemployment rate fell to 5.1% from 5.3%, the government said Friday. That’s the lowest level since April 2008. Economists polled by MarketWatch had expected a gain of 213,000 nonfarm jobs. On the more positive side, employment gains for July and June were revised up by a combined 44,000. The Labor Department said 245,000 new jobs were created in July instead of 215,000. June’s gain was revised up to 245,000 from 231,000.

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Caterpillar Inc.’s stock slumped 1.7% in premarket trade Friday, after RW Baird downgraded the maker of mining and farming equipment, as commodities prices have failed to stabilize as previously expected. Analyst Mircea Dobre cut his rating to neutral, nearly four months after raising to outperform. He cut his stock price target to $77, which is 3.4% above Thursday’s closing price, from $89. Dobre said his view that commodities prices were finding a bottom “is failing to gain traction,” as China-driven macro volatility has led to another leg down in prices. “Against this backdrop, upside from [Caterpillar’s] resources business appears increasingly unlikely, while peer [original equipment manufacturer] commentary and results are suggesting that fundamentals can actually get worse rather than better in the near term (a combination of volume declines and price compression),” Dobre wrote in a note to clients. The stock has dropped 13% over the past three months, while the Dow Jones Industrial Average has lost 8.6%.

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BlackBerry Ltd. shares rose about 4% in premarket trade Friday, after the mobile communications company said it has agreed to buy Good Technology for $425 million in cash. The deal will allow BlackBerry to offer “a unified, secure mobility platform with applications for any mobile device on any operating system — supported with security that has been certified by governments around the world embedded in every component of the mobility infrastructure,” BlackBerry said in a statement. California-based Good Technology’s products are used by banks and aerospace and defense companies, among others, said the statement. BlackBerry is expecting the deal to close in the third quarter of fiscal 2016 and to boost earnings and cash flow in the first year after closing. It expects to realize about $160 million in revenue in the first year. BlackBerry shares have fallen about 32% in the year so far, while the S&P 500 has fallen 5.2%.

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WASHINGTON (MarketWatch) – If the August employment report is weak, Fed officials should view it as a “one-month blip” that would not alter the strong labor market picture over the last several years, said Jeffrey Lacker, the president of the Richmond Fed, on Friday. In a speech in Richmond, Lacker said the case for raising rates remains strong, despite recent financial market volatility, which will have only a “quite limited” effect on the U.S. outlook. While the Fed’s favorite inflation indicator, the personal consumption expenditure index, rose at a 0.3% annual rate in July, inflation is not as low as this headline suggests because it includes several months last year when inflation was negative, he said. Since January, the PCE index has grown at an average annual rate of 2.2%, Lacker said. That is just above the Fed’s 2% target. “I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring,” Lacker said. The Richmond Fed president is a voting member this year. He has been calling for a rate hike since March.

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Netflix Inc.’s stock dropped 3% in premarket trade Friday, putting it on track for a sixth-straight loss, as investors continue to fret over increasing competition. The stock has lost 14% over the previous five sessions, and 20% since closing at a record of $126.45 on Aug. 6. But even with Friday’s premarket decline to $98.07, the stock is still more than double what it was at the end of 2014 ($48.80). A sixth-straight loss would be the longest losing streak since the six-session stretch ending March 10. Analyst Youssef Squali at Cantor Fitzgerald reiterated on Friday his buy rating and his stock price target of $125, which is 24% above Thursday’s closing price. He said the good ratings that Netflix’s original series Narcos received in its first week is a positive for the stock, “as there is correlation between the launch of big original titles and subscriber growth.” However, Amazon’s announcement this week to allow its Prime users to watch select TV shows and movies offline “should increase the appeal of its streaming service,” implying increased competition for Netflix.

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Jack Ma and Joe Tsai, the chairman and vice chairman of Chinese e-commerce giant Alibaba Group Holding Ltd. , are planning to borrow more than $2 billion through a margin loan by using their own shares in the e-commerce company as collateral, according to media reports. Citing people familiar with the loan, Bloomberg said the money may be used to fund Blue Pool Capital Ltd., which is the family office of Alibaba set up by the vice chairman. In a statement sent to The Wall Street Journal, Alibaba said that “share financing is very common for founders and senior executives who hold such a strong belief in the future growth potential of their companies.” The move comes after Alibaba shares have taken a deep dive in recent months and are currently down 45% off their high of $120 in November.

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Apple Inc.’s new music service reached the ears of more than 44 million smartphone owners in the United States during its first month, making it one of the top 15 smartphone apps in the nation, ComScore reported Thursday. The analytics company’s audience-measurement tool looked at the nearly 183 million iOS and Android users in the U.S. and found that 24.1% accessed Apple Music in July, ranking it No. 14 even though the service hasn’t debuted on Google Inc.’s Android operating system yet. That ranking put the app just behind Twitter Inc. and ahead of Snapchat, and made it the second most popular app devoted solely to music, behind Pandora Radio , which reached 43.9% of users of both major mobile operating systems. Apple Music launched June 30 and offers a streaming-music service, which has grown in popularity over the download-focused iTunes system Apple made popular, as well as a global radio station.

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Allergan PLC said late Thursday it agreed to acquire privately-held AqueSys Inc. for $300 million cash. AqueSys makes medical devices that are placed in the eye to reduce pressure associated with glaucoma. Allergan said that it will also pay milestone payments for regulatory approval and commercialization of AqueSys’s XEN45 device, which is expected to get U.S. approval in late 2016 or early 2017. Allergan plans to close the acquisition in the fourth quarter.

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