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Tricks and treats of 'Deceptive Practice'
Stocks open lower: Market paring down earlier losses. Dow is down 25 points.
Big drop in jobless claims: Weekly filings for unemployment benefits fell by 14,000 to 374,000. Meanwhile, 176,000 private-sector jobs were added last month, according to payroll provider ADP. The Labor Department comes out with its jobs report Friday morning. From AP:
"We're actually seeing some better news on the U.S. jobs front," said Jennifer Lee, an economist at BMO Capital Markets, in a note to clients. Unemployment aid applications have fallen for two straight weeks. The back-to-back drop of 18,000 is the largest two-week decline since February, she noted. The data sketched a picture of a slowly improving job market one day before the government reports on hiring in June. Economists are predicting 90,000 jobs were added last month, while the unemployment rate stood at 8.2 percent.
Lukewarm retail sales: Costco, Target, and Macy's all missed expectations in June, while Limited surpassed forecasts. From AP:
June is a period when stores clear out summer merchandise to make room for fall goods, but it took more discounts than a year ago to get shoppers to buy because of a weakening economy, according to UBS Investment Research analyst Roxanne Meyer. Only a handful of chains representing roughly 13 percent of the U.S. retail industry report monthly sales.
Another record low for mortgage rates: Average on 30-year loans fell to 3.62 percent, down from 3.66 percent last week and the lowest since they started long-term mortgages in the 1950s. (AP)
European central bank drops interest rates: Move is designed to open up credit, which could help Europe's deteriorating economy. From the NYT:
With interest rates now close to zero, the bank and its president, Mario Draghi, will have a dwindling selection of conventional monetary policy tools they can use to combat the crisis. The cut Thursday is likely to increase speculation that the E.C.B.'s next step to contain the crisis would be massive purchases of government bonds, similar to the quantitative easing undertaken by the U.S. Federal Reserve. "The E.C.B. is aware that cutting rates to their lower bounds is likely to fuel market expectations that an outright Q.E. launch will follow shortly after," Jens Sondergaard, analyst at Nomura, said in a note to clients ahead of the rate decision.
Support for Brown's tax measure: Field Poll finds 54 percent of likely voters favoring the governor's ballot measure that would temporarily boost the state sales tax as well as the personal income tax for those making more than $250,000 a year. From the SF Chronicle:
More than a fifth of those voters backing Brown's tax plan, , say they would be less likely to support it if the state starts spending money on high-speed rail. "These are people who generally agree that the state needs more tax money, but are concerned that if the state has the money for high-speed rail, they have a question as to whether the taxes are really needed," said Mark DiCamillo, director of the poll. With the Legislature slated to vote this week on providing $2.7 billion in state bond money for the initial Madera to Bakersfield link in the system, Brown's support for high-speed rail "is out of sync with what voters are seeing in the budget," DiCamillo added.