JCPenney’s President Resigns Suddenly
The markets were up this morning based on the positive housing data reports that were released, as well as the belief that the Federal Reserve is going to offer a new round to quantitative easing to help stimulate the economy. The Dow Jones Industrial was up 118 points, the NASDAQ was up 35 points and the S&P 500 was up 13 points.
Leading economic news for the day is the U.S. Commerce Department release of new housing data. There was an 7.9% increase of building permit requests, up to 780,000 for the month. This was up significantly from the 720,000 economists had originally predicted. However, the news wasn’t all strong. American builders also saw a drop in breaking ground on new single-family homes for May. Ian Lyngen, strategist with CRT, said “Overall, a mixed read from the housing sector but one this is consistent with further stability in the single-family market.”
Overall, there was a 4.8% drop in new housing starts, an adjusted rate of 708,000 for May. The Commerce Department adjusted the numbers for April to 744,000. This had previously been the best reading since 2007. Paul Diggle, property economist at Capital Economics, said “The 4.8% m/m fall in housing starts in May could be an early sign that the recent slowdown in the wider economy has taken some of the wind out of the sales of the improvement in housing market activity.”
In other news, the Federal Reserve is holding a two day meeting set to begin Tuesday. Analysts are saying that the meeting may be in regards to a new round of quantitative easing. Even if no action is immediately taken, there’s hopes that the Fed will send a message saying they will be standing by if help is needed. Brian Bethune, economics professor at Gordon College in Massachusetts, said of the meeting, “I think Fed officials will send a pretty decisive signal that they are prepared to provide more support to boost economic growth and lower unemployment.”
In company news, retailer J.C. Penney Company, Inc (NYSE:JCP) is down 10% in trading today, to $21.87 per share. The news driving the downturn was the fact that the company’s president, Michael Francis, has left his job suddenly, after only nine moths on the job. This is placing heavy doubt on the companies new marketing strategies. Charles Grom, retail analysts with Deutsche Banks, said in a note to clients, “This surprise announcement is a catastrophic blow to the bull case on JCP. The lack on continuity within the executives office has to be a concern considering the company is only at the outset of its turnaround effort.” The company is down 37.7% in share price so far this year.
Meanwhile, Microsoft Corporation (NADSAQ:MSFT) was up 3.42%, to $30.86, so far this trading day. The company announced two new “surface” tablets that will run on Windows 8 and Windows RT. The company is not building the tablets themselves and it is unsure who is building the tablets for them. Tom Mainelli, Microsoft’s research director for mobile connected devices, said “Our current thinking… is that Windows-based tablets will be largely additive to our existing media tablet market forecast. We don’t expect Windows-based tablets to necessarily take share from Apple and Android, but will grow the overall tablet market.”
Finally for the day, pharmacy retailer Walgreen Company (NYSE:WAG) shares were down 6.12% to $30 each, at the time of writing. The company announced that it was buying 45% stake in European health and beauty Alliance Boots Holdings Ltd for $46.7 billion. Walgreens will have the option to buy the rest of Alliance Boots in three years.
That’s all for today!