Stocks slip on weak jobs report

NEW YORK (CNNMoney)

The government said Friday that employers added 162,000 jobs in July, below forecasts. But the unemployment rate did fall to 7.4%.

The Dow Jones industrial average and S&P 500 both retreated from the all-time highs they hit Thursday. The Nasdaq slipped as well.

The response in the bond market was more pronounced. The yield on the 10-year Treasury note sank from about 2.74% before the report to 2.61%. That may be a sign that the Federal Reserve may not pull back on stimulus as quickly as some investors expected.

The Fed has repeatedly said that improvement in the job market would be a trigger for it to begin removing the liquidity it has been pumping into the market for the past few years. Some experts thought that this so-called tapering could begin as soon as September.

But Ishaq Siddiqi, market strategist at ETX Capital in London, said he thinks the Fed will not change its policy this year given the modest improvement in hiring.

"We need to see clear signs of sustainable improvement and stronger momentum in the jobs market before tapering can really start," he said.

The U.S. dollar was also under pressure following the jobs data. The greenback was down 0.7% versus the U.K. pound and 0.4% versus the euro.

Related: Fear & Greed Index, still greedy

On the corporate front, Dell (DELL, Fortune 500) shares rose after the PC maker announced a buyout deal with founder Michael Dell and Silver Lake Management.

On the earnings front, Toyota (TM) reported a 94% jump in quarterly profit, helped by a weaker yen.

Viacom (VIA), the media company that owns cable networks MTV and Nickelodeon. reported a jump in quarterly revenue and profit.

Shares of Weight Watchers (WTW) plunged after the company reported weak earnings and announced that CEO David Kirchhoff will step down.

After the closing bell, LinkedIn (LNKD) reported better-than-expected results and boosted its full-year forecast. The stock surged in early trading.

AIG (AIG, Fortune 500) shares rallied after the insurer announced plans to reinstate a dividend and buy back shares.

First Published: August 2, 2013: 9:50 AM ET

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Hiring slumps in July

The economy added 162,000 jobs in July, marking the weakest month for job growth since March.

NEW YORK (CNNMoney)

The U.S. economy added 162,000 jobs, marking the slowest month for hiring since March, the Department of Labor said Friday. Economists surveyed by CNNMoney had predicted employers added 180,000 jobs. Stocks slipped at the opening bell, following the report.

"It was a bit of a disappointment," said Sal Guatieri, senior economist with BMO Capital Markets. "We're continuing to see moderate but unspectacular job growth in the U.S. and that's consistent with an economy that's growing at a modest rate."

The report was discouraging in many regards. While the unemployment rate fell slightly to 7.4%, the drop was partly because 37,000 people dropped out of the labor force.

Only about 63% of Americans over age 16 participate in the job market -- meaning they have a job or are looking for one. That rate has been hovering recently around its lowest level since 1979.

The make-up of job growth was also disappointing.

Hiring in July was concentrated in sectors typically characterized by low-wage jobs: Retailers, for example, added 47,000 jobs and restaurants and bars hired 38,000 workers.

July's job growth was also below the average monthly gains over the past year, and revisions to June and May figures show that the economy added 26,000 fewer jobs than originally reported.

Meanwhile, the average workweek fell slightly, and average wages fell by about 2 cents to $23.98 an hour.

Share your story: Are you working part time, but would rather work full time?

A survey of households showed workers got far more part-time jobs than full-time jobs, and the number of self-employed workers increased dramatically in July. But data from that survey are notoriously volatile, and economists cautioned against reading too much into just one month's numbers.

Earlier in the week, the Commerce Department reported that the economy grew at slow rate in the second quarter, equivalent to about 1.7% a year. Many economists, including those at the Federal Reserve, expect economic growth to accelerate later this year.

"I don't think it's time to press the panic button," Guatieri said. "We still think the economy will pick up in the second half of the year as some of the fiscal headwinds abate."

The Federal Reserve has said it wants to see the outlook for the job market improve "substantially" before it will be ready to start gradually reducing its monthly bond-buying program -- known as QE3. Weakness in the July jobs report could mean the central bank will hold off on beginning to taper QE3 until later in the year.

Although the job market has improved over the past few years, it still has a way to go before it fully recovers from the Great Recession.

Overall, the U.S. economy lost 8.7 million jobs in the financial crisis, and has since gained back 6.7 million jobs.

First Published: August 2, 2013: 8:45 AM ET

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Weight Watchers plunges 19% on dismal quarterly results

Weight Watchers stock plunged after dismal earnings.

NEW YORK (CNNMoney)

Weight Watchers (WTW) shares plummeted 19% after the company reported a 16% decline in quarterly profit, compared to the year-ago quarter. The company said this was partly because of a $21.7 million charge for debt refinancing.

The company also reported a drop in revenue of nearly 4%, compared to the year-ago quarter. It said it is acquiring fewer new customers as more people turn to free apps that provide a similar service.

"This deceleration was driven by declining sign-ups in the U.S. business, as the commercial weight loss category continued to be impacted by increasing consumer trial of activity monitors and free apps," said the company, in its earnings report.

Weight Watchers lowered its full-year guidance to a range of between $3.55 and $3.70, compared to the prior range of $3.60 to $3.99.

First Published: August 2, 2013: 9:57 AM ET

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Good news: Jobless claims fall to 5-year low

NEW YORK (CNNMoney)

About 326,000 people filed initial claims for unemployment benefits in the week ending July 27, the Labor Department reported Thursday.

That marks the lowest level of weekly claims since January 2008 and seems to indicate layoffs are back to levels more consistent with pre-recession hiring.

That said, July is a notoriously choppy month for weekly jobless claims, so economists often prefer to look at a four-week moving average to smooth out some of the volatility. That indicator fell last week as well, and is now at its lowest level since May.

"We are optimistic that the downward trend in claims will persist and that the labor market will continue to improve, but we are also cautious that claims may rise again in the next few weeks," said Thomas Simons, money market economist for Jefferies & Co., in a note to clients.

Meanwhile, 2.95 million people filed claims for their second week or more of unemployment benefits, also marking a decline from a week earlier.

The initial claims report is viewed as one of the more important gauges of the job market. Released every week, usually with just a five-day lag, it's the closest thing we have to a real-time jobs indicator. For that reason, economists scrutinize the numbers to come up with their predictions for job growth each month.

This July, economists surveyed by CNNMoney predict employers added 180,000 jobs, marking a slight slowdown in hiring after they added 195,000 jobs in June. The Labor Department will release its monthly jobs report on Friday morning. In a separate report Wednesday, payroll processing firm ADP (ADP, Fortune 500) said the private sector added 200,000 jobs in July. That was more than expected.

First Published: August 1, 2013: 9:14 AM ET

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S&P 500 tops 1,700 for first time

NEW YORK (CNNMoney)

The S&P 500 topped 1,700 for the first time ever, while the Dow Jones industrial average also hit a record high. Both indexes jumped 0.8%, while the Nasdaq gained 0.9%.

Stocks have been driven by positive economic news this week and Thursday was no different.

The Labor Department reported that the number of Americans filing first-time claims for unemployment benefits fell to a five-year low. That's good news ahead of the government's monthly jobs report on Friday.

Still to come, the Institute for Supply Management will release its monthly manufacturing sentiment index, while the Census Bureau will issue data on construction spending.

Major automakers will also release their monthly sales results throughout the day.

Investors were also calmed by indications that the Federal Reserve will not be too hasty when scaling down its massive bond-buying program.

Related: Fear & Greed Index

On the corporate front, Procter & Gamble (PG, Fortune 500) reported better-than-expected earnings and sales for its fiscal fourth quarter.

Exxon Mobil (XOM, Fortune 500) reported quarterly earnings that fell short of forecasts, citing weaker refining margins, while revenue topped estimates.

Royal Dutch Shell (RDSA) reported earnings and revenue that missed estimates. The company cited higher costs, exploration charges and challenges in Nigeria, where oil thefts and supply disruptions have hit Shell's bottom line.

Barrick Gold Corp. (ABX) booked a quarterly charge of $8.7 billion in the second quarter, driven by falling gold prices.

Check out how global stock markets are doing

Shares of DirecTV (DTV, Fortune 500) fell after the satellite television provider posted earnings that widely missed forecasts. LinkedI (LNKD)n is due after the close.

Son (SNE)y reported first-quarter results showing a 13% jump in sales compared with the same quarter a year earlier. The revenue boost was largely the result of a weaker yen and stronger smartphone sales.

Yelp (YELP) shares jumped 20% after the online review site reported a smaller-than-expected quarterly loss late Wednesday.

Shares of J.C. Penne (JCP, Fortune 500)rebounded following a 10% sell-off Wednesday. The retailer issued a statement early Thursday disputing reports that CI h (CIT, Fortune 500)ad cut off some of the credit to its suppliers due to concerns about Penney's ability to pay them.. However, an analyst for Citigroup cut her recommendation on the stock to a "sell" from "neutral."

Overall, U.S. stocks finished largely unchanged Wednesday. But the markets surged in July. All three major indexes gained between 4% and 7%.

First Published: August 1, 2013: 9:49 AM ET

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Rolling Stone sales double with 'Boston Bomber' issue

Rolling Stone's controversial July issue featuring alleged "Boston Bomber" Dzhokhar Tsarnaev generated big newstand sales.

NEW YORK (CNNMoney)

The issue has sold 13,232 copies since going on sale on July 19, according to data collected from 1,420 retailers by sales tracker MagNet. That was slightly more than double the magazine's average sales in 2012.

The Tsarnaev cover with the title, "The Bomber: How a popular, promising student was failed by his family, fell into radical Islam and became a monster," ignited widespread backlash for being insensitive.

The Boston marathon bombings on April 15 killed three people, wounded more than 200 and led to a frantic manhunt that left a police officer dead.

Related Story: Rolling Stone cover of bombing suspect called 'slap' to Boston

The photo itself, which showed a tousle-haired, thinly-goateed Tsarnaev staring straight ahead, was also criticized for seemingly glorifying him.

CVS (CVS, Fortune 500), Walgreens (WAG, Fortune 500), 7- Eleven and Stop & Shop were among the retailers who announced they would not sell the Rolling Stone issue to customers.

Rolling Stone defended its decision to feature Tsarnaev on the cover, saying the cover story "falls within the traditions of journalism and Rolling Stone's long-standing commitment to serious and thoughtful coverage of the most important political and cultural issues of our day."

First Published: August 1, 2013: 9:54 AM ET

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Netflix launches user profiles for individual recommendations

Timmy's love of watching cartoons on Netflic won't ruin his parents' Netflix recommendations anymore.

NEW YORK (CNNMoney)

The new "Profiles" feature will let each Netflix account include up to five separate user profiles. The feature effectively sections off viewing habits for each household member, giving each person individualized suggestions and the ability to add their own favorite titles.

Eddie Wu, Netflix's director of product innovation, told CNNMoney it's long been obvious to the company that a father wouldn't want to watch "Dora the Explorer" simply because his two-year-old watched "SpongeBob Squarepants."

Wu noted that Netflix had been toying with different ways to solve that problem, but the company was resistant to introduce a feature that added an extra step for users.

"We tried a few things that didn't involve explicitly making profiles, because we didn't want to make it too complex for people," Wu said.

Ultimately, Netflix decided this setup was fairly seamless. In addition to profiles for family members, the new feature also lets users create profiles around themes of their choosing, like "Date Night."

The profiles feature will also let users link their Facebook (FB) accounts, in order to share their individual viewing history and get recommendations from friends. Netflix added Facebook integration in March after lobbying Congress to change an old video law.

Related story: YouTube's boost from a cable TV boss

For now, profiles will be available on Netflix's website, the Sony (SNE) PlayStation 3, the Microsoft (MSFT, Fortune 500) Xbox 360, Apple (AAPL, Fortune 500) iOS devices and most smart TVs. Google (GOOG, Fortune 500) Android devices won't support Netflix (NFLX) profiles until the end of the fall, Wu said.

The profiles feature may not be as bold a change as the company's recent ramp-up of original programming, but Neil Hunt, Netflix's chief product officer, said profiles are another way to stand out in the crowded streaming-video space.

The company said focus-group testing showed that profiles generate more viewing and more engagement.

"We like to play around with more ways to move forward," Hunt said.

First Published: August 1, 2013: 8:18 AM ET

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Rapid home price gains will slow

San Jose, Calif., saw huge home price gains during the 12 months that ended March 2013, but it's expected to gain just 7.4% in the current period.

NEW YORK (CNNMoney)

While double digit gains have been common, home appreciation is projected to drop to 6.5% during the 12 months ending March 31, 2014, according to a report released Thursday. That will follow a 10.2% jump for the preceding 12 months, the first double-digit increase since the peak of the housing boom seven years ago.

The forecast is based on the CoreLogic Case-Shiller home price indexes and covers 384 metro areas and more than 80% of the total U.S. housing market.

Related: 10 most expensive cities in the world

Dr. David Stiff, chief economist for CoreLogic Case-Shiller, expects home prices in most markets to continue to increase significantly for several months before slowing down.

"Record levels of affordability, a slowly improving job market and very small inventories of new and existing homes for sale will continue to drive U.S. home price appreciation during the summer," he said.

In the handful of markets where prices have recently declined, Stiff said they'll likely turn positive before the year is out. Even with the dramatic price increase recently, he remained unconcerned about a new bubble, as "home prices remain 26% below their peak nationally and are even lower in some metro areas."

Related: Housing markets where cash is king

San Jose, Calif., was the biggest winner over the 12 months that ended in March 2013, with an increase of 23.7%, but it's forecast to gain just 7.4% in the current period.

Phoenix and Sacramento will also see a significant slowdown, with price gains dropping from above 20% to the single digits.

Related: 10 big, booming cities

Other markets will take up some of the slack. Prices in Hartford, Conn., should increase by 9.8% after recording a 1.2% year-over-year gain through March 2013. Baltimore and Philadelphia will also see their prices jump.

Stiff has consistently projected stagnation in Florida housing markets, and this year is no different. He thinks prices will dip in Miami by 2.7%; Fort Lauderdale by 2.6%; and Orlando by 1.6%. Tampa is a lone bright spot, where prices are expected to rise 2.3%.

First Published: August 1, 2013: 8:20 AM ET

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Central banks in Europe keep rates on hold

The heads of each of the central banks -- Mario Draghi and Mark Carney -- are moving towards issuing more forward guidance.

LONDON (CNNMoney)

The ECB kept its benchmark interest rate at a record low of 0.5%.

Separately, the BofE said it would also stay the course with its monetary policy, leaving interest rates at a record low of 0.5%, and keeping its asset purchase program unchanged at £375 billion.

In a significant break with tradition, both central banks gave investors more insight into future policy moves last month, and investors are keen to hear more.

"Looking ahead, we expect forward guidance on interest rates to be introduced in the near future along with scenario analysis to explain how the Bank of England would react if the economy was to surprise significantly on the upside or downside," said Azad Zangana, a European economist at Schroders in London.

Related: Eurozone's unemployment crisis may have peaked

The BofE said it would release more information next week about its plans for providing forward guidance.

The rate announcements come as a slew of new economic data point to stabilization in the recession-hit eurozone economy and accelerating growth in the U.K.

The latest purchasing managers' index from Markit Economics showed a sharp increase in U.K. manufacturing in July, with the index hitting a 28-month high. That marks the fifth consecutive month of improvement.

"This survey was important ... because it suggests that the manufacturing sector in the U.K. -- about 10% of GDP -- continues to gather pace," said Kathleen Brooks, research director at FOREX.com.

Meanwhile, Markit's purchasing managers' index for the eurozone came in at a two-year high in July. While that wasn't as strong as in the U.K., it continues to show the region is stabilizing.

"These readings confirm our view that the worst is now behind us in terms of economic activity in the eurozone," said London-based Ricardo Santos, an economist at BNP Paribas.

First Published: August 1, 2013: 8:26 AM ET

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U.S. economy pulls through federal budget cuts

NEW YORK (CNNMoney)

Gross domestic product -- the broadest measure of economic activity -- rose at a 1.7% annual rate in April through June, slightly faster than the 1.1% rate in the first quarter, the Bureau of Economic Analysis reported Wednesday.

Federal budget cuts continued to drag on the economy, but the impact was not quite as severe as in the prior six months. According to the report, the U.S. economy bore the brunt of federal budget cuts at the end of 2012, when defense cuts in particular were deep enough to completely offset gains in consumer spending.

Consumer spending continued to rise in the second quarter, as Americans spent more on health care, recreational goods and vehicles, furnishings and clothing. The gain was slightly slower than in the first three months of the year, but was still seen as a good sign that consumers are coping well in spite of a higher payroll tax rate this year.

Meanwhile, business investment and the housing recovery also boosted growth.

Economists surveyed by CNNMoney had predicted GDP would grow at a 1.2% annual pace, so the report was much better than expected and seen as an encouraging sign for the recovery. That said, 1.7% growth is still considered weak historically.

In the three years leading up to the Great Recession, the economy grew an average of about 3% a year.

"With this report, the story of modest growth just continues on," said Jason Schenker, president and chief economist of Prestige Economics.

The data was solid enough to allow the Federal Reserve to continue

The Bureau of Economic Analysis also revised its GDP methodology on Wednesday to include research and development and arts and entertainment production as business investments.

The new methodology means U.S. economic activity is larger than previously reported, at around $16.6 trillion a year.

First Published: July 31, 2013: 8:55 AM ET

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