Rite Aid Gets a Warning from the NYSE

Rite Aid Gets a Warning from the NYSE

Rite Aid Corp., the third largest U.S. drugstore, has seen its shares decline 73% this year. The retailer has struggled with its $4 billion acquisition of Brooks and Eckerd that closed more than a year ago. The struggling U.S. economy has also forced the company to discount merchandise, leading to wider losses. For the latest ending quarter, Rite Aid took losses of $222 million, tripling the loss from the prior year's quarter.

The Camp Hill, PA based drugstore reported that they would need to split its stock 1 for 10, 1 for 15 or 1 for 20 to continue to trade on the New Your Stock Exchange (NYSE). Its shareholders will need to approve the split, which will reduce the number of outstanding shares. Rite Aid has come to this decision due to the NYSE notifying them that as of Thursday its stock has traded below $1 for the past 30 sessions, putting the company out of compliance with the exchange rules. The NYSE has given Rite Aid six months to rectify the situation.

Rite Aid Corp (RAD) closed this week at $0.71.

Google Beats Earning Expectations

Google, Inc. posted a fiscal third-quarter profit that beat analysts' forecasts. Google, best known for its Internet search engine, reported that net income for the period ending in September increased to $1.35 billion, or $4.24 a share, from $1.25 billion, or $3.92 a share, in the same period a year earlier.

Google was able to cut expenses in a number of areas during the quarter in research and development and sales and marketing. The Mountain View, CA based company was able to add 500 new employees, a small increase compared to prior periods but a positive sign nonetheless. Google has also began receiving more than half of its revenue from overseas markets, including Europe and Japan. The company reported that 51% of its third-quarter revenue came from international markets.

Shares of Google (GOOG) finished the week at $372.54.

Strong Growth Reported for IBM

IBM Corp. reported a 22% gain in earnings for the third-quarter as the high-tech giant benefited from strong growth in sales from its software and services divisions. For the period ending this past September, IBM reported it earned $2.8 billion, or $2.05 a share, compared with $2.36 billion, or $1.68 a share, for the same period a year earlier. However, since the end of September, IBM stock has declined nearly 20% on worries about its exposure to the financial market.

CFO Mark Loughridge said he remained "quite confident" that the company could hit its long-term goal of at least $10 in earnings per share for 2010. The company's software division increased 8% from the previous year and 4% in the technology services area. This overall company growth was somewhat offset by the hardware segment which declined 11%.

IBM Corp (IBM) closed this week at $90.78.

The Dow started the week at 8,451 and closed at 8,852. The NASDAQ began the week at 1,649 and finished at 1,711. The S&P 500 started at 899 and ended at 940.

Treasury Gains Soften as Stock Market Rebounds

Treasury Gains Soften as Stock Market Rebounds

Treasury's rose slightly Friday as the market rode out large swings, with bonds paring earlier gains spawned by a weak U.S. housing report. Treasury yields have risen in the holiday-shortened week as U.S. stocks climbed higher. Increases have been limited as concern that the economy will sink further into a recession has maintained investor interest in the relative security of government debt.

Futures traders still expect a slowing economy to prompt the Federal Reserve to lower its target borrowing rate at the end of the month.

The 10-year Treasury note began the week at 3.86% and finished at 3.94%. The 30-year Treasury bond began at 4.14% and finished at 4.31%.

Largest Rate Increase Since 1987 for 30-Year FRM

Largest Rate Increase Since 1987 for 30-Year FRM

Freddie Mac released its Primary Mortgage Market Survey for the week which showed that the 30-year fixed-rate mortgage (FRM) averaged 6.46%, up from last week when it averaged 5.94%. Last year at this time, the 30-year FRM averaged 6.40%.

This week's increase of 52 basis points was the largest weekly increase since the week ending April 17, 1987, when the 30-year FRM increased 84 basis points. The 15-year FRM this week averaged 6.14%, up from last week when it averaged 5.63%. A year ago at this time, the 15-year FRM averaged 6.08%.

"Interest rates for 30-year fixed-rate mortgages rose this week to an 8-week high," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. He also stated, "ARM rates, which tend to be based on shorter-term benchmarks, showed smaller gains in part due to the Federal Reserve's October 8 inter-meeting rate cut in the overnight lending rate."

Recent economic reports suggest the economy is still slowing. For instance, retail sales fell for the third consecutive month by 1.2% in September. In addition, in its latest Beige Book, released October 15th, the Federal Reserve indicated that economic activity weakened in September across all twelve Federal Reserve Districts and that several Districts also noted their contacts had become more pessimistic about the economic outlook."

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