Mixed impact on consumers from Fed’s ‘Twist’

 

Operation Twist doesn’t give consumers much to shout about.

The Federal Reserve’s latest effort to boost the economy by driving down long-term interest rates won’t have a big impact on home and car buyers, savers or credit card users.

Any noticeable changes from the central bank shuffling $400 billion of its portfolio are likely to be mixed. Although borrowers may benefit from lower rates on mortgages and other fixed-rate loans, savers holding long-term bonds are likely to see their interest income dip.

The stock market’s skeptical reaction reflected the limited outlook for the program’s impact. If the Fed’s move spurs the economy, investors could see their portfolios climb. But the initial response of investors was a sell-off Wednesday and Thursday, partly because of the Fed’s suggestion that the economic slump could last for years.

 

Berkshire Hathaway stock dips below $100,000

 

Berkshire Hathaway’s Class A stock slipped below $100,000 for the first time since January 2010 amid broader market declines and concern about the health of the economy.

The Class A shares of billionaire investor Warren Buffett’s company traded as low as $98,952 Thursday, but rebounded to close at $100,000. The more affordable Class B shares traded as low as $65.35, during the day. The Standard & Poor’s 500 index dropped 3.2 percent.

Over the past year, Berkshire’s Class A shares declined nearly 19 percent from $124,865 to Wednesday’s closing price of $101,250. By contrast, the S&P 500 index that Buffett measures his company’s progress against was up about 2 percent from a year earlier at Wednesday’s close.

 

Nike’s 1Q net income rises 15 percent

 

Nike Inc.’s fiscal first-quarter net income rose 15 percent as sales of its athletic gear rose faster than its costs.

The world’s largest athletic shoe and clothing maker reported after the market closed Thursday that it earned $645 million, or $1.36 per share, for the quarter that ended Aug. 31. That’s up from $559 million, or $1.17 per share, in the same quarter last year.

Nike’s revenue rose 18 percent to $6.08 billion. Excluding the impact of foreign exchange rates, revenue rose 11 percent.

Nike, based in Beaverton, Ore., said demand for its product remained strong around most of the globe. That helped make up for the higher prices it paid for raw materials and for selling more things at a discount, both of which hurt its profit margins during the period.

Fewer people applied for unemployment benefits

The number of people applying for unemployment benefits fell last week, though the decline isn’t enough to signal improvement in the job market. Weekly applications dropped by 9,000 to a seasonally adjusted 423,000, the Labor Department said Thursday. The four-week average, a less volatile figure, rose slightly for the fifth straight week to 421,000.

Applications typically need to fall below 375,000 to signal sustainable job growth. They haven’t been that low since February. Higher unemployment benefit applications may suggest more employers are laying off workers amid growing worries that the economy has weakened.

Pacific Biosciences of California Inc. said Wednesday that it will cut 130 employees, or 28 percent of its work force. Last week, Bank of America Corp. said it is cutting 30,000 jobs.

Still, economists say the main problem is that there are few jobs for the 14 million people who are unemployed.

Discover 3Q profit more than doubles, card use up

Discover Card users used their plastic more often during the summer, with higher gas prices adding to increased pursuit of the card’s cash-back rewards. The increased use, combined with better payment habits, helped Discover Financial Services fiscal third-quarter profit more than double.

The Riverwoods, Ill.-based credit card company’s results solidly beat Wall Street expectations, which buoyed its stock while the broader markets plunged as fears mounted over the health of the global economy.

Higher gas prices helped push sales volume on Discover cards up 9 percent to $26.3 billion for the quarter. The average price per gallon during the June to August period was $3.648 per gallon, up from $2.729 the prior year, according to auto club AAA, Wright Express and Oil Price Information Service.

Target’s blunder with designer continues

Target Corp. drummed up so much hype around its exclusive, limited-time line by upscale Italian designer Missoni that the discounter’s website crashed and was down most of the day on Sept. 13 when the collection was launched, angering customers. More than a week later, some shoppers who bought the Missoni for Target line are posting on social media websites Facebook and Twitter that they won’t shop at Target again because their online orders are being delayed — or worse, canceled — by the retailer. The Missoni collection was an attempt by Target to regain the cachet it lost among the fashion-forward crowd after it began focusing on expanding its food business. Target is among a few retailers who have partnered with high-end designers that create exclusive lines they can offer for a limited time at deep discounts.