The number of Americans filing new claims for unemployment benefits declined last week by 3,000 to a seasonally adjusted 336,000, which was just slightly above the 335,000 economists were expecting. Meanwhile, consumer prices rose slightly in January, but overall inflation remains muted. The Labor Department said the Consumer Price Index edged up 0.1% in January, slightly less than the 0.2% gain economists were expecting. The core rate, which strips out the more volatile food and energy prices, also ticked up just 0.1%. Overall inflation increased 1.6% year over year, which remains below the 2.0% target set by the Federal Reserve for annual inflation. Stock futures remained lower after the report.
Facebook (FB) announced it is buying mobile messaging startup WhatsApp for $19 billion in cash and stock. WhatsApp has 450 million monthly users, which is more than Twitter's 240 million users. Twitter is valued at $30 billion. The app allows users to send text, pictures and video to anyone with the software for free. Some market watchers may see this acquisition as a sign of desperation on Facebook's part to try and regain its popularity with young users which the company admits is a demographic that has been declining.
One stock reaping the benefits from Facebook’s acquisition of WhatsApp is BlackBerry (BBRY), whose share were up more than 5% in early trading. The $19 billion acquisition of WhatsApp has investors re-evaluating BlackBerry Messaging, also known as BBM, which still remains popular even though BlackBerry's devices have waned in popularity.
Google (GOOG) also has a part in the WhatsApp story. The tech giant reportedly bid for WhatsApp and was said to be rebuffed. Meanwhile, Google is planning to expand its high-speed internet service to 34 more cities across eight states on top of the three cities that currently have it.
Tesla (TSLA) surging in early trading after the company reported better-than-expected earnings and an upbeat outlook. After the bell yesterday, the company reported adjusted earnings that beat estimates by $0.12. Revenue more than doubled but did miss estimates. Tesla also said it expects a sharp increase in sales of its Model S sedan in 2014. The company expects to deliver 35,000 cars this year which would be a 55% increase from last year and ahead of analysts' estimates. Shares of Tesla are up over 400% since this time last year.
Wal-Mart (WMT) shares were down in early trading. The company beat earnings estimates by a penny this morning, though it was $0.07 below last year's results. Revenue rose 1.5%, but missed estimates. Wal-Mart blamed the lower profits on a comparable store sales decline of 0.4% at U.S. stores, its biggest unit. Wal-Mart also lowered its earnings guidance for the year and for the current quarter, blaming reductions in government benefits, higher taxes and tighter credit.
And Gap (GPS) said it will raise its minimum wage to $9 an hour by this summer and $10 an hour by the summer of 2015. The announcement comes as President Obama has called for the federal minimum wage to be increased to $10.10 an hour. The Congressional Budget Office this week said that change would lift an estimated 900,000 people out of poverty, but also have the effect of eliminating 500,000 jobs from the economy due to the increased cost to businesses. Wal-Mart said it remains neutral on raising the minimum wage.