Stocks began the government shutdown with a rise. Markets moved higher, perhaps a reflection that the effects of the stalemate were already priced into equities. Already 800,000 government workers have been furloughed because of the shutdown. Meanwhile, consulting firm IHS estimates the shutdown will cost more than $300 million a day in lost economic output. It also says a weeklong shutdown could shed 0.2% off the quarterly reading on GDP.
The shutdown is already having an effect on scheduled government data reports. A release on construction spending for August was canceled this morning. In addition, the Labor Department says it won't be issuing the monthly jobs report on Friday if the shutdown persists.
Walgreen (WAG) rose 4% on its quarterly earnings which were released ahead of the opening bell. The drug store giant says it made adjusted earnings of 73-cents a share, beating estimates by a penny. Revenues, however, just missed expectations at $17.94 billion versus $17.95 billion. Profits were actually close to double from a year ago. Same-store sales were up 4.6% in that time. Walgreens says it has been benefiting from boosted sales of higher-profit generic drugs. Walgreen stock is up more than 41% year-to-date and hit a new 52-week high last Monday.
J.C. Penney (JCP) briefly topped the $9 a share mark again before paring gains to close down less than 1%. This follows a day in which the stock touched a 30-year low. It also comes amid reports that hedge fund Perry Corporation has cut its stake in the retailer back to 4.5%. It was just last month that Perry upped its stake in Penney to 8.6%. Shares of the beleaguered retailer began to tailspin after the company announced last Thursday that it wants to sell 84-million shares. The intended price is $9.65 a share.
Diamond Foods (DMND) plunged nearly 10% following the release of earnings yesterday afternoon. The company beat on the bottom line for the quarter with adjusted earnings of 9-cents. Estimates had actually been for a loss of 3-cents. Moving forward, Diamond is predicting a rough quarter, warning that walnuts will be in short supply. The company is also planning to relaunch its Emerald brand during the period.
Merck (MRK) climbed 2% on news that it's laying off 8,500 workers. That's on top of 7,500 previously announced job cuts. The company says the downsizing is part of a restructuring that will save $2.5 billion a year by the end of 2015. The past two years have been tough on Merck with the company failing to get a number of drugs to market. They include products to raise good cholesterol, treat osteoporosis and reverse the effects of anesthesia.
Meanwhile, Amazon (AMZN) rose over 2% after announcing it plans to hire 70,000 seasonal workers for its warehouses. That's a 40% increase over last year. The jobs typically pay about $11 an hour. Amazon says some workers will be offered full-time jobs after the holidays are over. The stock is up 21% year-to-date and hit new high September 20th.
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