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Jobless claims reach new heights

The number of U.S. workers filing new claims for unemployment insurance unexpectedly rose to its highest level in close to six months, a fresh signal of a weak jobs market.

The number of U.S. workers filing new claims for unemployment insurance unexpectedly rose to its highest level in close to six months, a fresh signal of a weak jobs market.

The data comes two days after the Federal Reserve downgraded its assessment of the economy’s health and said it would take steps to ensure its support for the fragile economic recovery does not wane.

So, how should we fix this? Not with any stimulus. Here’s what one politician thought:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

No, not Ronald Reagan. This quote is from John F. Kennedy. You may remember him as a Democratic president from the 60’s. Here’s another gem of his:

“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

The stock market has responded to the jobless data, and not in a good way. Stocks have fallen, as the data indicates a weak labor market.

Stocks rally Tuesday

The long holiday weekend has breathed life into the stock market. Stocks have rallied on Tuesday. Investors went after shares hit when indexes down over 15% over the past two months.

Both the Dow and Nasdaq closed at an eight month low on Friday. The Dow Jones was up by 140 points or 1.5%. The Nasdaq composite was up 38 points, about 1.9%.

Gains were broad based, with 29 of 30 Dow shares rising, led by Caterpillar, Chevron, Hewlett-Packard, IBM, Microsoft, JPMorgan Chase, 3M and Wal-Mart Stores.

Progress from banks are helping to drive the recovery. Bank of America was up 2.5% and the KBW bank index was up 2.6%.

Toys “R” Us looking for $800 million

Toys “R” Us is trying to raise $800 million through an initial public offering in an attempt to remove some debt from their balance sheet.

As of January, the company had over $5.2 billion in debt.

Purchased for $6.6 billion in 2005 due to slumping sales, Toys “R” Us enters the public market for the second time. The company was taken private by the investor group owner, which is led by Bain Capital, Kohlberg Kravis Roberts & Co, and Vornado Realty Trust.

Toys “R” Us operates or licenses almost 1,600 stores, including Kids “R” Us and FAO Schwarz.

Apple overtakes Microsoft

The apocalypse must be near. Apple has reached a total value of $222 billion.

Microsoft is at $219 billion.

Okay, maybe it’s not the sign of the first seal being broken, but it is pretty momentous. Remember how Apple almost went out of business in the 90’s? What saved the company was the iPod in 2001. It worked with Microsoft-running computers, but really made people take a second look at Apple computers.

In 2007, the iPhone changed the way people looked at touchscreen smart phones.

Now, if I could only figure out what to use an iPad for, I’d be all set.

Flash Crash still an issue

The “Flash Crash” of May 6th is still raising question. The idea that stocks can fall 1,000 points in a matter of 20 minutes is cause for concern. Technology has advanced to the point that millions of trades can be made in minutes. And, it seems as if no one reason is to blame.

The SEC has proposed new rules known as circuit breakers. The plan aims at the volatility of individual stocks. A six-month pilot plan tests the new system. If stocks move 10% in either direction in a five minute period, trading is paused for the market makers to step in. The pilot program is set to begin June 14th.

This circuit breaker exists in the NYSE, but could be applied worldwide. The SEC is looking for feedback on the plan they will implement.

Stock market gains

After last week’s losses, the Dow Industrial gained more than 400 points. Attributed to the European $1 trillion bailout plan of Greece, the gain hints at the possibility of long term recovery. The trillion dollar plan will help troubled nations and stabilize the euro.

The euro gained versus the dollar, and the dollar gained versus the yen. On Friday, trades of 296 stocks were cancelled by Nasdaq. These stocks were the ones whose prices fluctuated the most. The trades occurred between 2 p.m. and 3 p.m. During the fluctuation, the stocks were traded at the price at 2:40 when they should have traded at the 2:45 price.

The Dow plunged almost 1,000 points in a matter of minutes, but was able to gain some of that back before the end of the day.

Hopefully, the upward swing will continue as Europe’s unstable economy is addressed.

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