Stocks Surge on Productivity Data, Unemployment Claims

Third-quarter non-farm productivity numbers jumped 9.5% as businesses were able to do more with fewer workers. This reading was much higher than the 6.5% rise expected by the markets.

Initial unemployment claims were also better than expectations. Claims fell 20,000 in the week to 512,000, the lowest level since January.

October same-store sales results were mixed, with retailers like  TJX ,  Gap  and  Costco  posting gains but teen retailers such as  Abercrombie and Fitch  and  American Eagle  seeing weakness.

At midday the Dow, S&P 500 and NASDAQ were up 1.7%m 1.4% and 2% respectively.

Stocks on the Move
Unilever UL posted a 2% fall in year over year third-quarter sales, but sales would have increased 3.4% excluding unfavorable foreign currency movements as the firm saw a 3.6% rise in volume. Efforts to reduce manufacturing complexity, eliminate low-margin stock-keeping units, and reduce the employee base led to increased profitability, as the adjusted operating margin expanded 70 basis points to 16.8%. The stock is off 1.8%.

IMS Health RX has agreed to be acquired by private equity firm TPG for $22 a share, a 50% premium to the share price before rumors of the acquisition surfaced. The transaction is expected to close by the end of the first-quarter of 2010, but it is still possible that other bidders could emerge. The stock rose 23%.

MGM Mirage MGM posted weak third-quarter results. Excluding figures from Treasure Island, which the company sold in March 2009, total revenue declined 9% to $1.5 billion. Hotel occupancy was stable, but the firm cut room rates in order to replace lost convention business with leisure travelers. Overall revenue per available room dropped 22.5% on the Strip. Casino revenue was down just 1% thanks to strong baccarat play. Shares were up 3.3% at midday.

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Foreign Markets
European stocks erased early losses as investors shrugged off the Bank of England’s decision to pump another 25 billion pounds into the monetary system signaling the Bank’s persistent worry about the state of the economy. The FTSE 100, Paris CAC and Germany’s DAX were up 0.5%, 1.1% and 0.8% respectively.

Asian shares were mixed as stronger local currencies and recovery fears weighed on exporters. The Shanghai Composite was up 0.8% while the Nikkei 225 and Hang Seng  Ha were down 1.3% and 0.6% respectively.