How Microsoft Drove the Dow Higher Today

June 5, 2014, 8:33 am

≫ Next: Why Universal Display Corporation Shares Lit Up Today

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The Dow Jones Industrial Average touched an all-time high of 16,845 this afternoon, marking the seventh record high this year. The European Union's decision to add more monetary stimulus to the economy and turn deposit rates slightly negative has investors cheering, even if it's really a sign of how bad conditions in Europe are.

Leading the Dow today is Microsoft , which has changed from a Dow dog to an outperformer almost overnight.

MSFT Total Return Price data by YCharts.

What's driving Microsoft today
The catalyst for Microsoft today was an analyst note from FBR Capital Markets' Daniel Ives, who said CEO Satya Nadella's plans to shift the company's focus toward mobile and the cloud are going well. He also raised his price target from $43 to $49.

If Microsoft is successful, its tiled operating system will be on low-end mobile devices by year-end.

But the bigger news was that Microsoft expects Windows 8 mobile devices to cost less than $200 by year's end. OEM partners vice president Nick Parker said in a keynote speech at Computex that Windows Phone smartphones will sell for less than $200 this year as Microsoft targets the lower end of the market. Microsoft began offering its operating system free for devices smaller than 9 inches, and it appears manufacturers are starting to take advantage.

More of Microsoft's revenue will come from cloud services and enterprise software as a result of the shift, but it's necessary for Microsoft to gain share and not allow its high-tech rivals to control the world's mobile devices.

It'll be a slow process to gain market share, but Nadella is making progress, and with shares trading at 14 times forward estimates and the stock paying a 2.8% dividend yield, there's good value to be found for investors.

The future of computing is wearables
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article How Microsoft Drove the Dow Higher Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Why Universal Display Corporation Shares Lit Up Today

June 5, 2014, 8:34 am

≫ Next: After Market: Stocks Keep Rising Ahead of May Jobs Report

≪ Previous: How Microsoft Drove the Dow Higher Today

Filed under: Investing

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Universal Display Corporation jumped more than 12% early Thursday after the OLED technologist announced a new $50 million share repurchase program.

So what: This authorization is seen as a significant vote of confidence in Universal Display's long-term story, and allows the company to reabsorb shares of common stock at its discretion during the next 12 months. It also comes on the heels of Universal Display's blowout first-quarter earnings report, which initially resulted in a 16% single-day pop early last month. Going into yesterday's close, however, investors' patience had worn thin as the stock gave up nearly all of its post-earnings gains to trade within reach of multi-year lows.

Now what: Universal Display has made clear it doesn't have any significant cash needs right now, and much of its current $267 million cash hoard is the result of raising more than $250 million from a secondary offering back in 2011 in anticipation of acquiring a large OLED-centric patent portfolio from Fuji in 2012. But those patents only came with a purchase price of $105 million, and much of Universal Display's cash largely remained unutilized since then. With Universal Display now solidly profitable and with shares currently trading at just 17 times next year's estimated earnings, I think increasing shareholders' slice of the pie now is a great idea.

Leaked: Apple's next smart device (warning, it may shock you)
Universal Display's technology is also rumored to be used in a yet-to-be announced smart device from Apple. In fact, Apple recently recruited a secret-development "dream team" to guarantee this device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But Universal Display isn't the only way to play it, and another small company's technology is crucial to its success. Its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Why Universal Display Corporation Shares Lit Up Today originally appeared on Fool.com.

Steve Symington owns shares of Apple and Universal Display. The Motley Fool recommends Apple and Universal Display. The Motley Fool owns shares of Apple and Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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After Market: Stocks Keep Rising Ahead of May Jobs Report

June 5, 2014, 9:45 am

≫ Next: Bank of America Could Pay $12 Billion to Settle Probes

≪ Previous: Why Universal Display Corporation Shares Lit Up Today

Filed under: Earnings, Market News

Investors are often cautious on the day ahead of the government's monthly jobs report, but that wasn't the case Thursday. The Dow Industrials and the S&P 500 both rallied to record highs, helped by the European Central Bank's move to cut key interest rates to near zero. The Dow Jones industrial average (^DJI) gained 98 points, the Standard & Poor's 500 index (^GPSC) rose 12, and the Nasdaq composite (^IXIC) rallied 44 points.

The Dow was led upward by Caterpillar (CAT) and Microsoft (MSFT), both up more than 2 percent. FBR Capital raised its rating on Microsoft to "outperform."

General Motors (GM) edged lower. An internal report on the company's faulty ignition switches found incompetence and neglect, but no conspiracy and no cover-up. GM shares are lower so far this year as the recalls and negative reports about the company's conduct have piled up.

Amazon (AMZN) jumped 5 percent on news reports that it's about to launch its own smartphone.

Barnes & Noble (BKS) gained 3½ percent. It's partnering with Samsung on a co-branded tablet due out by the end of the summer.

And Netflix (NFLX) added 1 percent. It's now blaming Verizon (VZ) for slowing the speed on Internet delivery of its movies. Netflix shares are now up more than 90 percent over the past year. Verizon responded by sending a legal challenge to Netflix, saying there's no basis for its charges.

On the merger front, investors are hanging up on Sprint (S) following reports that it's near a deal to pay $50 billion to buy T-Mobile (TMUS). Sprint lost 4 percent and T-Mobile fell 2 percent.

But Whole Foods (WFM) gained 4½ percent on a report it may be a takeover target, with the large privately held supermarket chain Publix mentioned as a possible suitor.

As for earnings, Rite Aid (RAD) slid 7½ percent after lowering its outlook. PVH (PVH) also cut its outlook. The owner of the Calvin Klein and Tommy Hilfiger brands fell 8 percent. And handbag maker Vera Bradley (VRA) fell 5 percent as earnings tumbled.

On the upside, network equipment company Ciena (CIEN) jumped 18 percent after beating expectations and raising its outlook.

What to Watch Friday:

The Labor Department releases employment data for May at 8:30 a.m. Eastern time.
The Federal Reserve releases consumer credit data for April at 3 p.m.
Jos. A. Bank Clothiers (JOSB) reports quarterly financial results after markets close in New York.

-Produced by Drew Trachtenberg.

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Bank of America Could Pay $12 Billion to Settle Probes

June 5, 2014, 10:40 pm

≫ Next: Push Is On for More Female Financial Planners

≪ Previous: After Market: Stocks Keep Rising Ahead of May Jobs Report

Filed under: Company News, Bank of America, Banks, Financial Services, Scandals and Lawsuits

BofA Could Pay at Least $12 Billion to Settle Probes — **Matt Rourke/AP**

By Sudarshan Varadhan

Bank of America (BAC) could pay more than $12 billion to settle probes by the U.S. Justice Department and a number of states into the bank's alleged handling of shoddy mortgages, The Wall Street Journal said Thursday, citing people familiar with the negotiations.

At least $5 billion of that amount is expected to go toward consumer relief consisting of help for homeowners in reducing principal amounts and monthly payments, and paying for blight removal in struggling neighborhoods, the paper said, citing people with knowledge about the issue.

A BofA spokesman declined to comment on the issue. The Department of Justice also declined to comment on the matter.

The second-largest U.S. bank faces multiple government probes over the underwriting, sale and securitization of residential mortgage bonds before the financial crisis.

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Push Is On for More Female Financial Planners

June 5, 2014, 11:00 pm

≫ Next: Another Month of Solid Hiring Could Fuel U.S. Growth

≪ Previous: Bank of America Could Pay $12 Billion to Settle Probes

Filed under: Careers, Financial Services, Financial Advisors, Investing

management's office space one ... — **M. Niebuhr/Shutterstock**

By Kimberly Palmer

Ever since Manisha Thakor, the founder of MoneyZen Wealth Management, entered the financial services field, she's been one of the few women at the table. "In my early 20s, I tried to behave like the other people around me by wearing dark suits, being serious and showing no sign of feminine energy, but eventually the real me broke through," she says.

As her real self, which Thakor describes as "authentically quirky," she has found her greatest success: Now in her mid-40s, she runs a thriving business helping clients -- who are mostly women -- manage their money, and she is also a popular author, speaker and expert on personal finance issues. She attributes her ability to get ahead in a male-dominated field to her early financial education: Her father taught her about investing when she was 11. She was fascinated and went on to pursue an investment banking career and then an MBA at Harvard University.

Many leaders in the financial services field hope that more women will start following Thakor's path. According to the Certified Financial Planner Board of Standards, 23 percent of CFP professionals are women, which inspired them to launch an initiative to attract more women into the field last year. "There are so many women who are not seeing that opportunity [to become a CFP]. ... Men do not indicate that same lack of knowledge about financial planning," says Eleanor Blayney, consumer advocate for the board.

Old Boys Clubs? Sharks? Lower Pay?

Tim Maurer, a certified financial planner and director of personal finance at the BAM Alliance, a group of independent advisers, says there's a perception of the industry as an "old boys club." "Although there's been some improvement, there's a lot of truth to that perception," he says.

An April report by the board found that women are less aware of the financial planning field than men, and they also believe that the profession is focused exclusively on quantitative analysis and number crunching rather than long-term relationships with clients. "Financial planning is not the same as making investments or product sales," Blayney says. "It's a much more comprehensive, holistic, relationship-driven kind of practice. You're working with people over time, and not just putting a life insurance policy in place and moving on. You're a problem-solver for individuals and families."

Another issue is the salary discrepancy women face in the field, Blayney notes. The pay differential between male and female financial advisers is significant. Aite Group surveys from 2012 and 2013 found female financial advisers earn on average $32,000 less than male advisers. "The pay differential is disturbing, but not all that surprising, because we know it's the same in many other professional areas," Blayney says.

More Personal and Relational

Some female financial advisers report that being a woman can be an advantage. Thakor built a wealth management practice serving primarily female clients with $3 million or more in assets. Some clients, especially women, say they prefer working with a female adviser. "Female advisers are more naturally skilled in the more personal and relational elements of planning," Maurer says. "It would be a mistake, however, to presume that they are less skilled in the more technical and analytical elements of a planning practice."

To bring more women into the field, the board plans to increase education and awareness of the profession, starting with young girls and continuing on up to women in college and business graduate school. "They can see that jobs in the financial services aren't all 'sharks on Wall Street'. ... it's a profession that's built around helping others," Blayney says. She adds that the job also allows a large amount of flexibility and telework opportunities, which can help parents of both genders balance home and work responsibilities.

Thakor thinks the first step is introducing girls to financial concepts at an early age, as her father did for her. "I've noticed boys tend to engage in more 'social talk' around business and money concepts in high school and college than girls do," she says, which can help kids become more familiar with finance-related fields. As a result, she adds, "When the option of being a financial adviser comes up as a possible career path, it feels more relevant to their lives."

Plus, "Attracting more women will in turn become part of the solution, because they will have more role models and mentors," Blayney says.

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Another Month of Solid Hiring Could Fuel U.S. Growth

June 5, 2014, 11:00 pm

≫ Next: Million-Dollar Question: How Much Do You Need to Retire?

≪ Previous: Push Is On for More Female Financial Planners

Filed under: Labor, Economic Indicators, Job Market, Job Search, Investing

Another month of solid hiring could fuel US growth — AP

By CHRISTOPHER S. RUGABER

WASHINGTON -- Hiring has picked up in the past several months, and another strong job gain could boost hopes that the U.S. economy has rebounded after a grim start to the year.

Economists forecast that employers added 220,000 jobs in May, according to FactSet. That would be below April's burst of hiring, when 288,000 jobs were added, the most in 2½ years. But it would still be near the monthly average gain this year of 214,000 jobs.

The government will release the May employment report at 8:30 a.m. Eastern time Friday.

Analysts predict that the unemployment rate rose to 6.4 percent from 6.3 percent. But if it did, it will likely be because more people out of work started looking for jobs in May. The government counts people as unemployed only if they're actively seeking work. So when more people look for work, the unemployment rate can rise.

If at least 98,000 positions were added in May, the total number of U.S. jobs would finally return to its level in December 2007, when the Great Recession began. Yet that's hardly cause for celebration: The population has grown nearly 7 percent since then.

Economists at the liberal Economic Policy Institute estimate that 7 million more jobs would have been needed to keep up with population growth. Average wages, meanwhile, have grown just 2 percent a year since the recession ended, below the long-run average annual growth of about 3.5 percent.

Many economists predicted late last year that growth would finally pick up in 2014 from the steady but modest pace that has persisted for the past four years.

But the economy actually contracted in the first three months of this year as a blast of cold weather shut down factories and kept consumers away from shopping malls and car dealerships. The U.S. economy shrank at a 1 percent annual rate in the first quarter, its first contraction in three years.

So far, employers have shrugged off the winter slowdown and have continued to hire. That should help the economy rebound because more jobs mean more paychecks to spend.

Most economists expect annualized growth to reach 3 percent to 3.5 percent in the current second quarter and top 3 percent for the rest of the year.

Most recent economic figures suggest that growth is accelerating.

Auto sales surged 11 percent in May to a nine-year high. Some of that increase reflected a pent-up demand after heavy snow during winter discouraged car buyers. But analysts predict that healthy sales will continue in coming months, bolstered by low auto-loan rates and the rollout of new car models.

Manufacturers are expanding solidly, a private survey showed this week, fueled by gains in production and orders. And a measure of service firms' business activity reached a nine-month high in May.

The number of people seeking unemployment benefits, meanwhile, has fallen to nearly seven-year lows. Applications are a proxy for layoffs, so the figures indicate that companies are cutting fewer workers. When businesses are confident enough to hold on to staff, they may also step up hiring.

Small businesses are also hiring steadily, according to a survey by the National Federation of Independent Business. That's a sharp contrast from earlier stages of the recovery. Small firms have added jobs for eight straight months, the NFIB said Wednesday, the longest such stretch since 2006.

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Million-Dollar Question: How Much Do You Need to Retire?

June 5, 2014, 11:17 pm

≫ Next: Fed: U.S. Economy Needs to Tighten Up Before Rates Can Rise

≪ Previous: Another Month of Solid Hiring Could Fuel U.S. Growth

Filed under: Personal Finance, Retirement Living, Retirement Plans, Social Security, Financial Education

SAVE spelled out in Scrabble pieces — **Lisa Werner/Alamy**

By Sharon Epperson | @sharon_epperson

The good news is there are now more millionaires than ever. But when it comes to retirement, is a million dollars enough?

"If they want to be financially independent, retire at 65 and be able to have an income of $40,000 a year in retirement for 30 years, then it's likely that they're going to need a million dollars to retire to generate that lifestyle," said Bruce Allen, an independent wealth adviser.

Living comfortably on $40,000 a year in retirement, which would require a $1 million nest egg by the time you reach the retirement age, will depend on your expenses, investment returns and health care costs. This figure doesn't factor in other benefits, like pensions and Social Security, which can greatly boost your retirement income.

For retirees Ralph and Karen Jones, making the most out of their money meant making a big move.

"I didn't think that we could maintain the lifestyle that we wanted if we stayed in New York after retiring. Coming to Myrtle Beach was just amazing, to see the difference in what your money would buy, how much you can get for your money," Karen Jones said.

The Joneses bought their new home in South Carolina and now pay a fraction of the property taxes they once did -- freeing up funds to vacation frequently, and make big ticket purchases when they want.

The Joneses aren't your typical retirees. U.S. Census data show less than 8 percent of the U.S. population has a million dollars. Yet, many financial advisers warn even a seven-figure sum may not be enough.

Many retirees make it work with less. According to Census data, the median household income for those 65 and older is $34,000, but that's almost half the $66,000 for ages 55 to 64. In order to preserve that preretirement standard of living, financial experts say you'll need more than a million dollars.

"A million dollars could be enough, it might not be enough. It really depends upon ... what you anticipate your retirement to be and what you were earning before retirement," said Jeanne Thompson of Fidelity Investments.

That's the million dollar question.

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Fed: U.S. Economy Needs to Tighten Up Before Rates Can Rise

June 5, 2014, 11:44 pm

≫ Next: Walmart Faces Shareholder Scrutiny at Annual Meeting

≪ Previous: Million-Dollar Question: How Much Do You Need to Retire?

Filed under: Unemployment Rate, Federal Reserve, Interest Rates, Economy, Investing

Fed: U.S. Economy Needs to Tighten Up Before Rates Can Rise — **Andrew Harrer/Bloomberg via Getty Images**Federal Reserve Governor Jerome Powell

By Marc Jones and Francesco Canepa

LONDON -- Federal Reserve Governor Jerome Powell said Friday that he wanted to see signs that the U.S. economy was tightening up before interest rates could be raised.

While acknowledging that employment in the United States had rebounded, Powell highlighted "significant" slack, referring to unemployed or underutilized workers.

The Fed hopes to end its stimulus program for the U.S. economy by the end of the year, clearing the way for it to eventually raise interest rates.

"I'm looking for some sign the economy is getting tight before we can start thinking about raising rates," Powell said at an event in London.

Powell added there was a "significant amount of slack in the labor market" in the United States at present.

In brief prepared remarks, Powell said the Fed's evolving statements about the future path for rates have played an important role in shaping market expectations about U.S. monetary policy.

With the overnight federal funds rate stuck near zero for years, he said the management of expectations has been important in allowing investors to buy and sell bonds with confidence that rates wouldn't unexpectedly increase.

That, for example, has lowered the premium charged for longer-term loans, and helped tamp down volatility as well, Powell said.

"Forward guidance has generally been effective in providing support for the economy at a time when the federal funds rate has been pinned at its effective lower bound," said Powell, who is awaiting Senate confirmation to a new 14-year term on the Fed board.

Powell added that markets were "well aligned" with the guidance the central bank has offered about the likelihood that its asset-buying program will be stopped by the end of the year.

-Additional reporting by Howard Schneider in Washington.

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Walmart Faces Shareholder Scrutiny at Annual Meeting

June 6, 2014, 12:47 am

≫ Next: Money Minute: Busiest U.S. Airport Finally Gets Free Wi-Fi

≪ Previous: Fed: U.S. Economy Needs to Tighten Up Before Rates Can Rise

Filed under: Company News, Retail, Internet, Wal-Mart, Shopping Trends

WalMart Stores CEO — **April L. Brown/AP**Walmart CEO Doug McMillon

BY ANNE D'INNOCENZIO

FAYETTEVILLE, Ark. -- Walmart's newly anointed CEO Doug McMillon said the world's largest retailer's task is to bring the changing world of e-commerce together with physical stores to help make customers' shopping experience better as technology evolves.

The comments came at the Walmart Stores' (WMT) annual shareholders meeting Friday. They come at a time when the retailer is seeking to address concerns over its declining sales and business practices at home and overseas.

Our purpose of saving people money will always be relevant, but we'll do it in new ways.

"Our purpose of saving people money will always be relevant, but we'll do it in new ways," said McMillon, a 23-year-old Walmart veteran who took over as CEO post in February. "We're going to invent the new, and bring together the digital world e-commerce with physical world of our stores."

To bolster his point, McMillon talked about a service that Walmart offers at its Asda.com Web site in the U.K., where customers can order groceries online and then pick them up from trucks at various pickup points in the city.

He also showed off miniature figures of executives to illustrate how some Walmart stores have been using 3-D printers to print miniature figurines for customers in the U.K.

"Imagine a day when we can print small household items and replacement parts in a store," he said.

Packed Meeting

McMillon made his remarks at the meeting, which drew 14,000 Walmart workers around the world to the University of Arkansas's Bud Walton arena in Fayetteville, Arkansas. Typical of past Walmart's shareholders' meetings, the event was packed with celebrity entertainment. Actor Harry Connick Jr. served as the master of ceremonies and at one point said he was going off script to sing "A Closer Walk with Thee." And the event included musical acts by Pharrell Williams and Robin Thicke.

Despite the festivities, the company is under scrutiny on all fronts. Revenue at established Walmart stores in the U.S. has declined for five consecutive quarters. The number of customers has also fallen six quarters in a row at the division, which accounts for 60 percent of the company's total sales.

As with many other retail chains that cater to working-class Americans, Walmart is a victim of an uneven economic recovery that has benefited well-heeled shoppers more than those in the lower-income rungs. Moreover, shoppers are increasingly looking for lower prices at online rivals such as Amazon.com (AMZN) and at small stores such as dollar chains and pharmacies.

As a result, Walmart is accelerating its expansion of smaller store formats and pushing online grocery services. It's also adding services catering to the needs of its low income shoppers, such as its new money transfer service.

At the same time, Walmart is still battling labor-backed critics who argue that its workers' wages are too skimpy. The issue came up amid the festivities Friday when worker Charmaine Givens-Thomas introduced a shareholder proposal for an independent chairman.

"Something is wrong when the richest family in America pays hundreds of thousands of workers so little that they cannot survive without public assistance," she said.

Walmart also is facing tough ethical questions overseas as it continues to confront concerns over how it handled bribery allegations that surfaced in April 2012 at its Mexican unit. The company is being pressured to increase its oversight of factories abroad following a building collapse in April 2013 in Bangladesh that killed more than 1,100 garment workers. Walmart wasn't using any of the factories in the building at the time of the collapse, but it is the second-largest retail buyer of clothing in Bangladesh.

Among the proposals by shareholders was a call for an independent chairman that doesn't serve as an executive at Walmart, a move that was backed by Institutional Shareholder Services but failed in a preliminary tally of votes. Walmart has said ISS's request for disclosure of "specific findings" in regard to possible violations of the Foreign Corrupt Practices Act, which prohibits companies from bribing foreign officials, is "contrary to the best interests of the company" because such a disclosure could interfere with the ongoing investigations.

ISS also recommended that shareholders vote against the re-election of board members, citing the failure of the board to provide more information to shareholders about specific findings of the investigation into bribery outside of the United States. All 14 directors were re-elected.

Meanwhile, Walmart named Greg Penner to the new position of vice chairman, signaling that succession planning on the board could be in the works.

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Money Minute: Busiest U.S. Airport Finally Gets Free Wi-Fi

June 6, 2014, 1:26 am

≫ Next: May Jobs Report Brightens U.S. Economy's Prospects

≪ Previous: Walmart Faces Shareholder Scrutiny at Annual Meeting

Filed under: Market News, Economic Recovery, Internet, Travel Industry, Health Insurance

The busiest airport in the country finally offers free Wi-Fi connections.

The new network at Atlanta's Hartsfield-Jackson Airport can handle up to 15,000 users at a time. More than 94 million travelers pass through the airport each year, and officials say the lack of free Wi-Fi was one of their biggest complaints. Up until now, the airport charged $4.95 to connect.

Of course, you can fly from Atlanta to London, and now your plane can land at Heathrow's new terminal. The $4 billion facility is designed to handle 20 million passengers a year. Queen Elizabeth will be there for an official opening ceremony next week. The terminal is named in her honor.

And one more note for air travelers: airlines are doing a much better job of handling our bags. A new report shows the number of lost bags has been cut in half since 2007. Delta (DAL) and USAirways (AAL) have made the biggest gains.

One of the most controversial parts of the Affordable Care Act is the financial penalty imposed on people who don't sign up. Well, we now know 4 million people will be hit with that penalty. The Congressional Budget Office says that's actually about 2 million lower than its earlier estimate, mostly because many people with very low incomes are exempt from the fines.

Here on Wall Street, the Dow Jones industrial average (^DJI) and the Standard & Poor's 500 index (^GPSC) both rose to a record high Thursday. For the S&P, it's the seventh record in the past nine trading days. The Dow gained 98 points, the S&P rose 12, and the Nasdaq composite (^IXIC) rallied 44 points.

Do you feel richer? Many people might so no, but overall, Americans are wealthier than ever before. New figures from the Federal Reserve show the net worth of U.S. households rose by 2 percent in the first quarter to an all time high. Most of the gain was due to rising stock and home prices. That could be good news for the overall economy, if people feel more confident to borrow and to spend.

-Produced by Drew Trachtenberg.

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May Jobs Report Brightens U.S. Economy's Prospects

June 6, 2014, 1:43 am

≫ Next: The Death and Eventual Rebirth of Mortgage Assumptions

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Filed under: Careers, Economic Indicators, GDP, Unemployment Rate, Job Market

may jobs report — **Justin Sullivan/Getty Images**Job seekers at a San Francisco career fair earlier this week.

By Lucia Mutikani

WASHINGTON -- U.S. employers kept up a solid pace of hiring in May, returning employment to its pre-recession level and offering confirmation the economy has snapped back from a winter slump.

Nonfarm payrolls increased 217,000 last month, the Labor Department said on Friday, in line with market expectations. Data for March and April was revised to show 6,000 fewer jobs created than previously reported.

"That suggests the first quarter was an anomaly in terms of what the economy was and we are back to a decent pace of job creation. Overall it's a pretty solid report," said John Canally, an economist at LPL Financial in Boston.

May marked a fourth straight month of job gains above 200,000 even though there were fewer gains than the 282,000 seen in April when hiring was still bouncing back from a winter lull.

The nation finally recouped the 8.7 million jobs lost during the recession, with 8.8 million more people in work now than at the trough in February 2010. The working age population has risen 10.6 million since then though and 12.8 million people have left the labor force.

"The trajectory of this recovery is still slower than all other ones," said Sam Bullard, senior economist at Wells Fargo Securities in Charlotte, North Carolina. "That's not going to change and it's not fast enough to bring back a lot of the workers who stopped looking anytime soon."

U.S. stock prices opened up modestly, while yields on U.S. Treasury debt were little changed. U.S. dollar was also steady against the yen and euro.

Economy Gaining Strength

The pace of hiring adds to data ranging from automobile sales to services and factory sector activity that have suggested economic growth this quarter will top a 3 percent annual pace.

The economy contracted at a 1 percent rate in the first quarter, dragged down by unusually harsh winter weather and a slow pace of inventory building by businesses.

The unemployment rate held steady at a 5½ year low of 6.3 percent in May even as some Americans who had given up the search for work resumed the hunt.

A measure of underemployment that includes people who want a job but who have given up searching and those working part-time because they can't find full-time jobs fell to 12.2 percent, the lowest since October 2008.

Economists expect more previously discouraged workers to re-enter the labor force over the course of the year. While that would be a sign of confidence in the labor market, it could slow the decline in the jobless rate.

The report also showed the number of long-term unemployed fell. The average jobless American had been looking for work for 14.6 weeks in May, the shortest stretch in five years and a sharp drop from the prior month.

The return of discouraged job seekers and drop in long-term unemployment will be welcomed by the Federal Reserve, which has cited low labor force participation as one of the reasons for maintaining an extraordinarily easy monetary policy.

The labor force increased by 192,000 people after declining sharply in April. That left the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, at 62.8 percent.

Average hourly earnings, which are being closely watched for signs of how fast the slack in the labor market is being taken up, rose 5 cents last month. In the 12 months through April, earnings were up a tepid 2.1 percent, holding in a range that suggests little build-up in wage inflation.

May employment gains were broad-based. Manufacturing employment increased by 10,000, expanding for the 10th straight month. Further increases are expected as auto sales outpace inventories.

Construction payrolls rose by 6,000. It was the fifth consecutive month of gains, but the pace is slowing.

There were sturdy job gains in leisure and hospitality, and professional and businesses services, as well as healthcare, which added 33,600 worker.

Government payrolls increased 1,000, a fourth straight monthly increase. Retail employment also rose.

The length of the workweek held steady at 34.5 hours, with a measure of total work effort rising by 0.2 percent.

-Additional reporting by Jason Lange in Washington, and Chuck Mikolajczak and Richard Leong in New York.

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The Death and Eventual Rebirth of Mortgage Assumptions

June 6, 2014, 3:00 am

≫ Next: 8 Old Wives' Tales That Are Stopping You From Getting Rich

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Filed under: Mortgages, Banking, Housing Market, Interest Rates

side of green house constructed ... — **Pressmaster/Shutterstock**

Not so many years ago, obtaining a mortgage was a local affair. You'd walk into your neighborhood bank, fill out a few papers, and get your loan -- and the money would usually come from the institution you'd walked into.

But over the last 25 years or so, the banking industry has undergone a series of sweeping changes. Mortgage lending has become much more standardized and national, so your local bank is probably underwriting your loan based on Fannie Mae and Freddie Mac standards. Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.) supply cash to the primary mortgage markets by purchasing large blocks of loans originated by other lenders. Mortgages that don't conform to their standards can't be sold on the secondary market. The bank will hold these rare in-house loans on its books or possibly sell them to another bank directly.

What Is a Mortgage Assumption?

This article isn't about Fannie or Freddie, but you need to know a little about mortgage lending's history before we start to discuss mortgage assumptions, which allow new borrowers to assume the terms of in-place mortgages, such as payments, interest rates and pay-offs. Mortgage assumptions were the norm for many years.

There were two kinds of assumable loans: simple and formal. A simple assumption was simple because you didn't need to qualify for the loan. Nobody ran a credit check (there wasn't even standardized credit reporting back when simple assumptions were the norm); your income was not verified; and the now-standard mortgage qualifying process was not done. If you could pay the difference between the home's price and the underlying loan balance, you could just take over that mortgage. It might have looked like this:

You agreed to buy a home for $80,000, and the current mortgage rate was 9 percent for new loans. The home you were buying had an underlying simple assumption mortgage balance of $50,000 at 6 percent, with 20 years left on the mortgage.
If you had the $30,000 in cash to give the seller, you could simply assume the lower-interest rate loan and be 10 years into the payoff schedule. You would have a significantly smaller payment than you would have had on a new loan, and more of that payment would be going to principal and less to interest.
If you didn't have the whole $30,000, you could try to get the seller to carry some of his equity back in the form of a second mortgage and make a smaller cash down payment

Most mortgages were simple assumption loans. In formal assumption loans, you might be able to assume the underlying loan if you qualified financially, and the lender was allowed to change some terms. Up until the mid- to late 1980s, Federal Housing Administration and Veterans Affairs loans were simple assumption loans. Some people mistakenly believe that the simple assumptions went away because there was a high default rate caused by too many people taking over loans they wouldn't have qualified for, and couldn't really afford. In fact, it was much more about banks' profits.

The Problem of the Reverse Spread

As interest rates went through the roof in the late 1970s and early 1980s, lenders faced a problem with what's called "reverse spread." If banks were making new mortgages at 14 percent, they might also be paying 10 percent on savings accounts. That's a comfortable 4 percent profit margin. But if people were assuming older 7 percent mortgages, they'd keep paying the older, lower rate on those loans while the bank had to keep paying out 10 percent on deposit accounts. And that, obviously, equals a 3 percent loss.

To alleviate this problem, loans started including "due on sale" clauses in their mortgages that took away the automatic assumption option. This doesn't mean that loans are not assumable today, but it does mean they aren't easy to assume. Mortgages now state almost universally that the loan cannot be assumed without lender approval. You are free to approach the note holder about assuming an underlying loan. They are also free to tell you to forget about it.

If the loan is in default, you have a better chance of taking it over if the loan is current. And even if the lender sanctions the loan takeover, don't be shocked if it wants to change the terms.

Many private loans (commonly referred to as land contracts, contracts or contracts for deeds) and mortgages can be written to be assumable if that is what the buyer (borrower) and seller (lender) agree because there are no banks in the middle of those transactions. Some investors also take over a property "subject to" existing financing.

Right now, with interest rates still near their all-time lows, there is, unsurprisingly, little desire among home buyers to assume mortgages. Why take over an older loan when you can get a cheaper new one yourself? But when interest rates rise dramatically again (and they will), you will see assumption come back into vogue. Once money starts getting expensive, buyers and sellers will have to get creative like they did 30 years ago.

John Jamieson is the best-selling author of "The Perpetual Wealth System". Check out his video of the week.

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8 Old Wives' Tales That Are Stopping You From Getting Rich

June 6, 2014, 4:04 am

≫ Next: American Express Data Breach Affects 76,000 in California

≪ Previous: The Death and Eventual Rebirth of Mortgage Assumptions

Filed under: Books, Personal Finance, Financial Education

If words create thoughts, and thinking directs sets choice and action, then most people have been brainwashed into financial mediocrity. At least, that's what Steve Siebold, author of the book "How Rich People Think," argues. He's spent the last 30 years conducting 1,200 interviews with millionaires and billionaires to understand what they know and do that most people don't.

Siebold told DailyFinance that "the masses are programmed from an early age" to think in ways that prevent them from doing better. One of the more pervasive forms, according to him, are folksy sayings that people take to heart when they should also be taking it to head for a rational analysis. Here are eight dangerous platitudes that could be keeping you exactly where you have been.

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American Express Data Breach Affects 76,000 in California

June 6, 2014, 4:41 am

≫ Next: New Visa Rules Aim to Make Prepaid Cards Safer, Simpler

≪ Previous: 8 Old Wives' Tales That Are Stopping You From Getting Rich

Filed under: Identity Theft, Credit Cards

AB853C Man holding a credit card Credit card hand tight close up debit card american express card — **Alamy**

By Christine DiGangi

About 76,000 American Express (AXP) customers in California may be victims of a data breach, the company announced this week. The names and account numbers of 58,522 California residents may have been compromised, and 18,086 additional customers in the state may have other information stolen, not including their names, according to the Los Angeles Times and other reports.

The credit card company discovered the breach March 25 when authorities notified the company that large files containing customer information had been posted online, seemingly by members of the group Anonymous. It's uncertain when the attack occurred. The California attorney general's office posted a description of what happened and what the firm is writing to customers.

The company said it is notifying affected consumers and has placed additional fraud monitoring on their accounts. Customers are not liable for fraudulent charges, American Express stressed. Data may include account number, the card expiration date, the date the card became effective and the four-digit code printed on the front of the card, according to a company statement.

Data breaches have become increasingly common and difficult to avoid, so the impact of such attacks really comes down to consumers' damage control. The easiest way to spot an unauthorized transaction is to frequently check your bank and credit card statements online. If you know your information was compromised in a data breach, even checking multiple times a day can be a good idea, so you can catch something as quickly as possible.

Affected customers should also check their credit reports and credit scores for sudden drops, which can be an indication of fraud. Even if you're not concerned about a data breach, monitoring account transactions, credit reports and credit scores should be a regular part of managing your finances. Credit.com has free, easy-to-use tools that allow you to check your credit scores.

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New Visa Rules Aim to Make Prepaid Cards Safer, Simpler

June 6, 2014, 5:01 am

≫ Next: Mortgage Rates Tick Up After Falling for Five Weeks

≪ Previous: American Express Data Breach Affects 76,000 in California

Filed under: Identity Theft, Credit, Consumer Ally, Credit Cards, Consumer Protection

Young female shop assistant using credit card machine, close-up credit card swipe Checkout Counter, Retail, Credit Card, Horizon — **Getty Images**

Recent events like the data breach that affected Target (TGT) customers across the nation have made consumers think twice before using credit and debit cards. In particular, prepaid cards -- onto which customers load a certain amount of money, and which can be used anywhere that accepts debit cards -- have created a great deal of confusion, as many people aren't clear about whether they offer the same fraud protections as credit cards or debit cards. Moreover, with wide variations in fees, it can be hard to figure out which prepaid card is best for you.

To make it easier for consumers to choose among prepaid cards, Visa (V) came out on June 3 with a new set of standards. Although issuers won't be required to follow those standards, those cards that meet the requirements will receive Visa's designation, which it hopes will spur customers to demand those positive characteristics. But do Visa's moves go far enough? Let's look.

What Visa Did

Some of the most important standards are for fees. Visa wants to see banks set flat monthly fees that include everything that cardholders would generally want to do with a prepaid card. Specifically, Visa wants prepaid card issuers not to charge separate fees for declined transactions, in-network ATM transactions, PIN or signature purchase transactions, getting cash back at the point of sale or general customer service. In addition, Visa wants cards not to charge overdraft fees or provide overdraft coverage, which makes sense given that the entire point of the prepaid card is to limit users to the amount loaded on the card.

Moreover, Visa wants prepaid card issuers to communicate their fee structures clearly, using some of the same methods that they are now required to use with credit cards, such as fee boxes and simple disclosures. In addition, a quick-use guide for consumers will help them minimize the costs of using particular cards.

Protecting the Consumer

Visa is including several important provisions for consumer protection. The first requires that balances be protected by insurance from the Federal Deposit Insurance Corp. or National Credit Union Administration, ensuring that if an issuer goes under, cardholders won't lose their unused balances. Visa will also require cards have access to its proprietary Prepaid Clearinghouse Service to provide fraud protection, and the Federal Reserve's Regulation E dispute resolution protections must apply in the same way they do for most bank debit cards. Moreover, by running cards through Visa's Zero Liability policy, cardholders should be entirely protected in many cases of fraud.

Zero liability might sound like a great solution for prepaid-card fraud, but it's important to understand the limitations of Visa's program. The Visa Zero Liability policy doesn't apply to PIN-based transactions that aren't processed by Visa. And it also doesn't cover ATM transactions. Just as many ordinary debit-card customers found in recent data breach situations, the weaker protection that applies to debit-card transactions makes credit cards look more attractive, and so customers should look into whether they can make signature-based transactions that would be subject to the Zero Liability policy without incurring extra fees.

A Sign of What's to Come?

Visa came up with the standards in conjunction with consumer groups at the Pew Charitable Trusts and the Center for Financial Services Innovation, with the goal of making prepaid cards more user-friendly and responding to frequent complaints among users. Although Visa's standards won't be mandatory, some believe that regulators like the Consumer Financial Protection Bureau might eventually use them as guidelines for future regulation.

Visa's moves won't make prepaid debit cards perfect, but they'll potentially make it easier for consumers to compare cards and get the best deal. That's a step in the right direction for the prepaid card industry.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+. He has no position in any stocks mentioned. The Motley Fool recommends Visa. The Motley Fool owns shares of Visa.

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Mortgage Rates Tick Up After Falling for Five Weeks

June 5, 2014, 6:05 pm

≫ Next: Coke: It's the Real Thing Keeping You Fat

≪ Previous: New Visa Rules Aim to Make Prepaid Cards Safer, Simpler

Filed under: Mortgages, Refinancing, Housing Market, Home Buying, Interest Rates

WASHINGTON -- Average U.S. rates on fixed mortgages rose slightly this week, reversing a five-week downward trend.

Mortgage buyer Freddie Mac said Thursday the average rate for a 30-year loan edged up to 4.14 percent from 4.12 percent last week. The average for the 15-year mortgage climbed to 3.23 percent from 3.21 percent.

Housing began to recover in 2012, but higher mortgage rates, tight credit and a limited supply of available homes have slowed momentum recently. Mortgage rates are about a quarter of a percentage point higher than they were at the same time last year.

U.S. home prices rose in April compared with a year earlier, but the increase was the smallest annual gain in 14 months, a report released Tuesday showed. Price gains have slowed this year as sales have faltered.

Data provider CoreLogic (CLGX) said that prices rose 10.5 percent in April from 12 months earlier. That is a healthy gain, but it is down from the pace in March and February.

And more Americans signed contracts to purchase homes in April than the prior month. But the pace of buying is still weaker than last year, according to recent data by the National Association of Realtors.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage fell a tad from a week earlier to 0.5 point. The fee for a 15-year loan held steady at 0.5 point.
The average rate on a one-year adjustable-rate loan fell to 2.40 percent from 2.41 percent. The average fee remained at 0.4 point.
The average rate on a five-year adjustable mortgage declined to 2.93 percent. The fee rose to 0.4 point from 0.3 point.

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Coke: It's the Real Thing Keeping You Fat

June 6, 2014, 5:49 am

≫ Next: Week's Winners and Losers: YouTube Brags, MySpace Nags

≪ Previous: Mortgage Rates Tick Up After Falling for Five Weeks

Filed under: Company News, Health Care, Advertising & Marketing, Food & Beverage, Consumer Issues

**Coca-Cola Co.**A screen grab from a Coca-Cola video showing people riding a bicycle long enough to burn sufficient calories to consume a can of Coke.

By CANDICE CHOI

NEW YORK -- Coca-Cola (KO) is taking on obesity, this time with an online video showing how fun it could be to burn off the 140 calories in a can of its soda.

In the ad, the world's biggest beverage maker asks what would happen if people paid for a can of Coke by first working off the calories it contained. The ad, which notes that it typically takes 23 minutes of cycling to achieve that, shows a montage of people on a giant stationary bicycle happily trying to earn a can of its cola, with carnival music playing in the background.

The video is unusual because it so frankly addresses how many calories are in its drink. But it also takes a frequent criticism used by health advocates and spins it in a happy light.

It's so clever on so many levels, but it's twisted, too.

"It's so clever on so many levels, but it's twisted, too," said Michele Simon, a public health lawyer and author of "Appetite for Profit: How the Food Industry Undermines Our Health and How to Fight Back."

Simon said she thought the video was a response to the recently released "Fed Up" movie, which is critical of the food industry's marketing tactics. In the movie, a health advocate states that a child would have to bike for an hour and 15 minutes to burn off the calories in a 20-ounce Coke.

Coca-Cola's video comes as soft drinks have faced growing criticism from health advocates who say they fuel obesity and chronic diseases related to diet. Numerous cities have tried to impose special taxes on sugary drinks, although none have succeeded, in large part because of heavy lobbying from the beverage industry.

In New York City, the Board of Health this week asked the state's highest court to reinstate a 16-ounce limit on sugary drinks sold in restaurants, stadiums and other venues. The measure, championed by former mayor Michael Bloomberg, was knocked down by a judge after a lawsuit led by the beverage industry.

Coca-Cola, based in Atlanta, began addressing obesity for the first time in a TV ad last year. That ad took a far more serious tone, with a voiceover stating that weight gain is the result of consuming too many calories of any kind, not just soda.

It's an argument frequently used by food companies, which tend to stress the need for physical activity and moderation when addressing criticism about the nutritional content of their products. But health advocates say that glosses over the reality that many people are simply consuming too many calories and that it would be unrealistic for them to try and offset that with exercise, especially given people's increasingly sedentary lifestyles.

In the meantime, the soda industry is fighting to stop declining sales even without the impact of any special taxes or measures. Just last year, U.S. sales volume declined 3 percent, faster than the 1.2 percent drop the previous year, according to industry tracker Beverage Digest. And critics are increasingly taking aim at other sugary beverages sold by Coca-Cola and PepsiCo (PEP), such as sports drinks and juices.

Judith Snyder, a Coca-Cola spokeswoman, said the latest video is part of a series that show "moments of delight and surprise" with Coke. She said it's intended to address the theme of energy balance in a lighthearted way.

She said it will be promoted on Facebook (FB) and Twitter (TWTR), but won't run on TV.

At the end of the video, which runs for 1 minute and 40 seconds, the phrase "Movement is happiness" appears on the screen, followed by: "Where will happiness strike next?"

Laura Ries, president of the brand consulting firm Ries & Ries, said that the video could backfire because people might be turned off by the idea that they would need to cycle for 23 minutes just to burn off a Coke.

"They're showing exactly why you wouldn't want to drink a Coke. Twenty-three minutes on a bike is not fun for most people," she said.

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Week's Winners and Losers: YouTube Brags, MySpace Nags

June 6, 2014, 5:57 am

≫ Next: After Market: Employment Tops '08 Peak, Stocks Hit New Highs

≪ Previous: Coke: It's the Real Thing Keeping You Fat

Filed under: Company News, Earnings, Retail

There were plenty of winners and losers this week on Wall Street, with a restaurant chain embracing more natural ingredients and an old website digging into your past to woo you back. Here's a rundown of the week's smartest moves and biggest blunders.

YouTube -- Winner

It's been two summers since Psy uploaded the official "Gangnam Style" video to Google's (GOOG) YouTube. It blew up as a global single later in the year. This week, it surpassed 2 billion views on YouTube.

It's a notable achievement for the South Korean pop music star, but it's also a big deal for YouTube. After all, the milestone shows how popular YouTube is as a video-sharing platform. Most folks may have tired of the video and the song ages ago, but clips live on forever in cyberspace. YouTube just validated itself again.

MySpace -- Loser

Speaking of bringing pop stars to life, MySpace -- yes, that MySpace -- turned heads this week by sending out old photos posted years ago to the emails of folks with dormant accounts.

MySpace had its moment in the sun before giving way to Facebook (FB), but the social networking dinosaur now jointly owned by Specific Media and pop icon Justin Timberlake, is struggling to regain its relevance. Sending old pics to folks that have moved on may seem like a clever tactic given the popularity of Throwback Thursday, but it comes off desperate at best, and creepy at worst.

Panera Bread (PNRA) -- Winner

Panera became the latest eatery to climb onto the organic food bandwagon this week. The chain of bakery cafes revised its food policy, moving to do rid its menu of artificial colors, flavors and preservatives by 2016.

It's a smart move for Panera. Growth at the former quick-service darling has been slowing lately, with analysts targeting top- and bottom-line growth in the mid-single digits. Anything it can do to beef up its profile with the growing number of consumers angling for natural foods will only help.

Walmart (WMT) -- Loser

The world's largest retailer held its annual shareholder meeting on Friday. Activists threatened to stage a protest, arguing that Walmart isn't paying a living wage.

However, the reason Walmart falls short is because it stocked area Walmart stores with stockholder-specific merchandise. We're talking about T-shirts, cups, and and caps with "Walmart SHAREHOLDER" imprinted on them.

They're selling for just $6. This is Walmart, after all. However, after a rough run during which the retailer has posted five consecutive quarters of same-store sales declines, is stakeholder pride really something that's going to be on display?

Five Below (FIVE) -- Winner

When you have to sell everything in your store for $5 or less -- hence the Five Below moniker -- it's understandable to be concerned about the bottom line. I mean, you can't even stock those $6 "Walmart SHAREHOLDER" T-shirts until the unsold swag becomes an overstocked closeout. (You know it probably will.)

However, Five Below is bucking the trend among thrift havens, which are generally struggling to draw shoppers. It saw its net sales soar 32 percent, powered by healthy expansion on top of a 6.2 percent increase in comparable-store sales. Don't mark down this markdown specialist.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Facebook, Five Below, Google (C shares) and Panera Bread. The Motley Fool owns shares of Facebook, Google (C shares) and Panera Bread. Try any of our newsletter services free for 30 days.

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After Market: Employment Tops '08 Peak, Stocks Hit New Highs

June 6, 2014, 9:50 am

≫ Next: Netflix's Latest Rival is Really a Friend in Disguise

≪ Previous: Week's Winners and Losers: YouTube Brags, MySpace Nags

Filed under: Earnings, Market News, Job Market

Slow but steady -- that seems to be the new mantra here on Wall Street. The Dow Industrials and the S&P 500 plowed further into record territory on Friday.

The catalyst for today's advance was the monthly jobs report, which showed the total number of people employed finally topped the 2008 peak it hit just before the Great Recession took hold.

The Dow Jones industrial average (^DJI) gained 88 points, the Standard & Poor's 500 index (^GPSC) rose 9, and the Nasdaq composite (^IXIC) gained 25 points.

Financial stocks helped lead the advance. Goldman Sachs (GS) and American Express (AXP) both gained more than 2 percent.

Bank of America (BAC) rose 1 percent on reports that it's in talks with the Justice Department to settle another set of probes into the bank's handling of mortgages leading up to and during the financial crisis. News reports say the company could pay more than $12 billion, which is more than it earned in all of 2013. But this could allow Bank of America to finally put this long-running problem behind it. Its stock has been virtually flat over the past 6 months.

Amazon (AMZN) posted a strong gain for second straight day, rising 2 percent, on indications that it's about to enter the smartphone business.

And Sears (SHLD) gained nearly 2 percent on a Reuters report that the company's chairman has held talks with outgoing Ford (F) CEO Alan Mulally, sparking rumors that he might head the retailer's turnaround effort.

Elsewhere, Hertz (HRZ) drove into a ditch, sliding 9 percent after saying it will restate earnings from 2011 through 2013 because of accounting issues.

Diamond Foods (DMND) fell 11 percent. Its quarterly loss widened, due to higher wholesale prices for nuts.

But Vail Resorts (MTN), Men's Wearhouse (MW), and VeriFone (PAY) all gained after beating expectations. Vail was up 6 percent; Men's Wearhouse rose 5½ percent; and VeriFone jumped 9 percent. Demand for its merchant payment systems has been helped by growing concern about hackers.

Finally, Caesars Entertainment (CZR) fell 3 percent on a Bloomberg report that the gaming company has received a default notice from a group of bondholders.

What to Watch Monday:

These major companies are scheduled to release quarterly financial statements:

Casey's General Stores (CASY)
Pep Boys-Manny Moe & Jack (PBY)

-Produced by Drew Trachtenberg.

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Netflix's Latest Rival is Really a Friend in Disguise

June 6, 2014, 11:00 pm

≫ Next: 7 Products With Outrageous Markups

≪ Previous: After Market: Employment Tops '08 Peak, Stocks Hit New Highs

Filed under: Company News, Media, Netflix, Entertainment Industry

Netflix (NFLX) is winning over a lot of fans: By the end of June, its popular streaming service is forecast to have nearly 50 million global subscribers. However, Netflix is also making a fair number of enemies.

The leading provider of premium video streaming has knocked heads with cable companies that fear Netflix subscribers will cancel their pay TV plans, Internet service providers that are slowing down its streams, and rivals offering their own digital video smorgasbords.

However, CEO Reed Hastings recently brought up a new name as a potential adversary: Aereo.

Dunking Aereo

Aereo has been a small but growing disruptor to the cable and satellite television giants since it launched its Web-based service. Customers pay as little as $8 a month for online access to their local broadcast channels and a few other partners. Aereo maintains a vast fleet of dime-sized Web-tethered antennas on its end that subscribers can then access across their phones, tablets, PCs and smart TVs. In this way, allows users to record shows to the cloud if they want to watch them later, like a virtual DVR.

The method of keeping an individual local antenna for every active subscriber is how Aereo has been able to overcome legal challenges to its business model that have reached the Supreme Court. It's also why Aereo is only available in a limited number of cities - though it's expanding quickly.

On on CNBC recently, Hastings singled out Aereo as a competitor. In theory, that would pit one industry disruptor against another, but this isn't likely to be much of a fight.

When Disruptive Companies Attack

Aereo's success isn't likely to come at Netflix's expense. In fact, most industry observers see Netflix as a beneficiary of Aereo's growth. If someone decides to cut the cord -- replacing expensive cable or satellite television plans -- with Aero's limited yet substantially cheaper assortment of channels, won't that make them more likely to add Netflix? Combining Aereo for live channels and Netflix for premium ad-free content sounds like a sweet deal at less than $20 a month.

Yet the combination isn't likely to work for most families. After all, tell a sports enthusiast to give up ESPN or a "Game of Thrones" fan to fall on the sword and live without HBO. Outside of Bloomberg TV, Aereo is lean in its offerings outside of locally available networks. That is likely to change as lesser channels that aren't gaining a lot of traction offer themselves up to it as a way to broaden their audience. There is also a possibility that if the numbers of pay TV subscribers start to shrink significantly, even networks like ESPN, HBO and MTV may have to consider letting consumers pay just for the channels they actually watch. However, for now, Aereo's appeal will be limited to those who are content with cutting back to the major over-the-air networks as a way to save some serious money.

Budding Frenemies

Aereo's success won't be a problem for Netflix. They will go together like peanut butter and chocolate if Aereo emerges from the Supreme Court with a victory and momentum.

Netflix will still have plenty of enemies, and they will also be Aereo's enemies. The same cable companies and broadband providers that see Netflix slurping up bandwidth and poaching TV buffs will despise Aereo for doing the same things. That's yet another good reason for Reed Hastings to consider the landscape, and realize that having shared enemies means that working together is better than working alone.

It really wouldn't be a surprise if Netflix made a play to acquire Aereo before long. Building it up as a competitor just seems like it's playing hard to get.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Netflix. Try any Motley Fool newsletter services free for 30 days.

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