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HSBC to slash 30,000 jobs
HSBC (NYS: HBC) , one of the largest European banks, announced it would be cutting 30,000 jobs as part of a cost-cutting program to improve profits. The plan is expected to reduce costs by $2.5 billion to $3.5 billion over two years. About 5,000 of the job cuts have already been carried out through the year after closing businesses in different countries, including shutting down all retail operation in Russia and Poland. The bank also announced it would be selling 195 of its branches in upstate New York to First Niagara Financial Group (NAS: FNFG) .
The announcement came after HSBC reported solid earnings with an increase in profits of 36% up to $9.2 billion over the first six months. The cuts are part of a trend in the banking industry to reduce cuts. Credit Suisse announced it would be cutting 2,000 jobs while Goldman Sachs and JPMorgan will also be making cuts. Read more atDealbook.
Allstate reports losses but stock gains
The second largest car and home insurance in the nation reported a $620 million loss in more than two years. Allstate (NYS: ALL) was mainly damaged by the rising claims from tornado destruction. Despite the loss, the insurer's stock price rose about $0.82 or 3%, since earnings beat analyst expectations.
The insurer plans to shut down its banking unit after a deal to sell deposits to Discover Financial Services (NYS: DFS) failed. The closure could be finalized by the end of 2011.
The company had been losing sales in auto insurance for nearly three years, prompting the departure of Joseph Lacher, president of Allstate Protection, last month. Allstate has been losing business to direct-to-costumer agencies including Progressive and Berkshire Hathaway's GEICO. Read more atBloomberg.
Making gains the second time around
Connected investors are the ones who profit from IPOs, but the average investor may also reap gains when the craze comes back around. After an IPO hits the market, its underwriters, usually large investment banks, have to enter a 40-day "quiet period" in which they can't comment on the company.
The trend has shown that after the period ends, the firms usually release bullish reports on the companies raising their stock price very much like when they went out to the market the first time. Recently, LinkedIn (NYS: LNKD) , Pandora, and Spirit Airlines (NYS: SPR) have seen double-digit percentage gains on their stocks after these reports. Investors who have stocked up on the stock days before the "quiet period" ends have seen gains through the six days after that. Read more atThe Wall Street Journal.
Less uncertainty but still no confidence
Coming down to the wire, both political parties were able to propose a bipartisan debt plan, which Congress still has to approve. Relieved from the uncertainty, markets were up by around 1% before coming back down after manufacturing numbers and the realization of the challenges ahead hit investors.
The Institute for Supply Management reported U.S. manufacturing expanded for the 24th consecutive month, but at a slower pace than expected. Production and employment followed the same trend. This added to the stress created by the fact that data released last week showed that the recession had been much larger and the recovery much weaker than previously thought. Experts say investors are now focusing on the worldwide growth. Markets were down as of midmorning, and experts said passing the debt ceiling will be crucial to gain market stability. Read more atThe New York Times.
So there you have it, the top financial stories for this afternoon. Check Fool.com throughout the day for commentary on these and other stories. Also, follow us on Twitter, on Facebook, or through our email digests.
At the time thisarticle was published Michelle Zayedowns no shares of any companies mentioned in the story. The Motley Fool owns shares of Berkshire Hathaway.Motley Fool newsletter serviceshave recommended buying shares of Berkshire Hathaway, Discover Financial Services, and Spirit AeroSystems Holdings. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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