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UPI NewsTrack Business

May 2, 2012 at 6:37 PM   |   Comments

Markets close mixed after ADP report

NEW YORK, May 2 (UPI) -- U.S. stocks were mixed Wednesday following a disappointing jobs report from payroll firm Automatic Data Processing Inc.

ADP said 119,000 jobs were added to the economy in March to April, far short of the 175,000 economists had expected. In addition, it was the first month out of the past five in which private employers added fewer than 200,000 jobs.

ADP said the number was consistent with the gross domestic product's growth rate, which was 2.2 percent on an annualized basis in the first quarter.

By close of trading on Wall Street, the Dow Jones industrial average lost 10.75 points or 0.08 percent, to 13,268.57.

The Nasdaq composite index added 9.41 points, or 0.31 percent, to 3,059.85.

The Standard and Poor's 500 index gave up 3.51 points, or 0.25 percent, to 1,402.31.

On the New York Stock Exchange, 1,326 stocks advanced and 1,700 declined on a volume of 3.8 billion shares traded.

The 10-year treasury note was yielding 1.929 percent.

The euro fell to $1.3152 from Tuesday's $1.3237. Against the yen, the dollar rose to 80.14 yen from Tuesday's 80.09 yen.

In Tokyo, the Nikkei 224 index gained 0.31 percent, 29.30, to 9,380.25.

In London, the FTSE 100 index lost 0.93 percent, 54.12, to 5,758.11.


Data disinters Durbin amendment debate

WASHINGTON, May 2 (UPI) -- Six months after a new cap on debit-card "swipe fees" was put into effect, average fees have dropped, the U.S. Federal Reserve said.

Fees averaged 43 cents per transaction for use of a debit card before the Fed changed the rules as stipulated in the so-called Durbin amendment, a late addition to the Dodd-Frank financial overhaul bill that put a cap on the fee for financial firms with more than $10 billion in assets.

The average swipe fee for larger firms has dropped to 24 cents, while remaining at 43 cents for smaller firms, The Hill newspaper reported Wednesday.

Arguments for and against the Durbin amendment were revisited with the fresh data.

"Small banks have been completely unaffected by the changes," said Brian Dodge, senior vice president for communications for the Retail Industry Leaders Association.

Bankers, however, said time would tell on how reasonable or effective the cap on swipe fees would be.

Since the fee limits were put in place, big banks have warned that pressure to produce profits would simple force them to replace the earnings from lower swipe fees with higher charges for other financial services.

"The Durbin Amendment's primary beneficiaries continue to be big-box retailers who want to reap the benefits of our nation's payments system without paying for it or passing along their savings to customers as promised," said Frank Keating, president of the American Bankers Association.

"ABA firmly believes the Durbin Amendment's small-bank exemption can't work long-term," he said.

Representing some of those smaller banks, Bill Cheney, president and chief executive officer of the Credit Union National Association, said, the "jury is still out."

"Credit unions continue to be concerned that market forces will ultimately drive down the fees that the exemption for smaller institutions is intended to protect," Cheney said.

The measure is referred to as the Durbin amendment after Sen. Dick Durbin, D-Ill., who pushed for the swipe fee limits.


Amazon forges ahead on sales tax

WASHINGTON, May 2 (UPI) -- Internet retail giant Amazon's tax deals struck with Texas and Nevada have changed the debate on a federal tax for Internet sales, a Washington lobbyist said.

"Whether you need to change the (federal) law begins to look like one segment of the retail business putting burdens on another segment," a lobbyist for an Internet company was quoted by Politico as saying Wednesday.

It may be hard enough to pass a sales tax bill in an election year, but Amazon has struck deals with seven states, including two announced last week.

That seemingly takes the wind out of a federal tax bill's sails.

"I think they are being strategic," said Betsy Laird, a lobbyist with the International Council of Shopping Centers.

"They have to make accommodations if they are going to be good corporate citizens in those states," she said.

Amazon's deal in Texas includes bringing their bill with the state up to date, creating new jobs and initiating sales tax collections for purchases made by residents of Texas as of July 1.

Amazon has also come out in support of a federal bill that would create an all-encompassing tax system for all e-commerce in all states.

"The debate has progressed, and it has matured, as has the legislation," said Scott Stanzel, a spokesman for Amazon, which is based in Seattle.

Amazon has in the past sided with a 1992 Supreme Court decision that held that companies owed states sales tax only if they had a physical presence in that state.

With that in mind, California changed the rules by declaring that any Internet firm in California that provided links for consumers to eventually make a purchase at Amazon was, in effect, an extension of Amazon, which met the definition of Amazon having a physical presence in the state.

On the federal level, however, a number of bills seeking to put closure on the issue have stalled, even though some of them have bipartisan support.

The bills have stalled, but brick and mortar stores have not stopped complaining that Internet companies are allowed to give their customers a discount by avoiding a tax they have to pay.

"Amazon may be the big fish, but it's still a big pond," said Jason Brewer, a spokesman with the Retail Industry Leaders Association.

"There are thousands and thousands of online retailers that are not collecting today. The simplicity that will come with a federal bill would benefit everyone," he said.


Target to drop Kindle product line

MINNEAPOLIS, May 2 (UPI) -- U.S. retail giant Target Corp. is phasing out sales of the Kindle tablet products, a company spokeswoman said without elaborating.

The Kindle line of digital tablets has sold well for Target, The Wall Street Journal reported Wednesday. Still, spokeswoman Molly Snyder said the store "is phasing out Amazon- and Kindle-branded products in the spring of 2012."

Speculation for why Target would stop selling Kindle devices includes an expansion of Apple Inc. products and a move to stop consumers from using Target as a showroom for Internet retailers.

Concern is growing among brick-and-mortar stores that customers come in to view products, then use a smartphone to find a favorable price on the Internet. They then leave the brick-and-mortar "showroom" without making a purchase there.

To counter "showrooming," retailers are seeking out specially branded products or exclusive deals with manufacturers.

Neither Apple nor Amazon would comment on Target's decision, the Journal said.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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