Yahoo! Starts to Sound Like a Cry for Help; Shorter Unemployment Line, Longer Job Hunt; Families Flunk the College Financing Test
Yahoo! Starts to Sound Like a Cry for Help
After a bout of self-doubt in late February, the stock market has regained its footing and is again in record territory. Last week, the Dow Jones industrial average neared 13,000 for the first time. But the bulls now have something important to chew on. While early first-quarter earnings reports have emboldened the bulls, the technology sector has run into difficulties. Last week, Internet giant Yahoo! lost more than 12 percent of its value after failing to meet first-quarter earnings expectations, partly because of rising costs. And shares of IBM were rocked after analysts downgraded the stock. Does all of this matter? This year it might. For the first time since the late 1990s, investors are counting on tech earnings to sustain overall corporate profit growth. At the start of this year, tech earnings were expected to grow 17 percent in the first quarter, leading analysts to predict overall profits would climb 8.7 percent. But tech earnings now are expected to rise just 9 percent. That would cut the rise in overall profits to only 3.3 percent. Any further drop in tech earnings and corporate profits could be flat.
Shorter Unemployment Line, Longer Job Hunt
Though the unemployment rate has fallen from 4.7 percent last March to 4.4 percent, the time it takes job seekers to find new work has actually gone up over the past year. In the first quarter of 2006, the average American took 2.7 months to find a new job. This year, it's 3.6 months. If the job market is so healthy, what's taking so long? "The fact that job-search times have not fallen despite a tight labor market suggests that the prolonged job searches are self-induced," says employment expert John Challenger. In other words, job seekers may be holding out for more lucrative positions. While the job market is improving, private-sector wages certainly aren't soaring. Wages are likely to rise only about 3 percent this year, according to a recent study by the Bureau of National Affairs. Looking for a big pay hike? You may need to hold out a bit longer.
Families Flunk the College Financing Test
Apparent conflicts of interest between college financial aid officers and companies that make student loans aren't the only obstacles to an affordable education. So, too, is a general lack of understanding of how the financial aid system works. A new survey by Harris Interactive found that half of all students-and their parents-don't know that you can negotiate with schools for a better financial aid deal. What's more, a surprisingly large number of households think it's better to put savings in a child's name, rather than a parent's-when the opposite is true.
This story appears in the April 30, 2007 print edition of U.S. News & World Report.
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