Keycorp has a market cap of $7.69 billion; its shares were traded at around $8.5 with and P/S ratio of 1.2. The dividend yield of Keycorp stocks is 0.5%.KEY is in the portfolios of Third Avenue Management, Martin Whitman of Third Avenue Value Fund, RS Investment Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Pioneer Investments, Charles Brandes of Brandes Investment, Brian Rogers of T Rowe Price Equity Income Fund, Andreas Halvorsen of Viking Global Investors LP, Bruce Kovner of Caxton Associates, Irving Kahn of Kahn Brothers & Company Inc., Richard Pzena of Pzena Investment Management LLC, David Dreman of Dreman Value Management, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.
Highlight of Business Operations:During the third quarter of 2010, a renewed slowing of the U.S. economy ignited fears of a prolonged recovery or double-dip recession. With the strength of the economy in question, employers continued to be reluctant to add workers. U.S. payrolls decreased by 218,000 during the third quarter of 2010 compared to a 570,000 increase in the second quarter of 2010; however, the third quarter of 2010 decline was due to the termination of temporary government census workers hired during the second quarter. Private payrolls did increase, but at a slower pace than the second quarter, increasing by 274,000 compared to 353,000 the prior quarter. During 2010, the U.S. has gained 613,000 net jobs, and, therefore, is just beginning to offset the significant declines experienced over the prior two years, when over 8 million Americans lost their jobs. The average unemployment rate for the third quarter of 2010 declined to 9.6% from the second quarter average of 9.7%. This compares to a 9.3% average rate for all of 2009 and a 10 year average rate of 5.9%.
Even with mortgage rates at historically low levels and home affordability high, activity slowed in the housing market during the third quarter after the second quarters expiration of the homebuyer tax credit, which was offered as part of The Worker, Homeownership and Business Assistance Act of 2009. In September 2010, existing home sales decreased by 14% from June 2010. Weak demand and a rising pace of foreclosures served to weigh on home values as prices for existing homes over the same period declined by 6%. Foreclosures rose 11% over the third quarter. New home sales declined 1% in September 2010 from June 2010, while prices increased 2% over the same period. . Homebuilding activity saw moderate improvement as housing starts increased 13% in September 2010 from the years lows reached in June 2010, but still remain at very depressed levels.
Even as U.S. consumers continued to be constrained with high unemployment, consumer spending moderately increased in the third quarter of 2010. The average monthly rate of consumer spending increased 0.4% for the third quarter of 2010 compared to an average monthly increase of 0.3% in the first two quarters of 2010. Measures of inflation continued to remain low as prices for consumer goods and services increased a modest 1.1% in September 2010 from September 2009, compared to an annual increase of 1.1% in June 2010 and a 2.7% increase for all of 2009.
The Federal Reserve expressed concerns that the current low levels of inflation were running below long-term targets for price stability and suggested further monetary policy action may be needed to address the issue. They held the federal funds target rate near zero during the quarter while maintaining its stance that rates would remain at exceptionally low levels for an extended period. The Federal Reserve also announced the planned reinvestment of principal payments from its agency debt and mortgage-backed securities portfolio into longer-term Treasuries. The possibility of additional quantitative easing by the Federal Reserve sent the benchmark two-year Treasury yield down to all time record low levels, falling 0.18% from 0.61% at June 30, 2010, to 0.43% at September 30, 2010. The ten-year Treasury yield, which began the quarter at 2.93%, declined 0.42% to close the quarter at 2.51%. As distress from the second quarters European sovereign debt crisis subsided during the third quarter of 2010, the related concerns over the creditworthiness of financial institutions diminished. This resulted in a decrease in short-term interbank lending rates by as much as 0.25% and a narrowing of credit spreads for financial institutions debt obligations.
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