Wall Street Breakfast: Must-Know News

U.S. MARKETS

• U.S. equities closed mixed on Monday as the Nasdaq continued its downward trend. The Dow ended the day up 0.21% at 12827.49 while the Nasdaq fell by the same percentage to 2499.46, led by declines at Apple (AAPL), Research in Motion (RIMM) and Dell (DELL). The S&P 500 gained 0.32% to 1416.18. 10-year Treasurys were down 0.20% to 3.859%. Oil slipped $2.82 to $95.09, gold was down $3.70 to $862.00, and the dollar gained against the yen.
• Medicare spending shot up to $2.1 trillion in 2006, or 16% of GDP -- its fastest rate in 25 years -- thanks to the drug benefit added to the federal health-insurance program for the elderly.
• President Bush conceded Monday that the country is facing "economic challenges" and "cannot take growth for granted." Though his comments were unusually gloomy, he stopped short of warning of possible recession.
• Treasury Secretary Henry Paulson said Monday he supports the expansion of the government-backed plan to ease the financial burden on subprime mortgage holders to borrowers with other kinds of adjustable-rate loans.
• Online holiday shoppers spent over $29 billion this Christmas season, a 19% increase from last year.

GLOBAL MARKETS

• Asia on Tuesday: Nikkei up 0.19%, Hang Seng down 0.25%. Cathay Pacific was up and Air China down sharply after China Eastern Airlines' (CEA) minority shareholders rejected its proposed stake sale to Singapore Airlines and Temasek Holdings.
• Europe this morning: FTSE up 0.61%, DAX up 0.56%, CAC up 0.79%.

MUST-KNOW NEWS FOR TUESDAY

• Microsoft (MSFT) stalks Norwegian Internet search firm. The software behemoth is bidding 19 crowns per share ($1.2 billion) for Fast Search & Transfer. Fast's board is advising shareholders to accept the offer.
• Northrop Grumman (NOC) wants to replace Humvees. The defense contractor is pursuing a multi-billion dollar contract to manufacture vehicles to replace Humvees, which are the Army and Marine Corps' main form of transportation.
• Starbucks (SBUX) ousts CEO. The ailing coffeehouse chain is replacing CEO James L. Donald with chairman Howard D. Schultz as part of a major restructuring. The news boosted shares 9% in AH.
• Cayne is out as Bear Stearns (BSC) CEO, sources say. James Cayne, 73, is believed to be planning to step down following massive losses stemming from the collapse of the subprime market. He is expected to remain Chairman and to be succeeded as CEO by President Alan Schwartz.
• Krispy Kreme (KKD) CEO is out. President and CEO Daryl Brewster has resigned from Krispy Kreme "for personal reasons" and will be replaced by Chairman James Morgan.
• Sallie Mae (SLM) names new Chairman and CFO. SLM Corp. appointed Anthony Terracciano as chairmanand said John Remondi, a Sallie Mae veteran, will return as CFO. SLM shares closed up nearly 7%.
• Ford (F) invests in India. Ford Motor Co. said it will spend $500 million to more than double its production capacity in India and begin producing a small car for Indian consumption.
• Genzyme (GENZ) lands sought-after drug. The biotech will pay at least $325 million for the "hotly contested rights" to a cholesterol-lowering drug under development at Isis Pharmaceuticals (ISIS).
• EchoStar (DISH) freezes prices. EchoStar Communications said Monday it will freeze prices of satellite TV packages and offer three months of free programming to new customers as well as waive activation fees. Its shares declined 4.5% on the news.
• Dissidents shake up CNet Networks (CNET). A group of activist investors, led by Jana Partners, is attempting to seize control of the board of the online tech news company.
• Jefferies Group (JEF) warns. The midsize brokerage said bonus payouts will force it to post a Q4 loss of about $24 million, its first quarterly loss in 20 years.
• Sirtris Pharmaceuticals (SIRT) reports encouraging trial results. The first human clinical trial of a drug that mimics the effect of a component of red wine on blood sugar has shown positive results for diabetics.

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