Wall Street Breakfast: Must-Know News

U.S. MARKETS

• Tuesday was a tough day for U.S. stocks: the DJIA closed down 1.86% at 12589.07, with Countrywide Financial (CFC) leading decliners; the Nasdaq was off 2.36% to close at 2440.51; and the S&P 500 closed down 1.84% at 1,390.19. Yields on 10-year Treasurys were off 0.30% to 3.818%. Oil gained $1.24 to $96.33. Gold futures hit an all-time high of $883.80 before ending the day up $18.30 at $880.30.
• Pending home sales fell again. Contracts on formerly owned homes dropped 2.6% in November, the NAR said Tuesday.
• FOMC divided, minutes show. The minutes of the December meeting of the Federal Open Market Committee indicate that regional Fed banks backed three different options for the discount rate, ranging from no change to a half-point cut. The Fed ultimately split the difference.
• House committee to probe FCC. The House Energy and Commerce Committee has launched an investigation into the FCC's management procedures.
• Ford's (F) woes reflect "concern about the state of the U.S. economy," said CEO Alan Mulally Tuesday. Ford's stock hit a 22-year low last week.

GLOBAL MARKETS

• Asia: The Nikkei edged up 0.5% to close at 14,599.16 as bargain-hunters reentered the market following a two-day, 800-point plummet. Gainers included Mizuho Financial Group (MFG), up 5.2%, and Mitsubishi UFJ Financial (MTU), up 3.1%. Matsushita Electric Industrial (MC) fell 1.1%. Toyota (TM), Nintendo (NTDOY.PK) and shipping company Mitsui OSK Lines all rose. The Hang Seng rose 1.8% to 27,601.36. Hong Kong-listed shares of Chinese PC manufacturer Lenovo (LNVGY.PK) fell 10.4% on heavy volume following a downgrade. Singapore's Straits Times Index was up 0.4% at 3,350.78 and India's Sensitive Index -- which hit a record intraday -- advanced 0.7% to close at 21,021.81.
• Europe: The FTSE 100 closed down 1.09%, the DAX 0.45% and the CAC 0.83%, led by losses in the European retail sector. British retailer Marks & Spencer fell 16% following its worst quarterly update in two years. Norwegian Internet company Fast Search & Transfer, meanwhile, skyrocketed 40.8% following word that Microsoft (MSFT) plans to buy it.

MUST-KNOW NEWS FOR WEDNESDAY

• Countrywide (CFC) denies bankruptcy. The mortgage lender said Tuesday that rumors of its demise are greatly exaggerated, but its stock still sank 28% -- its steepest drop since the crash of 1987.
• K.B. Home (KBH) reports wide Q4 loss. The U.S. homebuilder posted a loss of almost $773 million, or $9.99 per share, primarily on an accounting charge. The loss was nine times wider than that anticipated by analysts. K.B. Homes' shares closed down 9.2%.
• AT&T (T) CEO spooks market. Randall Stephenson said Tuesday that AT&T is experiencing "softness" in its phone and broadband businesses and is disconnecting more delinquent customers. The suggestion that the slowing economy is beginning to affect the phone company sent its shares down 4.6% and contributed to the general selloff in the market.
• Airbus inks big deal with AWAS. The Boeing (BA) competitor will sell up to 100 jets, worth about $6.9 billion, to leasing company AWAS (Ireland) Ltd. Boeing shares fell 3.6%.
• Unisys (UIS) under pressure to split up. The hedge fund Millbrook Capital Management, which holds about 10% of Unisys, is pressing the company to sell or spin off its U.S. government services business.
• Eli Lilly's (LLY) Cialis gets boost from FDA. The FDA has approved Lilly's erectile-dysfunction drug for daily use, differentiating it more effectively against Pfizer's (PFE) Viagra. Lilly shares rose 2.8% on the news.
• Amgen (AMGN) raises guidance for 2007. The biotech is now forecasting full-year EPS of $4.30-4.50, ahead of its November guidance of $4.13-4.23.
• Oneok (OKE) boosts outlook. The energy company raised its 2007 earnings guidance to $2.75-2.79 from $2.62-2.72. Analysts had been expecting $2.66.
• Apollo Group's (APOL) restructuring shows results. The operator of the University of Phoenix reported a 23% jump in Q1 net income and a 17% rise in revenue.
• McGraw Hill (MHP) cuts staff. The publisher's shares closed down 4.4% following word that it will slash 3% of its staff and take an after-tax charge of $27.3 million, or $0.08/share, in Q4.
• Alliant Techsystems (ATK) will buy two Canadian space technology units. The defense contractor and rocket manufacturer will purchase the units from MacDonald, Dettwiler and Associates for $1.325 billion.
• Perry Ellis (PERY) will buy two Liz Claiborne (LIZ) brands. Perry Ellis International will purchase the C&C California and Laundry brands from Liz Claiborne Inc for $37 million.

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Comments

[Long-ShortGuy]

If you look at the news in this (excellent) summary, it's almost all bad. This market goes down further before it goes up.

[3p2w]

...and spot rallies will continue to be sporadic until transparency is achieved...VIX way up for a year and a half maybe. But there are baby bulls wandering around the big bears!!

[Polonius]

Countrywide is working on a Bankruptcy with a downtown Los Angeles law firm as we speak. To be disclosed by weeks end.