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News That Moved the Market
Intel Shares Fall. Intel Corp. (INTC, -12.3%) reported results from the fourth quarter and an outlook for the first quarter that were below expectations. After the news was released Tuesday night, futures plunged, highlighting fears of a major economic slowdown that many experts are predicting. Referring to the slowdown, CEO Paul Otellini said, "You hear all the pundits saying that the world is going to go to a trash basket, and you worry. Maybe a self-fulfilling prophecy. At this point we don't see anything on the horizon. ... If there's any near-term concern, I think it tends to be focused on the U.S. market. ... It would be imprudent not to be cautious about it, though."
JP Morgan and Wells Fargo Higher After Earnings Results. The markets did get a boost Wednesday morning as both J.P. Morgan (JPM, +5.8%) and Wells Fargo (WFC, +3.3%) both were able to limit losses from the credit crisis. J.P. Morgan's writedown of $1.3 billion was less than expected and Wells Fargo beat analysts' earnings forecasts. Both companies' CEOs, however, did foresee more credit-market losses in 2008.
Inflation Rises at a Slower Pace. December CPI increased 0.3% month-over-month, while core CPI, which excluded food and energy, rose 0.2%.Economists were expecting a 0.2% increase for both readings. After the cost of living increased 0.8% last month, the lower inflation figures provided some relief to economists, and should open the door for continued rate cuts. According to futures prices, there is now 42% chance the Fed cuts 75 basis points when it convenes in late January.
Industrial Output Flat. U.S. industrial production remained unchanged in December and capacity utilization fell to 81.4%. Forecasters were expecting production to actually decrease 0.2%. "Looking forward, we fully expect output to fall at a moderate pace in the first half; the absence of an inventory problem in most sectors means there should be no need for aggressive cutbacks in production," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.
Oracle Buys BEA for a 24% Premium. BEA's (BEAS, 18.6%) board of directors approved a $7.85 billion bid by Oracle (ORCL, +2.9%). Oracle will pay $19.375/share, a 24% premium over BEA's closing price Tuesday. The deal was a compromise of the $17 bid Oracle proposed in October and BEA's asking price of $21.
AMD (AMD) Earnings
Continental Airlines (CAL) Earnings
Merrill Lynch (MER) Earnings
Washinton Mutual (WM) Earnings
8:30 AM: Housing Starts
8:30 AM: Jobless Claims
10:00 AM: Philadelpha Fed Survey