Wall Street Breakfast: Must-Know News

U.S. Markets

• Wednesday, the DJIA was down 0.28% and the S&P 500 0.56%. The Nasdaq ticked into positive ground intraday but closed down 0.95%. Crude traded near a four-week low Wednesday but rose in Asian trading Thursday after the IEA said it is maintaining its 2008 demand forecast. Gold fell 2.3% to $882.00 an ounce.
• Mortgage application volume shot up 28.4% last week.
• Consumer prices rose by 4.1% in 2007, their fastest since 1990, led by gasoline and food. Core inflation, which excludes those factors, rose 2.4%.
• The Fed's Beige Book said economic growth slowed in late November and December, with "subdued holiday spending and further weakness in auto sales."
• Homebuilders are cheering up (a little). The homebuilders' housing-market index rose to 19 this month from a downwardly revised 18 in December. A year ago, the index was 35.
• Fed Chairman Ben Bernanke is expected to be "far more circumspect than Greenspan" on specific recommendations concerning the economy when he testifies today before the House Budget Committee.

Global Markets

• Asia: Nikkei up 2.07%, Hang Seng up 2.72%. Both indices swung sharply during the day. Honda (HMC) and Sharp (SHCAY.PK) gained 2.9% and 2.4%, respectively. China shares listed in Hong Hong fell 6.6% as large funds scaled back positions. The yen rose against the dollar and the euro after the Fed and the European Central Bank said growth is slowing.
• Europe: FTSE up 0.74%, DAX up 0.74%, CAC up 0.59%. British-French electronics retailer Kesa Electricals gained 7.8%, Belgian supermarket Delhaize (DEG) 4% and books-and-music chain HMV Group 14.95%.

Must-Know News for Thursday

• Ambac reports massive writedown, cuts dividend; shares plunge. The bond insurer (ABK) announced a $3.5 billion writedown, equivalent to almost two-thirds its net worth. It also said it is cutting its dividend by 2/3 and ousting its CEO. Shares tumbled 38.65% to $12.97.
• Florida follows through on threat and suspends Allstate. Kevin McCarty, commissioner of the Florida Office of Insurance Regulation, has suspended Allstate (ALL) from writing new policies in the state because of the company's noncompliance with a subpoena. "We're going to hit them where it hurts," he said. The suspension will primarily affect new auto policies.
• Air France-KLM might hold key to Delta-Northwest merger. Air France-KLM (AKH) "could provide strategic or financial backing" in a Delta (DAL) bid for Northwest (NWA) in return for a significant stake in the combined airline, sources told the WSJ.
• JPMorgan reports 34% drop in net; shares rise. JPMorgan Chase (JPM) posted net income of $2.97 billion ($0.86/share) against $4.52 billion ($1.26) a year ago. Revenue was up 7% to $17.38 billion. Analysts were expecting EPS of $0.93 on $17.05 billion in revenue. JPM shares rose 5.77%.
• Wells Fargo posts first quarterly profit decline in six years; edges expectations. The mortgage lender (WFC) reported that Q4 earnings fell to $1.36 billion ($0.41/share) from $2.18 billion ($0.64) a year earlier. Revenue rose 8% to $10.21 billion. Analysts expected EPS of $0.39 on revenue of $10 billion. Shares rose 3.32%.
• Citi sees $15 billion writedown at Merrill. Citigroup (C) is forecasting a $15 billion Q4 writedown at Merrill Lynch (MER) and is lowering its price target by $5 to $75, but continues to rate Merrill a "buy".
• Sun to buy MySQL. Sun Microsystems (JAVA) will pay $1 billion for the Swedish open-source database company. Sun shares rose 3.67%.
• Novartis posts Q4 profit miss. The European pharmaceutical (NVS) reported Q4 net income of $904 million ($0.41/share), a 45% decline from the year-ago quarter. Analysts were expecting earnings of $1.5 billion. Shares fell 2.10%.
• Microsoft allies with Edgar Online. The software giant (MSFT) and financial information provider (EDGR) will place advertising and content on one another's sites. Edgar shares gained 3.7% after hours.
• AMR swings to Q4 loss. The parent of American Airlines (AMR) posted a loss of $69 million ($0.28/share) versus a profit of $17 million ($0.07) a year ago. Excluding one-time benefits, the loss comes to $0.75/share, in line with forecasts. Shares closed up 3.18%.
• Apollo Group loses class-action suit. A jury found the education company (APOL) guilty of fraud and ordered it to pay investors $277.5 million. Shares fell 1.70%.
• Airbus Lags Boeing in New Orders, But Aircraft Deliveries Hit Record
• SAP Doesn't See Economy Crimping Sales, Chief Kagermann Says
• Deutsche Bank Set to Cut 250 to 300 Jobs
• Schwab Profit from Continuing Operations Up 36 Percent

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