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News That Moved the Market
Economic Data Sinks Stocks. A rash of disappointing economic data sunk stocks Thursday. The Federal Bank of Philadelphia released data showing manufacturing in the area fell hard as the regional manufacturing index dropped to -20.9 from -1.6 in December, representing a startling contraction. "Rarely has the Philly survey been this weak without the economy in the throes of economic recession," wrote Tony Crescenzi, chief bond market strategist for Miller Tabak & Co. "The preponderance of data point to a contracting U.S. economy." Also pushing the markets lower was news that housing starts dropped 14% in December to the worst levels in 16 years.
Bernanke Endorses Stimulus Plan. Bernanke told Congress it could help the U.S. economy stay clear of a recession by passing a quick, efficient and temporary fiscal stimulus plan. "To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next 12 months or so," Bernanke said. "Any fiscal package should be efficient... Finally, any program should be explicitly temporary." President Bush is expected to announce specific proposals for a stimulus plan in his State of the Union Address on January 28th.
Merrill Swings to a $9.8 Billion Loss. Merrill Lynch (MER, -10.2%) dropped after announcing $16 billion in mortgage-related writedowns, topping most analysts' estimates. The company will not make any large jobs cuts and will not explore selling its stakes in Bloomberg LP or BlackRock (BLK, +0.61%). Merrill stock is down about 49% in the past year.
Ambac Down on Potential Moody Downgrade. Ambac (ABK, -51.9%) was crushed on news that Moody's will put the bond insurer's Aaa credit rating under review for a downgrade. The news sparked fears that Ambac and other bond insurers like MBIA (MBI, -31.2%) will lose their Aaa ratings and spark a whole new round of writedowns on Wall Street.
Profits Up 12% at IBM. Shares of IBM (IBM, -0.5% day; +3.1% A.H.) were up after the company reported fourth-quarter results following the bell Thursday. Revenues were up 10%, helped by strong sales growth in Europe and Asia. The figures echoed the company's preliminary report released earlier this week.
GE (GE) Earnings
10:00 AM: Consumer Sentiment
10:00 AM: Leading Indicators