Wall Street Breakfast: Must-Know News

U.S. Markets

• U.S. equities sold off Thursday following the unexpectedly bleak Philadelphia manufacturing index report (see News That Moved Thursday's Market): the DJIA closed down 2.46% at a 10-month low, the S&P 500 fell 2.91% and the Nasdaq 1.99%. Stock futures reversed early declines: DJIA futures rose 80 points, S&P 500 futures 8.5 points and Nasdaq futures 19.25 points. Yields on 10-year Treasurys fell 0.24% to 3.659%. Crude settled up slightly at $90.13 while gold declined $1.50 to $880.50.
• President Bush is expected today to outline the principles of an economic stimulus package. Details will probably not be revealed until the State of the Union address on January 28.
• The retail industry might be entering its worst period in 17 years. "It will feel like a recession to many people even if we technically avoid one," said Frank Badillo, senior economist at market researcher TNS Retail Forward.
• U.S. home construction in 2007 fell 24.8% from 2006 to 1.35 million homes, a decline not seen since 1980. Housing starts in December fell 14.2% to a seasonally adjusted annual rate of 1.006 million, the slowest since 1991.
• More video games were sold in 2007 than ever before, led by games for Nintendo's (NTDOY.PK) Wii and Microsoft's (MSFT) Halo 3. Total video retail sales reached $17.94 billion, 43% above 2006.

Global Markets

• Asia: Asian shares rebounded Friday in volatile sessions. The Nikkei closed up 0.56%, almost 500 points above an intraday low. The Hang Seng ended the day up 0.35% after an early 3.9% decline. Nintendo (NTDOY.PK) rose 3.4% after falling heavily during the session.
• Europe: FTSE -0.13%, DAX -0.84%, CAC -0.32%. Rio Tinto (RTP) gained 2% on speculation that BHP Billiton (BHP) will sweeten its offer.

Must-Know News for Friday

• NYSE Euronext buys the Amex. The stock exchange group (NYX) said after hours Thursday that it will buy the American Stock Exchange for $260 million in stock as a means of expanding its options, ETF and cash product businessses. NYX shares gained 2.72% on the news.
• WaMu swings to huge loss; shares drop. The savings & loan (WM) reported a net loss of $1.87 billion (-$2.19/share), far exceeding analyst forecasts of a loss per share of $0.83. Revenue of $3.41 billion was also short of expectations of $3.51 billion. Shares fell 6.95% to $12.46.
• AMD pleases market after the bell. Advanced Micro Devices (AMD) reported a loss excluding items of $97 million (-$0.17/share), much narrower than analyst forecasts of a loss per share of $0.36. Shares rose 5.52% after hours.
• PNC Financial reports 53% drop in profit. Pennsylvania bank PNC Financial Services Group (PNC) posted Q4 net income of $178 million ($0.52/share) against $376 million ($1.27) a year ago. It also said it will not buy back stock before June at the earliest. Shares declined 7.15%.
• Activist shareholder wants to show Comcast CEO the door. Chieftain Capital Management, which holds about 2% of Comcast (CMCSA), has called for the firing of CEO Brian Roberts. Chieftain also wants cash returned to shareholders. Shares fell 4.24%.
• Seagate posts tripling of net income; shares fall on capacity concerns. The hard drive manufacturer (STX) reported Q2 net income of $403 million ($0.73/share) versus $140 million ($0.23) a year ago and analyst forecasts of $0.75. Revenue was up 14% to $3.42 billion, shy of analysts' $3.49 billion expectation, due to difficulties fulfilling demand. Shares fell 6% and another 2% after hours.
• Massey Energy hit with record-setting fine; shares fall. The Appalachian coal miner (MEE) has been fined $20 million, the largest penalty ever levied by the EPA, following an investigation that showed over 4,500 cases in which waters in West Virginia and Kentucky were polluted by mine runoff. MEE shares fell 10.71%.
• Wipro reports slowest growth in three years. India's third-largest software exporter (WIT) posted an 11% increase in net income to 8.26 billion rupees ($210 million), or 5.68 rupees/share, from 7.45 billion rupees, or 5.14 rupees. Analysts were expecting 8.62 billion rupees.
• Google unveils $30 million in new philanthropic grants. Google (GOOG) released the first set of large initiatives to be pursued by philanthropic arm Google.org, which has assets of $2 billion. They include the creation of pandemic prediction systems and job-creation programs in the developing world.
• Lehman cuts residential-mortgage lending jobs. Lehman Brothers (LEH) will eliminate about 1,300 positions at its Aurora Loan Services unit.

• Microsoft Names Industry Veteran to Replace Fired CIO
• MBIA, Ambac Default Risk Exceeds 70%, Credit Derivatives Show
• Amgen's Enbrel Records Subpoenaed in Inquiry
• GM Sees End to Bleak Era
• UAW Sees Big 3 Saving $1,000 a Car

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