Dow -128.11 (-1.06%)
Nasdaq -47.75 (-2.04%)
S&P 500 -14.69 (-1.11%)
News That Moved the Market
Fed Stops Market Meltdown. The Fed announced this morning it would lower its benchmark rate by 75 basis points to 3.50%. The emergency move, the first in six years, came eight days before the FOMC was scheduled to meet. The Fed said the action came "in view of a weakening economic outlook and increasing downside risks to growth." Major indices opened with huge losses after sell-offs in Asia and Europe on Monday, but were able to erase most of the losses in the first half of the session. Though this shows the Fed probably now sees a recession as a more likely event, many investors also took it to mean the Fed finally "gets it" and will act more aggressively to prevent a recession.
JNJ Reports Profit Increase. Johnson and Johnson (JNJ, -1.5%) said fourth-quarter profits jumped 9.5% from last year. Investors were troubled by sales decreases in key products, despite a 26% increase in international revenue. The company's 2008 EPS forecast was $4.39-$4.44/share, basically in-line with the $4.42/share analysts were looking for.
Bank of America's Profits Down on Writeoffs and Trading Losses. Bank of America (BAC, +4.0%) announced income fell by 95%, as most of the company's profits were wiped away by a $5.3 billion mortgage-related writedown. The company said it does not plan on lowering its dividend and remains "cautiously optimistic" for 2008.
Apple Drops in After Hours. Apple (AAPL, -3.5% day; -10.0% A.H.) announced after the bell that profits increased 57%, but provided a forecast that disappointed analysts. Though the company is very susceptible to a consumer slowdown, it should also be noted that the company has issued forecasts that have missed seven out of the last eight quarters, but has beaten analysts' expectations every quarter the last three years.
Texas Instruments Forecasts Solid Outlook. Mobile-phone chipmaker Texas Instruments (TXN, -1.4% day; +1.5% A.H.) also reported after the bell, announcing a 13% increase in profits and a forecast for the current quarter that beat analysts' expectations.
Notable Earnings (Full List Here):
EBAY (EBAY) Motorola (MOT) Pfizer (PFE)