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Must-Know News for Wednesday

  • Asian markets bounced back after the U.S. Fed soothed investors' frayed nerves by dropping its key rate to 3.5%. Nikkei: +2%. Hang Seng: +10.7%. Shanghai: +3.1%. BSE Sensex: +5.2%.

    European markets were less enthusiastic. FTSE: -0.66%. CAC: -1.02%. Dax: -1.35%. Bear in mind that European markets reacted to the Fed's move late Tuesday, whereas Asian markets were already closed at the time.

    U.S. futures pared overnight gains and are down sharply. DJIA -1.7%, S&P 500 -2.6%, Nasdaq -3.6%.

  • Apple comes up short. Apple's (NASDAQ:AAPL) earnings beat consensus expectations, but shares fell more than 11% in AH trading after Q2 guidance of $0.94/share on revenue of $6.8B fell short of Street expectations of $1.09/share on revenue of $7B.
  • Retail Ventures might sell Value City chain. Retail Ventures Inc. (NYSE:RVI) is expected to announce the sale of the Value City Department Stores chain to a group of investors led by Crystal Capital Fund LP.
  • Bond insurers' shares rise on chance of regulatory help. Ambac (ABK) gained 27.7%, MBIA (NYSE:MBI) 46.6%, Security Capital Assurance (SCA) 30.3%, and ACA Capital (OTC:ACAH) 25% after the New York Insurance Department said it is assessing ways to stabilize the bond insurance industry
  • Swiss Re surges on Buffett stake, ups buybacks. Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) has taken a 3% stake in Swiss Re (OTC:SWCEY), sending the reinsurer's shares up 10% in early trading Wednesday. The company said it will now increase its buyback program by 1.75 billion Swiss francs ($1.59 billion) to 7.75 billion francs.
  • AmeriCredit swings to loss; shares sink. The auto finance company (ACF) swung to a Q2 net loss of $19.1 million ($0.17/share) versus net income of $95.4 million ($0.74) a year ago. Shares fell 12.45% after hours.
  • Eaton posts Q4 earnings rise; sees strong 2008. The industrial manufacturer (NYSE:ETN) reported net income of $256 million ($1.71/share) against $241 million ($1.59) a year earlier. Excluding items, EPS rose to $1.79 from $1.66. Sales were up 10% to $3.37 billion. Analysts were expecting EPS of $1.73 on sales of $3.29 billion. Eaton is forecasting 2008 profits of $7.75-8.25, ahead of analyst expectations of $7.69.
  • DuPont's profit drops but sales rise. The chemical company (NYSE:DD) posted a 37% drop in net income to $545 million ($0.60/share) but an 11% rise in sales on strong growth in developing countries and a good performance by the agriculture and nutrition unit.
  • UnitedHealth posts in-line earnings, but softness in the commercial business pushes down shares. The insurer (NYSE:UNH) reported a 3.5% Q4 increase in profit to $1.22 billion ($0.92/share) and a 3% rise in revenue to $18.7 billion, but concerns about eroding commercial risk margins sent shares down 5.5% and prompted a selloff in the health insurance sector.
  • Texas Instruments reports 13% rise in Q4 profit. The semiconductor company (NASDAQ:TXN) reported net income of $756 million ($0.54/share) including items and revenue of $3.56 billion, a 3% decline from Q3. Analysts were expecting EPS of $0.52. Shares rose 3.89% after hours.
  • Getty Images exploring sale. Getty Images (GYI) confirmed that it is exploring strategic alternatives, sending its shares up 12.94%.
  • UAL reports revenue; remains coy about merger talks. UAL Group (UAUA) posted a 9.7% increase in Q4 revenue to $5.03 billion and refused to confirm or deny reports of merger negotiations with Delta (NYSE:DAL).
  • Supreme Court rebuffs Enron investors. The high court has refused to hear arguments from Enron shareholders who are trying to recover $40 billion from Wall Street banks following the 2001 collapse of the energy company.
  • California foreclosures skyrocket. Foreclosures in California rose over 400% in Q4 from the previous year and defaults more than doubled.
  • Goldman takes China solar stake. Goldman Sachs (NYSE:GS) and CDH investments will invest $100M in a leading Chinese solar water-heater maker, a bet on the growth of Chinese renewable-energy technology and the country's demand for alternative energy solutions.
  • Wachovia, National City Join Bank-Earnings Slide
  • Sears Would Face Soft Real-Estate Sector
  • J&J 4Q Profit Rises; Revenue Climbs

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Source: Wall Street Breakfast: Must-Know News