SAN FRANCISCO (AP) —
Stocks slide on weak earnings; Fed cuts stimulus
NEW YORK (AP) — Stock investors are still concerned about global economic prospects in 2014. And they had plenty worry about yesterday.
Disappointing earnings from big U.S. companies, ongoing jitters in emerging markets and more cuts to the Federal Reserve's economic stimulus combined to push stocks lower for the fourth day out of the last five.
The S&P 500 index fell 18 points, or 1 percent, to 1,774. The Dow Jones industrial average fell nearly 190 points, or 1.2 percent, to 15,738. The Nasdaq composite dropped 46 ½ points, or 1.1 percent, to 4,051.
Stocks opened lower in response to the lackluster earnings news. The market added to its declines yesterday after the Fed's announcement at 2 p.m. Eastern time.
The Fed said it will lower its monthly bond purchases by $10 billion to $65 billion because of a strengthening U.S. economy.
Asian stocks down as Fed reduces stimulus
TOKYO (AP) — Shares fell today in Asia as weak economic data from China and Japan deepened concerns over ongoing reductions in U.S. monetary stimulus.
After a euphoric rise in Japan's stock market last year, sentiment has dimmed as the Japanese yen reversed some of its weakness against the U.S. dollar, raising worries over the potential impact on exporters.
The recent volatility in emerging market currencies has led investors to shift toward "safe haven" currencies such as the yen and dollar.
The U.S. Federal Reserve's decision to further "taper," or reduce, its mortgage and long-term bond purchases was a major factor in roiling Asian markets.
The monthly purchases have supported U.S. economic recovery by keeping interest rates low but also sent money into stocks and other assets with higher returns.
Benchmark crude oil rose above $97.50 a barrel. The dollar gained against the euro and was little changed against the yen.
ECONOMY-THE DAY AHEAD
Major business and economic reports scheduled for today
WASHINGTON — The government will report weekly jobless claims today and the nation's fourth quarter gross domestic product.
Investors will be updated on the housing market today when the National Association of Realtors releases pending home sales index for December and Freddie Mac reports weekly mortgage rates.
The Senate Energy and Natural Resources subcommittee will hold a hearing today on lifting the ban on U.S. crude oil exports.
There are a slew of earnings reports set for release.
Companies reporting quarterly financial results before the market opens are Exxon Mobil, 3M, Altria Group, Viacom, Ericsson, Harley-Davidson and UPS.
After the closing bell, investors will hear from Google, Amazon.com, Visa and Chipotle Mexican Grill.
Royal Dutch Shell also reports fourth quarter earnings today.
Economy likely showed strength at the end of 2013
WASHINGTON (AP) — Economists are predicting that economic growth results being announced today will show solid results.
The government will make its first of three estimates of economic growth for the October-December quarter. Economists are forecasting an annual growth rate of 3.3 percent, after an even stronger 4.1 percent rate for July through September.
Most economists think 2014 will produce the strongest growth since the recession officially ended in June 2009. Many foresee GDP growth of 3 percent or better.
For all of 2013, analysts think the economy grew about 1.9 percent. That would be below the 2.8 percent growth for 2012 as measured by the gross domestic product. GDP represents the country's total output of goods and services.
A key reason for their optimism is an improved outlook for the government sector.
This year, economists also think the economy will get a lift from continued gains in hiring.
Google's Motorola misstep could be Lenovo's boon
UNDATED (AP) — An expensive mistake by Google could turn into a golden opportunity for China's Lenovo Group as it expands beyond its success in the personal computer industry.
Google is ridding itself of a financial headache by selling Motorola Mobility's smartphone business to Lenovo for $2.9 billion. The deal announced late yesterday comes less than two years after Google bought Motorola Mobility for $12.4 billion in the biggest acquisition of Google's 15-year history.
Already the world's largest PC maker, Lenovo is now determined to become a bigger player in smartphones as more people rely on them instead of laptop and desktop computers to go online.
Lenovo already is among the smartphone leaders in its home country, but it has been looking for ways to expand its presence in other markets, especially the U.S. and Latin America.
This marks Lenovo's second high-profile deal this month. The company announced plans last week to buy a major piece of IBM Corp.'s computer server business for $2.3 billion.
For Google, the sale is a tacit admission that the company miscalculated how much Motorola was worth.
Survey confirms China manufacturing at 6-month low
HONG KONG (AP) — A survey of factory purchasing managers confirms that Chinese manufacturing shrank this month for the first time in half a year.
The HSBC survey released Thursday backs up a preliminary version earlier this month that unsettled global investors by raising fears the world's No. 2 economy is slowing.
The purchasing managers' index fell to 49.5 from 50.5 in December. The index uses a 100-point scale on which readings above 50 indicate growth.
It's the index's lowest level since July.
The report said the reading "signaled a deterioration of business conditions" in China's huge manufacturing industry.
The reading was lower than 49.6 in the early version released last week that, combined with several other big economic worries, led to several days of sharp declines on world stock markets.
Target says hackers stole credentials from vendor
UNDATED (AP) — Target says investigators have found that hackers stole credentials from a vendor to access the retailer's systems and pilfer about 40 million debit and credit card numbers as well as personal information for another 70 million people.
Spokeswoman Molly Snyder declined to comment Wednesday on further details, such as the vendor's identity or how the hackers stole the credentials, citing the ongoing investigation.
Snyder did say that since Minneapolis-based Target Corp. confirmed the breach on Dec. 15, it has taken extra precautions such as limiting or updating access to some platforms.
Last week, some card numbers of Target customers from South Texas turned up in the arrest of a pair of Mexican citizens at the U.S.-Mexico border. But experts believe the attack's original perpetrators will be difficult to locate.
LEHMAN BROTHERS-FANNIE MAE
Deal OK'd for Fannie to get $537M on Lehman claim
WASHINGTON (AP) — A federal bankruptcy judge has approved Lehman Brothers Holdings Inc.'s settlement with Fannie Mae, allowing the mortgage finance giant to recover about $537 million for its claim against the estate of the failed Wall Street bank over soured mortgage securities.
Judge James Peck made the ruling Wednesday. The settlement values at about $2.15 billion Fannie's claim over home loans and mortgage securities it bought from Lehman before the financial crisis. Under rules of Lehman's bankruptcy proceeding, Washington-based Fannie will receive about 25 percent of that.
Fannie and sibling Freddie Mac were rescued by the government in a $187 billion bailout in 2008 after they were hit by massive losses on high-risk mortgages.
Lehman's bankruptcy in September 2008 was the biggest in U.S. history and helped set off the financial crisis.
In Senate, bipartisan support is key to farm bill
WASHINGTON (AP) — Support from Democrats and Republicans in the Senate is expected to overcome liberal as well as conservative criticism of a massive five-year farm bill that spends nearly $100 billion a year on food stamps and crop subsidies.
The chairwoman of the Senate Agriculture Committee, Democrat Debbie Stabenow of Michigan, says she has no doubt senators will approve the measure.
After years of setbacks, the farm bill cleared its biggest hurdle Wednesday when the House approved it 251-to-166.
Conservatives had sought to overhaul the food stamp program, which has ballooned to $80 billion a year. But the Senate balked and the White House threatened to veto a House plan to cut 5 percent from the program.
The final bill has $800 million, or 1 percent, in annual cuts to food stamps.
Seat fabric may force Toyota recall in US, Canada
TOKYO (AP) — Toyota Motor Corp. says it's in talks with the National Highway Traffic Safety Administration about a possible recall in the U.S. and Canada covering several car models, including the popular Camry, for a potential problem with seat fabric.
The Japanese automaker has already halted sales of the problem vehicles, which are only those equipped with seat heaters, because the fabric may not clear flammability standards.
Company spokesman Naoki Sumino says affected models are the Camry, Camry hybrid, Avalon sedan, Avalon hybrid, Corolla subcompact, Sienna minivan, Tundra and Tacoma trucks sold since August 2012, when the fabric supplier was changed.
He didn't immediately know how many vehicles were affected.
He says it's still unclear whether the NHTSA would decide on a recall.