On Tuesday February 22, 2011, 6:14 pm EST
Consumer confidence at
3-year high on job optimism
NEW YORK (AP) -- Americans
are feeling more chipper about the economy than they have in three years.
The Consumer Confidence
Index rose to 70.4 this month, up from 64.8 in January, as Americans expressed
more optimism about their income prospects and the direction the economy is
headed, a private research group reported Tuesday.
It's the strongest reading
since the early days of the most severe recession the U.S. has seen since the
1930s.
A robust stock market and
falling unemployment are lifting Americans' spirits in spite of rising food and
energy prices and a still-weak housing sector. In addition, a cut to the Social
Security tax meant Americans started seeing more money in their paychecks in
January, which may be boosting consumer spending.
Retailers including Macy's
Inc., Home Depot Inc. and VF Corp., maker of Lee jeans and Vans shoes, reported
better-than-expected earnings Tuesday. Home Depot posted its first annual
revenue increase since before the housing crash in 2006, while Macy's, the
country's second-largest department store chain, saw sales at stores open at
least a year climb 4.3 percent.
Home prices plummet in most
big US cities
WASHINGTON (AP) -- Home
prices are hitting new depths in most major U.S. cities and are expected to
fall further over the next six months.
In a majority of metro
areas tracked by Standard & Poor's/Case-Shiller, prices have fallen to
their lowest points since the housing bubble burst.
High unemployment, stricter
lending rules and fears that prices will continue to fall are among the reasons
why few people are buying homes. A rising number of foreclosures are also
weighing down prices. And as more people get stuck in depreciating homes,
housing could slow the economy.
Across the country, the
housing industry is recovering unevenly. Risky lending was more widespread in
places like Florida, Arizona and Nevada, leading to more foreclosures and
sharper price declines.
Homes in more established
areas -- those that had little room to build on during the housing boom -- are
doing a better job holding their value. Coastal cities in California and
Northeast are seeing much smaller price declines. In Washington and San Diego,
home prices rose over the past year.
Still, many people who want
to buy can't. Nearly 25 percent of households cannot move because they owe more
on their mortgage than their home is worth, according to Capital Economics. An
additional 25 percent can't qualify for a new mortgage because selling their
homes would leave them with too little money for a down payment.
Consumer comeback skips
Wal-Mart's aisles
NEW YORK (AP) -- Wal-Mart
is missing out on the consumer comeback.
The world's largest
retailer failed to reverse an almost two-year slide in a key revenue measure in
its fourth quarter, it said Tuesday, after all but promising in November it
would do just that.
At Wal-Mart, fewer
customers are coming in the door. At most other retailers, holiday shoppers
spent more, and consumer confidence is now at its highest point in three years.
Wal-Mart's mistakes in
merchandise and prices, along with financial stress on its lower-income
customers, forced it to rely on international growth and cost-cutting to post a
27 percent increase in fourth-quarter net income.
Wal-Mart's 1.8 percent
decline in revenue at U.S. discount stores open at least a year, its seventh
straight quarterly drop, was worse than feared. That important measurement of a
retailer's health excludes stores that open or close during the year.
For the past year, the
discounter has seen customer counts decline as it lost shoppers to rivals like
dollar stores for quick trips to buy milk and diapers.
Wal-Mart had hoped sweeping
changes, from restoring thousands of products it stopped carrying and going
back to offering low prices across the store, would help sales rise again.
It's now clear there won't
be a quick fix.
HP shares slide as
powerhouse faces growth fears
SAN FRANCISCO (AP) --
Hewlett-Packard Co.'s new CEO Leo Apotheker delivered some disappointing news
to Wall Street on Tuesday after his first full quarter with the technology
company.
Revenue growth, a
persistent worry for companies of HP's size, will be slower this year than many
analysts had envisioned. It was an unusual letdown that raised questions about
the momentum of the company's acquisition-fueled transformation into a
computing clearinghouse.
HP shares fell more than 10
percent in extended trading after the company reported its fiscal first-quarter
results.
HP said after the market
closed that its net income jumped 16 percent to $2.61 billion, or $1.17 per
share, in the three months ended Jan. 31. A year ago, it earned $2.25 billion,
or 93 cents per share.
HP said that excluding
one-time items, it earned $1.36 per share in the latest quarter. That was ahead
of the $1.29 per share that analysts polled by FactSet expected on that basis.
Revenue rose 4 percent to
$32.30 billion, from $31.18 billion a year ago. But analysts expected more:
$32.96 billion, according to FactSet.
HP appeared to attempt to
quell concerns by raising its full-year profit forecast. It expects net income
in a range of $5.20 to $5.28 per share, excluding items, which is in line with
analysts' target for $5.23 per share on that basis.
But revenue prediction fell
short. HP said it expects revenue of $130 billion to $131.5 billion in its
current fiscal year, which ends in October. Analysts expected $132.91 billion.
The guidance raised
concerns because HP has spent heavily in recent years on acquisitions that were
expected to propel substantial growth in areas that rival IBM Corp. has found
highly lucrative, especially selling technical services to corporations.
Holly and Frontier Oil to
join in nearly $3B deal
DALLAS (AP) -- Refinery
operators Holly Corp. and Frontier Oil Corp. are combining in an all-stock deal
valued at nearly $3 billion.
Both companies said Tuesday
that the deal will create the most profitable independent U.S. refiner on a per
barrel basis. The new company will have a refining capacity of more than
440,000 barrels per day across five refineries.
Analysts had been expecting
the industry to consolidate after the business rebounded last year and made
refining assets attractive to prospective buyers. Refineries that had struggled
to pass on high oil prices during the recession started to see profits surge
last year as demand grew for gasoline, diesel and other fuels.
Marathon Oil announced earlier
this year that it was spinning off its refining business and ConocoPhillips
plans to minimize its refining arm from 24 percent to 15 percent of its core
business.
Frontier shareholders will
get 0.4811 Holly shares for each Frontier share they own, and Houston-based
Frontier plans to chip in a special dividend worth 28 cents per share. Based on
Frontier's number of shares outstanding, the transaction is valued at $2.85
billion. The companies said the transaction has an enterprise value of $7
billion.
Altogether, including the
special dividend, Frontier's investors will receive $27.27 a share based on
Holly's closing price on Friday.
Forest Labs to buy Clinical
Data for $1.2 billion
NEW YORK (AP) -- Forest
Laboratories Inc. said Tuesday it is buying specialty pharmaceutical company
Clinical Data Inc. in a $1.2 billion deal in order to gain access to a key
antidepressant.
Forest is paying $30 per
share, a discount of nearly 12 percent from Clinical Data's closing price on
Friday. Forest also will pay an extra $6 per share if sales of the recently
approved antidepressant, Viibryd, achieve certain milestones.
New York-based Forest makes
the blockbuster antidepressant Lexapro, the Alzheimer's disease treatment
Namenda and the blood pressure drug Bystolic. It expects the deal will dilute
earnings for the next three years and may add to earnings afterward.
The Food and Drug
Administration approved Viibryd last month. Clinical Data, based in Newton,
Mass., holds exclusive worldwide rights to the drug from Germany-based Merck
KGaA. The drug should be available in U.S. pharmacies in the second quarter.
Forest said it will make
significant investments in marketing and sales to launch the drug, including
expanding its sales force.
Icahn offers $17 a share
for Mentor Graphics
NEW YORK (AP) -- Activist
investor Carl Icahn has offered to buy the remaining shares of software maker
Mentor Graphics Corp. for $17 per share in cash, valuing the company at about
$1.9 billion, according to a regulatory filing on Tuesday.
Mentor makes software and
systems used to test electronics components used in aerospace and
military-grade products, automobiles and low-power electronics.
The offer is a 17 percent
premium over the Wilsonville, Ore., company's closing price last Friday.
Mentor said in a statement
that it will review the proposal and said Icahn and his affiliates already own
a 15 percent stake in the company. In the meantime, it advised its shareholders
not to take any action until the review is complete.
The billionaire investor's
offer leaves room for Mentor Graphics to receive even higher bids without
paying him a break-up fee, according to the filing.
Obama pitches economic
message one state at a time
CLEVELAND (AP) -- Twenty
months ahead of the 2012 election, President Barack Obama is traveling the
nation, vying for the public's attention one state at a time, while
international crises and budget fights compete with his plans for economic
revival.
On Tuesday, Obama curried
favor with small businesses in politically important Ohio, pushing his plans to
boost American competitiveness by increasing spending on sectors like education
and infrastructure. That agenda, however, is running up against opposition from
some Republican governors in cash-strapped states, and GOP lawmakers on Capitol
Hill, whose demands for deep spending cuts raise the prospect of a federal
government shutdown.
The president's domestic
initiatives have also been overshadowed by the turmoil in the Middle East.
Tuesday's trip came amid an escalation of violence in Libya, where
government-backed security forces clashed with protesters, and news that four
Americans were killed at the hands of pirates off the coast of Africa.
Since his State of the
Union address last month, Obama has traveled away from Washington at least once
a week, mostly stopping in political battleground states that will be crucial
to his re-election bid, including Wisconsin, Michigan and Pennsylvania. He
plans a trip to Florida next week.
As was the case during the
2008 campaign, Obama aides are willing to forgo national media headlines in
favor of mostly positive coverage in local media outlets in regions the
president visits. They're also courting the press in swing states even when
Obama is not on the road, inviting reporters from local television stations in
Virginia, Wisconsin and Ohio to the White House for interviews last week.
By The Associated Press
The Dow Jones industrial
average sank 178.46 points, or 1.4 percent, to close at 12,212.79. It was the
biggest drop since Nov. 16. Bond prices rose as investors sought safety.
The Standard & Poor's
500 index fell 27.57, or 2 percent, to 1,315.44. It was the S&P's worst day
since Aug. 11.
The Nasdaq fell 77.53, or
2.7 percent, to 2,756.42.
Benchmark West Texas
Intermediate for April delivery jumped $5.71, or 6.4 percent, to settle at
$95.42 per barrel on the New York Mercantile Exchange. Oil hasn't been that
high since it settled at $97.92 on Oct. 1, 2008.
Retail gasoline prices in
the U.S. held steady overnight at a national average of $3.171 per gallon.
In other Nymex trading in
March contracts, heating oil rose 7.75 cents to settle at $2.8035 a gallon and
gasoline gained 5.63 cents to settle at $2.7464 a gallon. Natural gas futures
lost about a penny to settle at $3.867 per 1,000 cubic feet.