Wednesday January 7, 2009, 6:06 pm EST
Profit warnings, poor job outlook weigh on stocks
NEW YORK (AP) -- A warning from tech giant Intel about poor
business conditions and more evidence of rising unemployment left stocks with
their biggest losses in a month Wednesday.
The news upended some investors' hopes for a speedy economic
recovery this year and sent the major stock indexes down more than 2.5 percent,
including the Dow Jones industrials, which lost 245 points.
Intel's second warning since November, as well as bleak outlooks
from aluminum producer Alcoa and media industry bellwether Time Warner,
underscored the breadth of the economy's slowdown. In addition, the ADP
National Employment Report said private sector jobs fell by a
greater-than-expected 693,000 in December. That made investors nervous ahead of
Friday's employment report from the government.
Intel will miss its already-lowered 4Q targets
SAN FRANCISCO (AP) -- Even after sharply reducing its outlook for
the fourth quarter, Intel Corp. said Wednesday that it would miss its revenue
projection by about $500 million, a sign that PC makers and buyers are being
more tightfisted than it seemed only two months ago.
Intel shares closed down 6 percent.
Santa Clara, Calif.-based Intel, the world's largest chip maker,
now says revenue was $8.2 billion for the last three months of 2008, a 23
percent decline from the year-ago period.
Obama tabs spending watchdog, eyes Social Security
WASHINGTON (AP) -- Pointing with concern to "red ink as far
as the eye can see," President-elect Barack Obama pledged Wednesday to
tackle out-of-control Social Security and Medicare spending and named a special
watchdog to clamp down on other federal programs -- even as he campaigned anew
to spend the largest pile of taxpayer money in history to revive the sinking
economy.
The steepness of the fiscal mountain he'll face beginning Jan. 20
was underscored by stunning new figures: an estimate that the federal budget
deficit will reach $1.2 trillion this year, by far the biggest ever, even
without the new stimulus spending.
With less than two weeks to go before taking the helm at the
White House, he'll deliver a speech Thursday laying out why he wants Congress
to quickly pass his still-evolving economic plan.
Citgo
reverses decision on free fuel shipments
BOSTON (AP) -- Citgo, the Venezuelan
government's U.S.-based oil subsidiary, reversed course Wednesday and said it
will continue shipments of heating oil to poor families in the
Former U.S. Rep. Joseph Kennedy, head of the Boston-based nonprofit
which distributes the fuel, said Venezuelan President Hugo Chavez intervened
directly.
Citgo
Petroleum CEO Alejandro Granado made the announcement
in Boston, saying Citgo had found a way to continue
paying for oil shipments.
Time Warner expects $25B charge, loss for year
New York-based Time Warner said its results, particularly for its
AOL and publishing unit's advertising operations, have been pressured by
economic conditions that are more difficult than it initially anticipated.
Time Warner's cable television arm Time Warner Cable Inc. will
account for $15 billion of the charge, with the remaining $10 billion related
to its publishing and AOL divisions.
Russia stops all gas supply to Europe via Ukraine
As
Bulgaria, the EU's poorest member, was among the worst hit.
Paulson says changes needed at Fannie, Freddie
WASHINGTON (AP) -- Treasury Secretary Henry Paulson on Wednesday
said the best option for the future of Fannie Mae and Freddie Mac could be for
the mortgage giants to be run like public utilities.
In what could be his last speech as Treasury secretary, Paulson
said that allowing the two companies to return to their previous operating
approach was not an option.
Fannie Mae and Freddie Mac were taken over by the government in
September and placed in a conservatorship after mounting mortgage losses put
them in operating distress that was a prelude to the broader financial crisis
that hit Wall Street last year.
Under Paulson's proposal, Congress would replace Fannie and
Freddie with one or two private sector entities that would purchase and
securitize mortgages with a credit guarantee backed by the federal government. The
new companies would be privately owned but governed by a rate-setting
commission that would establish a targeted rate of return.
EMC says 4Q results will beat expectations
HOPKINTON,
However, the Hopkinton, Mass.-based company
announced it will lay off 2,400 workers, or about 7 percent of its staff,
consolidate facilities and reduce costs to boost its competitiveness.
EMC, the world's largest maker of external disk storage devices,
expects adjusted earnings of 30 to 31 cents per share on sales of about $4
billion, up 4 percent from last year.
Oil prices tumble below $43 on oil reserve report
SIOUX FALLS, S.D. (AP) -- Energy prices
plunged across the board Wednesday, giving up a week of gains with unexpectedly
large
Sweet crude for February delivery tumbled 12 percent, or $5.95,
to settle at $42.63 a barrel on the
The Energy Information Administration said inventories of
commercial crude oil inventories rose 6.7 million barrels, well beyond the 1.5
million-barrel build expected by analysts surveyed by Platts,
the energy information arm of McGraw-Hill Cos.
New papers filed in Madoff case
NEW YORK (AP) -- Disgraced financier Bernard Madoff
and his wife sent at least 16 watches, a jade necklace and a diamond bracelet
to family and relatives, proving he will continue to dissipate what little is
left from his $50 billion fraud, a prosecutor told a judge in arguing that Madoff be jailed.
Assistant U.S. Attorney Marc Litt said
in a letter released Wednesday that Madoff violated a
court order barring him from dissipating, concealing or disposing of any assets
when he and his wife sent the items to close relatives and two friends.
Bank of America sells shares in Chinese bank
BEIJING (AP) -- Bank of America Corp. raised more money Wednesday
to cope with U.S. economic turmoil by selling part of its stake in China
Construction Bank Ltd.,
Bank of America sold 5.62 billion Construction Bank shares in a
move that reduced its stake from 19.1 percent to 16.6 percent.
The Charlotte, N.C.-based bank is raising money to weather the
worst downturn for
By The Associated Press
The Dow Jones industrial average fell 245.40, or 2.72 percent, to
8,769.70, its biggest point and percentage decline since Dec. 1.
Broader stock indicators also tumbled. The
Standard & Poor's 500 index fell 28.05, or 3 percent, to 906.65. It
was the biggest drop for the index since Dec. 1.
The Nasdaq
composite index fell 53.32, or 3.23 percent, to 1,599.06, hit by the decline in
Intel shares.
Sweet crude for February delivery tumbled 12 percent, or $5.95,
to settle at $42.63 a barrel on the
In other Nymex trading, gasoline
futures tumbled nearly 11 cents to settle at $1.0764 a gallon. Heating oil fell
8.3 cents to settle at $1.5431 a gallon while natural gas for February delivery
fell 11 cents to settle at $5.872 per 1,000 cubic feet.
In