February 7, 2008

IBD's Top 10 - Wednesday

Stocks Sell Off On Fed Warning

1 A Fed official's inflation warning turned a mildly positive day into another negative one. The Nasdaq fell 1.3%, the S&P 500 0.8% and the Dow 0.5%. Trading declined, but picked up as stocks fell. CME (NYSE:CME - News) and Nymex (NYSE:NYX - News) both dived 18% as the Justice Dept.'s call for a futures exchange shake-up threatened their planned merger. Apple (NasdaqGS:AAPL - News) and Baidu (NasdaqGS:BIDU - News) were among the big losers.

Cisco Falls On Q3 Sales Warning

2 Citing a weak economy, the networking giant sees 10% revenue growth vs. views for 15%. Orders weakened in Jan., and may stay soft for the next few months, Cisco (NasdaqGS:CSCO - News) said. It met Q2 views for a 15% profit rise to 38 cents a share ex items. Sales rose 16.5% to $9.8 bil. Cisco shares fell 7% late, with many other techs down as well.

McCain Seeks Common Ground

3 Buoyed by Super Tuesday wins that gave him a commanding lead for the GOP presidential nomination, John McCain urged conservative critics to "calm down" and focus on where they agree. He'll speak before a key conservative gathering Thu. Mitt Romney was reassessing his campaign. Dem Hillary Clinton won the 3 biggest states, but held just a slight delegate edge over Barack Obama.

Fed Reaffirms Inflation Concern

4 Cooling hopes for more aggressive rate cuts, the hawkish Philly Fed President Charles Plosser said the central bank can't take a "damn the torpedoes" approach that ignores inflation. Recession risks have risen, he said, but still sees 1% GDP growth in the first half. Futures traders still expect a half or 3/4-point cut by the Fed's March meeting.

Time Warner May Shed Cable

5 New CEO Jeff Bewkes said the media conglomerate may spin off Time Warner Cable. Time Warner (NYSE:TWX - News) is cutting 100 jobs at its corporate offices and splitting AOL's dial-up business from its ad business. Q4 EPS met views for a 32% rise to 29 cents a share ex items. Revenue grew 2% to $12.64 bil, a hair below views. Shares rose 2%. Time Warner Cable fell 3%, hitting a record low intraday.

Productivity Growth Tops Views

6 Nonfarm output per hour rose at a 1.8% annual rate in Q4, well below Q3's blistering 6% pace, but triple what Wall Street had expected. Output edged up just 0.4% -- but hours worked fell at a 1.5% rate, the 2nd straight decline and the worst since Q1 '03. Unit labor costs grew 2.1% in Q4, much less than feared.

Senate's Stimulus Bill Stalled

7 Senate Republicans blocked a move by Dems to add over $40 bil in checks for the elderly, disabled veterans and the unemployed to a bill to stimulate the economy. The $205 bil measure fell just short of the 60 votes needed to move to a final vote. Republicans want the Senate to adopt the $161 bil House bill backed by President Bush, to get checks and other aid out quickly.

Oil Slumps As Stockpiles Soar

8 March crude oil fell $1.27 to $87.14 a barrel after the Energy Dept. reported a stocks buildup of 7.05 mil barrels last week. It was far more than expected, and the biggest such rise since March '04. The combo of bigger imports and weaker demand could be a symptom of a slowing economy, some traders said. Heating oil and gasoline lodged less-dramatic losses. On Tue., oil fell $1.61.

Macy's Cuts Jobs After Sales Fall

9 The department store operator will ax 2,300 management jobs as it consolidates and decentralizes to cut costs. Macy's (NYSE:AEO - News) cut Q4 profit targets after saying Jan. same-store sales fell 7.1% year-on-year. Shares fell 5%. American Eagle's Jan. comps fell more than expected, but the youth apparel chain backed EPS views. Most retailers report Jan. sales Thu. Analysts expect grim results.

Mortgage Applications Hit Highs

10 Activity rose 3% in the Feb. 1 week, doubling over 5 weeks to the most since March '04, said the Mortgage Bankers Assoc. Applications for buying a home shot up 12% after falling hard in the prior 2 weeks. Refi activity eased 1% after skyrocketing in the prior 4 weeks. Mortgage rates edged up for a 2nd week from multiyear lows.

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