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| Market Summary |
A day after a historical election, stocks sank into negative territory as investors remained jittery about the economy and the direction it will take under Barack Obama’s presidency. The Dow Jones Industrial Average lost over 480 points to end at 9,139.27. Today’s session was much different from Tuesday’s pre-election rally. Stocks fell earlier in the session after investors received additional disappointing economic reports. Payroll service firm ADP reported that the private sector lost 157,000 jobs last month. Based on this news, investors are anxiously awaiting the Labor Department’s report on employment due on Friday. The Institute of Supply Management’s reading on the service also came in lower than expected. The index fell to 44 from 50.2 in the previous month and reminded investors how close the economy is to a recession. In corporate news, KB Home (KBH: Charts, News, Offers) cut its quarterly dividend 75% in an effort to remain strong during these troubling financial times. GMAC Financial Services said its third-quarter loss widened to $2.52 billion. Credit markets continued to improve. The 3-month Libor fell to 2.51% from 2.71%. U.S. light crude oil for December delivery fell $5.23 to settle at $65.30 a barrel on the New York Mercantile Exchange after rallying in the previous session.
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| Market News |
British drugmaker GlaxoSmithKline PLC (GSK: Charts, News, Offers) is restructuring its U.S. operations, starting with reducing its U.S. sales force by 1,000, following many of its top competitors in eliminating sales jobs. The world's No. 2 drugmaker by revenue also will switch from having dual U.S. headquarters, in Philadelphia and in Research Triangle Park, N.C., to operating just the North Carolina headquarters. U.S.-traded shares of GlaxoSmithKline fell $2.66, or 6.6 percent, to $37.53 in early afternoon trading. Spokeswoman Mary Anne Rhyne said Wednesday that the headquarters change is meant to eliminate confusion and is largely symbolic. There are currently no plans to cut jobs or close offices in Philadelphia related to the headquarters move, she said. (Source: Yahoo! Finance) Full Story
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Time Warner Inc. (TWX: Charts, News, Offers) reported third-quarter profit Wednesday that beat Wall Street expectations, even as its AOL online unit continued to weigh down the company with a 6% decline in advertising revenue. The media conglomerate saw growth in its cable-access and cable-network businesses. But its Time Inc. magazine unit showed weakness. Revenue fell 17% in the AOL unit. And revenue fell 9% at the Warner Bros. movie division compared with a strong 2007 period led by a "Harry Potter" sequel - despite the high-profile theatrical release of the Batman sequel "The Dark Knight," which has grossed more than $527 million so far this year. Overall, Time Warner reported net income of $1.07 billion, or 30 cents a share, roughly in line with the $1.09 billion, or 29 cents per share, it earned in the year-ago period. Time Warner is the parent company of CNNMoney.com. (Source: CNN Money) Full Story
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Google's (GOOG: Charts, News, Offers) decision to quit an online search ad deal with Yahoo! (YHOO: Charts, News, Offers) could open up another takeover attempt by Microsoft (MSFT: Charts, News, Offers). Google said Wednesday that after four months of review by the Department of Justice -- and despite revisions to the deal's terms -- "it's clear that government regulators and some advertisers continue to have concerns about the agreement." "Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners," wrote Google's legal officer David Drummond on the company's blog. "That wouldn't have been in the long-term interests of Google or our users, so we have decided to end the agreement." The Justice Department acknowledged that it had planned to challenge the deal on antitrust grounds, claiming that under the arrangement, both Google and Yahoo! would account for 90% of the search advertising market. (Source: TheStreet) Full Story
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| Market Analysis |
After a long, hard fought and history-making campaign, Barack Obama is the president-elect. There is great joy throughout America and the world at the election of this thoughtful man as our first black president. Now that the grinding political process is behind us, he is free to reshape his campaign sound bites into presidential policies that will deliver the real change he promised. And here, I start to dream… In a bold departure from campaign rhetoric aimed at comforting disaffected rust-belt voters, Mr. Obama is now able to affirm his commitment to free trade and the process of globalization. Importantly, informed by his University of Chicago and Harvard-based economic advisers, he has underscored his support for the North American Free Trade Agreement, to the great relief of our most important trade partners to the North and the South. (Source: Forbes.com) Full Story
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Ooops. Alan Greenspan has just discovered that, when the odor of money is floating on the air, you can't expect the $$,$$$,$$$ bonus crowd to "just say no.'' It was a flaw in his thinking, Greenspan concedes, in apparent shock. So what about the financial planners who advise pre- and newly post-retirement clients to hold a substantial portfolio of stocks? Are there flaws in that theory of asset allocation? I put that question on the Web site used by members of the National Association of Personal Financial Advisors. The resounding answer: NO. They've kept the faith in a financial portfolio that's 50 percent to 60 percent invested in stocks for people facing a retirement of 20 to 40 years. Given the history of the markets, that appears to be the only way of staying ahead of inflation, says Jay Hutchins, president of Comprehensive Planning Associates in Lebanon, New Hampshire. He sees your choice as either accepting investment risk or "disinvesting and virtually guaranteeing that you will run out of money if you live longer than 10 or 15 years.'' (Source: Bloomberg) Full Story
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When greeting old friends after a period of absence, Ralph Waldo Emerson used to ask: "What has become clear to you since we last met?" What is clear to us and many others is that market capitalism has arrived at a critical juncture. Even beyond the bailouts and recent volatility, the challenges of the climate crisis, water scarcity, income disparity, extreme poverty and disease must command our urgent attention. The financial crisis has reinforced our view that sustainable development will be the primary driver of economic and industrial change over the next 25 years. As a result, old patterns and assumptions are now being re-examined in an effort to find new ways to use the strengths of capitalism to address this reality. Indeed, at the Harvard Business School Centennial Global Business Summit held earlier this month, the future of market capitalism was one of the principal themes discussed. (Source: Wall Street Journal) Full Story
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