The Wall Street Journal-20080131-Business and Finance
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Business and Finance
Full Text (432 words)The Fed lowered interest rates by half a percentage point to 3%, the second cut in nine days, as it sought to nip an incipient recession in the bud. The central bank, signaling continuing concerns about growth, left the door open to further reductions. The 2.25 percentage points in rate cuts since September roughly equal the initial pace of those in early 2001 as the most rapid in two decades.
The economy slowed sharply in the fourth quarter as gross domestic product grew 0.6%. Consumer spending rose 2%. A2
The Dow industrials fell 37.47 points 12442.83 after rising as much as 201 points in the wake of the Fed action. Concerns that bond insurers may face billions in losses weighed on the index.
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S&P downgraded or took negative rating action on over 8,000 residential mortgage bonds and CDOs. It forecast financial firms' losses would hit $265 billion.
New York's attorney general could employ a state law called the Martin Act to make it easier to prosecute mortgage abuses by Wall Street firms.
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UBS warned 2007 losses will be $4 billion more than forecast as the Swiss bank took its third write-down in four months.
Shinsei Bank and Sumitomo Trust reported sizable earnings declines, hurt by losses on U.S. mortgage securities.
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Amazon's net more than doubled on a 42% increase in sales. Shares fell about 13% after hours despite an upbeat forecast.
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Gold surpassed Monday's record of $927.10 in late trading. A new class of investors is powering the metal's rise.
The euro came within reach of its highest level ever against the dollar before settling at a record close of $1.4882.
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Societe Generale confirmed Daniel Bouton will stay on as chairman and co-CEO. Kerviel's effort to impress his colleagues appears to be a motivating factor behind his trading spree.
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J.C. Penney plans to merge the buying and marketing operations for store and online sales, cutting as many as 200 jobs.
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Lilly is in settlement talks with the U.S. over its marketing of antipsychotic drug Zyprexa. A grand jury subpoena had raised prospects of indictment.
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Kraft and Kellogg reported lower profits and said they are facing increasing pressure from the high cost of ingredients.
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Starbucks reported weak same-store sales growth and said it will cut the number of net new locations by 350.
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Honda's profit jumped 38%, helped by sales of its fuel-efficient cars. It raised its forecast despite expected weakness in the U.S.
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Altria's board approved the spinoff of Philip Morris. The two companies plan to repurchase $20.5 billion in stock.
