The Wall Street Journal-20080201-MBIA Paces Stocks Rise- Yum Drops

Return to: The_Wall_Street_Journal-20080201

MBIA Paces Stocks Rise; Yum Drops

Full Text (512  words)

Bond insurer MBIA marshaled the moves of the stock market, leading a retreat at the opening bell before leading a rally later in the day.

Even with these late gains, financial stocks such as Citigroup and Countrywide Financial and, particularly, technology stocks like Amazon.com and Google paced indexes to their worst monthly performance in several years.

An increase in weekly unemployment-benefit claims for the week ended Jan. 26 helped set the negative tone, but it was worries surrounding MBIA's report of a $2.3 billion quarterly loss that hastened a decline of 193 points on the Dow Jones Industrial Average shortly after the opening, market watchers said. The Dow swung higher during MBIA's conference call as executives expressed confidence in its ability to maintain its triple-A credit rating -- considered crucial to its business model -- and dismissed any possibility that it faces insolvency.

"The market wants some evidence these bond insurers don't go down and take a financial institution or two with them," said Mike Darda, chief economist at MKM Partners.

The reassuring comments from MBIA helped many financial stocks. Dow component Citigroup rose 61 cents, or 2.2%, to 28.17, although its shares fell 4.3% for January. Similarly, Countrywide Financial rose 49 cents, or 7.6%, to 6.96, but has fallen 22% for the year. MBIA jumped 11% higher to $15.50, a gain of $1.54.

MasterCard rose 18, or 9.5%, to 207. The big credit-card issuer reported a surge in fourth-quarter profit, helped by overseas business. An executive said the company is more insulated against a U.S. economic slowdown than many others in the sector.

Meanwhile, investors were choosy about their fast-food stocks. Burger King Holdings rose 2, or 8.3%, to 26.16 as its fiscal second- quarter profit beat the Wall Street estimate.

Yum Brands fell 64 cents, or 1.8%, to 34.16. Deutsche Bank cut its rating on the operator of Pizza Hut, KFC and Taco Bell restaurants, citing worries about its outlook for this year.

Covance fell 5.09, or 5.8%, to 83.01 after the company, which conducts drug testing studies and provides "purpose-bred" laboratory animals, posted fourth-quarter profit growth.

Monster Worldwide slid 76 cents, or 2.7%, to 27.85 on the Nasdaq after Deutsche Bank cut its rating on the jobs Web site to "hold," citing declines in January listings.

Alliance Data Systems surged 7.87, or 18%, to 50.57. The credit-card and payment processor, which is trying to push Blackstone Group to complete an agreement to buy it, posted brisk fourth-quarter growth in operating earnings.

CVS Caremark rose 2.89, or 8%, to 38.91 after the drugstore said quarterly earnings nearly doubled, thanks to its acquisition of pharmacy-benefits manager Caremark.

Among technology stocks, Amazon.com (Nasdaq) rose 3.49, or 4.7%, to 77.70 despite concerns about its 2008 operating-earnings outlook. Amazon has fallen 16% this year.

Mattel added 2.07, or 11%, to 21.01 after it posted brisk fourth- quarter profit growth.

Shares of coffee-shop chain Starbucks (Nasdaq) fell 31 cents, or 1.6%, to 18.91 after it cut down the number of stores it plans to add this year, warning that "the consumer is in a recession."