For the week and month ending Friday, January 30, 2008, all major US indexes ended in negative territory. Bank stocks helped drive gains on Wednesday after hopes that a government-sponsored plan for a “bad bank” would absorb toxic debt from financial institutions. However, more weak economic news such as declining new home sales, rising unemployment claims, contraction in fourth quarter GDP (although not as bad as expected) and bleak earning figures wiped out earlier week’s gains.

-U.S. stocks tumbled on Thursday, ending a four-session streak of gains which added to more losses for the month. The Dow was the worst performer for the month, shedding 775.53 points or 8.84%, its worst January percentage decline ever.  The S&P trailed as the second worst performer amongst the major three indices, declining 77.37 points or 8.57%, its worst January performance ever. The Nasdaq Composite also fell 100.61 points or 6.38% for the month, its worst monthly percentage drop since 11/08 when the index fell 10.77%

-Wednesday’s FOMC Meeting Announcement offered little surprise as the Federal Reserve kept its target rate range at 0 to 0.25%. The Fed also suggested that it was prepared to purchase long-term Treasuries and would expand its efforts to keep credit flowing. Money moved out long-dated treasuries, with the 30-year T-Bond yield jumping 29 basis points for the week to finish at 3.607%. 

-Next Week’s Highlights: ISM Manufacturing Index, Personal Income and Spending, Pending Home Sales Index, Productivity and Costs, and Employment Situation will be highlighted in the new month’s economic calendar. Companies reporting earning results include: Humana, Sysco, Merck, Mattel, Disney, Time Warner, News Corp., Kraft, Kellogg, UPS, Visa, MasterCard, and Schering Plough.

Market Moving News:
-Better than expected earning results from tech stocks, Amazon.com (AMZN), Yahoo (YHOO), and Sun Microsystems (JAVA) led to a slight gain of 0.37% for the week in the Nasdaq 100.
**Amazon (AMZN) exceeded analysts’ projections by 13cents / share after the online retailer posted a 9% increase in fourth quarter net income as strong international sales and high demand for the Kindle eBook reader offset declining margins. Shares of Amazon rallied 16.2% for the week.
**Yahoo (YHOO) announced higher than expected fourth quarter results that beat analysts’ estimates by 4 cents / share helped by cost cuts, but warned that a weak advertising market may hurt future sales.  The web pioneer's shares managed a gain of 3.6% for the week.
**The hardware and software maker Sun Microsystems (JAVA) posted a smaller than expected loss for second quarter of 1 cent / share versus analysts’ consensus loss of 9 cents / share due to declining sales for some of its company servers’ systems and restructuring charges.  Shares of JAVA surged 12.4% for the week.

-Bank stocks led U.S. Indices higher during mid-week on optimism that the U.S. Treasury department will use the remaining $350 billion TARP funds to further aid financial institutions. Under the new plan, the banks would pour their “toxic” assets from their books into an aggregator or “bad bank” instead of the government taking stakes in banks equity through capital injections. Several financials stocks such as: Wells Fargo (WFC), Zions Bancorp. (ZION), State Street Corp (STT), CIT Group (CIT) soared more than 9% for the week despite details lacking in the “bad bank” plan.

-The U.S. Conference Board Consumer Confidence Index hit an historic low in January at a reading of 37.7, its lowest level in more than 40 years of data. Rising unemployment, falling home prices, and the financial crisis weighed on consumers’ morale.  Consumer confidence has negatively impacted the S&P Consumer Discretionary Sector which was the fourth worst performer amongst the S&P sectors for the month, down 10.64% with retailer stock Jones Apparel (JNY) as the worst performer in the sector, down 40.96% month-to-date.

-Job losses mounted with various sectors announcing job cuts totaling to more than 65,000 on Monday, the biggest job loss announcement for a single day so far this year.
**Amongst the companies that reported the largest layoffs were machinery and equipment maker Caterpillar (CAT) which expects to slash 20,000 jobs.  This Dow component also recorded a 32% drop in fourth quarter net income on cancelled orders and lower demand, as it missed analysts’ estimates by 20cents / share. Shares of Caterpillar declined 13.5% for the week.
**Global pharmaceutical firm Pfizer Inc (PFE) stated it will trim its workforce by 15% or layoff about 19,000 employees. Pfizer’s restructuring plans comes after the company proposed to acquire rival Wyeth (WYE) for $68 billion, adding to further consolation in the drug sector. Furthermore, the two pharmaceuticals stated a drop in their fourth quarter net income. Shares of PFE and WYE slid 16.5% and 1.8% for the week.
**Telecommunication giant Sprint Nextel (S) warned it will reduce 14% of its work force or 8,000 jobs as part of a plan to reduce labor costs by $1.2 billion a year.
**Philips Electronics (PHG) announced it will slash 6,000 jobs this year as the company also swung to a fourth-quarter net loss of approximately $1.91 billion on falling demand and restructuring charges. ADR’s of Philips Electronics rallied 12.6% for the week.
**The home retailer Home Depot (HD) stated it will close its Expo home-design business that caters to big-remodeling projects, and cut 7,000 jobs. The move comes after the company cited it will reduce its 2009 capital expenses budget by 44% to $1billion. Shares of HD slightly fell 0.9% for the week.
**Additional companies that unveiled plans to cut jobs included Eastman Kodak (EK), financial firm Charles Schwab (SCHW), and Citrix Systems (CTXS) each stated that it will reduce 18%, 8%, 10% of its workforce, respectively.

-The S&P Case/Shiller U.S. single family Home Price Index for 10 metropolitan cities slid 2.2% in November from October, and recorded another historic year-over year drop of 19.1%. Tight credit conditions, continued foreclosures and increasing unsold home supplies have led the 10-City Composite Index to 28 months of consecutive monthly declines as it has lost 26.6% from its market peak in June 2006. 

-Pharmaceutical stocks were mostly positive for the week with upbeat news on successful new drug studies from Pozen (POZN), better than expected earning results from Bristol-Meyers Squibb (BMY), and a string of deal announcements that demonstrated a strong acquisition market in spite of weak credit conditions.
**Shares of drug maker Pozen (POZN) surged 42.2% for the week after the company stated that the Food & Drug Administration reaffirmed the testing of two of its products aimed at reducing the risk of stomach ulcers in its PN400 arthritis pain drug.
**Bristol-Meyers Squibb swung to fourth quarter profitability after reporting an increase in sales of 7% and 31% in its anti-clotting drug Plavix and psychiatric drug Abilify. 

M&A, Deals, Corp Actions: Dominated by Pharmaceuticals
-Further consolidations in the pharmaceutical market were reinforced by biopharmaceutical company CV Therapeutics (CVTX) which agreed to a $1 billion takeover bid by a Tokyo-based pharmaceutical firm Astellas Pharma. The offer of $16/share represents a premium of 41% of CVTX’s Monday closing price. CV Therapeutics had previously partnered with Astellas on its Lexiscan injection used to maximize blood flow, and as a result the deal would optimize Astella’s cardiology business. CVTX’s stock soared 36.9% for the week.

-Swiss-based pharmaceutical Roche Holding (RHHBY) made a second hostile bid offer to buy U.S. based company Genentech (DNA) for approximately $42 billion from its earlier offer of $48 billion back in July. Roche is seeking an additional 44% ownership in Genentech that it does not already own as the new offer is aimed directly at shareholders after failing to reach an agreement with the company’s directors.

-Pharmaceutical industry giants, Pfizer (PFE) and Wyeth (WYE) announced Monday that both firms have entered a definitive merger agreement under which Pfizer will acquire Wyeth for $68 billion, creating one of the most well diversified companies in the global health care industry. Shares of Pfizer declined 16.5% for the week after also stating that it would halve its dividend to raise $22 billion in debt to buy its rival Wyeth.

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