Stocks Turn Mixed Amid Earnings Gloom
Stocks turned mixed Wednesday as some disappointing earnings reports cast a pall over a pair of better-than-expected readings on the economy.
Stocks snapped a three-day losing streakWednesday and closed higher following better-than-expected earnings from Merck and signs of progress from a key housing report.
Executive paychecks were in the spotlight with limits for TARP-tapping companies expected to be unveiled, an industry source told CNBC. A cap of $500,000 could be set for senior executives’ annual salaries under the plans from President Barack Obama.
An early round of earnings reports brought more bad news.
Time Warner reported a fourth-quarter loss of $4.47 a share due to a $24.2 billion writedown related to its cable, publishing and AOL assets.
Also, Kraft Foods saw a 72 percent drop in profit, to 11 cents a share, which it attributed to costs related to a restructuring program.
The Obama administration is wrestling with the details of a ‘bad bank’ plan, which could form part of a wider package of measures to be unveiled next week, according to a source familiar with the situation.
From the executives-gone-wild file, Wells Fargo cancelled an employee event in Las Vegas after getting railed in the press for such extravagance amid the banking crisis. The financial services company received $25 billion in government funds only months ago.
Also, Panasonic , the world's largest maker of plasma televisions, said it would cut 15,000 jobs and shutter 27 plants worldwide as it adjusts to the global economic slowdown.
Telecom equipment maker Alcatel-Lucent revealed a $5.03 billion impairment charge in fourth-quarter 2008 due to the "drastic deterioration" of the economic outlook.
In economic news, the ISM's gauge of the service sector jumped to 42.9in January from 40.1 in December. Economists had expected the measure to slip.
Meanwhile, 522,000 jobs were shaved fromprivate-sector payrolls last month, according to ADP. This report is closely watched ahead of the government's employment report, due out Friday, though the two don't always jive.
A jump in refinancing helped boost mortgage applications last week, while outplacement firm Challenger Gray & Christmas reported a spike in planned layoffs to their highest level in seven years.
Still to Come:
WEDNESDAY: Earnings from Cisco, Prudential, Sunoco and Visa after the bell
THURSDAY: Chain-store sales; weekly jobless claims; factory orders; Earnings from Kellogg, MasterCard, Unilever, Hartford Financial, News Corp
FRIDAY: December jobs report; consumer credit
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