U.S. Stocks Fall on Intel Forecast, Extending Global Tumble

(Bloomberg) -- U.S. stocks declined after Intel Corp.'s sales forecast stoked concern over technology profits and deepened a decline in global markets that's wiped out $2.58 trillion in value this year.

Intel, the world's largest computer-chip maker, dropped the most in five years in Nasdaq Stock Market trading after saying first-quarter sales will be as much as 6.9 percent below analysts' estimates. Exxon Mobil Corp. and Chevron Corp. led energy shares lower on the New York Stock Exchange as oil prices retreated below $90 a barrel for the first time in four weeks.

The Standard & Poor's 500 Index lost 12.7, or 0.9 percent, to 1,368.25 at 11:04 a.m. in New York, below its Aug. 16 trading low. The Dow Jones Industrial Average slipped 75.43, or 0.6 percent, to 12,425.68. The Nasdaq Composite Index sank 47.9, or 2 percent, to 2,369.69. Asia's regional benchmark fell to its lowest since August, while European shares slid to a 16-month low. Indexes in Russia, Japan and Hong Kong all dropped by more than 3 percent.

``It's obviously treacherous out there, and Intel did no favors with their earnings announcement,'' said Kurt Brunner, who helps manage $1.5 billion at Swarthmore Group Inc. in Philadelphia. ``There's not a whole lot of places to hide, and the consumer looks weak right now.''

The S&P 500 has dropped 6.8 percent so far this year, while the Dow average is down 6.3 percent and the Nasdaq Composite has lost 11 percent. Technology shares, which helped lead the market higher last year, have retreated 12 percent as a group in 2008 for the worst performance among 10 industries.

Losses were limited today as JPMorgan Chase & Co. and Wells Fargo & Co. posted results that topped analysts' estimates and Oracle Corp. agreed to buy BEA Systems. Four stocks retreated for every three that rose on the NYSE.

Consumer prices rose at a slower pace in December, signaling inflation may decelerate after rising in 2007 by the most in 17 years.

Intel Forecast

Intel tumbled $2.86, or 13 percent, to $19.83. First- quarter sales will rise to as little as $9.4 billion, the chipmaker said yesterday after the close of trading, less than the $10.1 billion estimate of analysts surveyed by Bloomberg. Lehman Brothers slashed its price estimate on the stock by 23 percent to $23.

Advanced Micro Devices Inc., the second-largest maker of computer processors, lost 16 cents to $5.96.

Apple Inc. dropped $10.23 to $158.81. The shares slumped for a second day after new products failed to impress investors yesterday.

Oil fell below $90 a barrel for the first time in four weeks in New York after a Energy Department report showed supplies rose more than expected.

Oil Drops

Exxon, the largest U.S. oil company, declined $2.79 to $86.23. Chevron Corp., the second-biggest, lost $2.74 to $85.53. ConocoPhillips, the second-largest U.S. refiner, retreated $2.66 to $77.95.

Ambac Financial Group Inc. plunged $6.05, or 29 percent, to $15.09. The second-largest bond insurer will slash its dividend 67 percent and raise more than $1 billion in new capital to preserve its AAA credit rating. Ambac and rival MBIA Inc. are under scrutiny by ratings companies and regulators after their guarantees on collateralized debt obligations and bonds linked to subprime mortgages began plunging in value.

Oracle Corp., the world's third-biggest software maker, slid 4 cents to $21.27 after agreeing to buy BEA Systems Inc. for $8.5 billion. Oracle will buy the San Jose, California-based software maker for $19.38 a share in cash, 24 percent above yesterday's closing price. Oracle capitulated to BEA's board's demands for a higher price after BEA rejected a $17 bid in October. BEA added $2.97 to $18.55.

 

Read more at Bloomberg

Boeing delays 787 by three more months

(Reuters) - Boeing Co (BA.N: Quote, Profile, Research) said on Wednesday it would push back first test flight and deliveries of its 787 Dreamliner by about three months, as it struggles with production of the new, carbon-fiber airplane.

The delay is the second major setback for the program in three months, after announcing a six-month delay in October.

Only a month ago Boeing's commercial airplane chief assured Wall Street that the plane was on track to meet its revised schedule.

Boeing said on Wednesday the first test flight of the plane would now take place around the end of the second quarter, compared with its previous target of near the end of March.

First deliveries of the plane are now scheduled for early 2009, rather than its previous estimate of late November or December this year.

Chicago-based Boeing said the new delay would not have a significant effect on 2008 results, but it would update its financial forecasts for this year when it reports quarterly earnings on January 30.

It plans to provide financial forecasts for 2009 when it reports first-quarter earnings at the end of April. The new delay is likely to have a greater impact on 2009, as that is when deliveries of the 787 are now scheduled to start.

 

Read more at Reuters

Consumer prices data open door to rate cut

(Reuters) - Consumer prices rose modestly in December while industrial production was flat, leaving the door open for the Federal Reserve to slash interest rates later this month to shore up an economy that some fear is on the verge of a recession.

The reports released on Wednesday also showed consumer prices shot up last year at the fastest rate in 17 years, driven by soaring energy costs, while manufacturing growth was the weakest since 2003.

The data "underlines our view that we're on the razor's edge here, that we could be headed into recession," said Mike Schenk, senior economist with Credit Union National Association in Madison, Wisconsin.

Stock markets were mixed, with technology shares hurting after a disappointing earnings report from sector bellwether Intel Corp. Bond prices weakened while the dollar's value declined against other major currencies.

The Consumer Price Index, the most broadly used gauge of inflation, rose 0.3 percent in December, slightly ahead of economists' forecasts for a 0.2 percent rise, the Labor Department report showed.

Still, core prices that strip out volatile food and energy items rose 0.2 percent last month - in line with forecasts - following a 0.3 percent November increase.

For the full year, CPI jumped 4.1 percent, well ahead of the 2.5 percent increase posted in 2006 and the largest 12-month rise since a 6.1 percent increase in 1990. Core prices were up 2.4 percent for the full year, following a 2.6 percent pickup in 2006. That was the smallest 12-month rise in core prices since a 2.2 percent increase in 2005.

 

Read more at Reuters