Report: Fed to Crack Down on Banker Pay

Pay policies for bank employees across the United States would require approval from the U.S. Federal Reserve as part of a proposal to curb risk-taking at financial institutions, The Wall Street Journal reported, citing people familiar with the matter.

Under the proposal, the Fed could reject compensation policies that it feels encourage employees to take excessive risks, the paper said.

The final proposal, which requires approval by the Fed's board, is still a few weeks away from completion and could be revised, the paper said.

On Thursday, European Union leaders agreed to seek curbs on bankers' bonuses at next week's G20 summit.
Under the Fed proposal, bureaucrats would not set the pay of individuals but would review banks' salary and bonus policies and make changes if necessary, the Journal said.

The Fed could be immediately reached for comment on the report.

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Markets Fluctuate Despite Upbeat Data

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Stocks inched lower Thursday afternoon even as new economic data appeared to reinforce the bulls' hopes for economic recovery.

Today’s Markets

As of 2:10 p.m. EDT, the Dow Jones Industrial Average fell 9.30 points, or 0.09%, to 9782.71, the Standard & Poor's 500 slid 3.29 points, or 0.31%, to 1065.47 and the Nasdaq Composite lost 7.33 points, or 0.34%, to 2125.81. The consumer-friendly FOX 50 dropped 0.42 points, or 0.05%, to 772.69.

It's been a bumpy day of trading on Wall Street as the Dow initially opened flat before climbing as much as 65 points and then returning to the flatline. The choppy trading comes even though new economic data showed Mid-Atlantic manufacturing activity returned in September to pre-recession levels and initial jobless claims surprisingly declined last week.

Aside from the better-than-expected economic data, the markets were focused on fluctuating and Oracle’s (ORCL) worse-than-expected quarterly revenue.

The apprehension on Wall Street comes after the markets climbed to new 2009 highs in each of the last two sessions. Stocks have closed in the green in eight of the previous nine sessions amid growing economic optimism.

“We are pricing in a lot of good news and not a lot of disappointment. For sure, there is going to be some disappointment out there,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business. “We’ve been basically going in a straight line since the early part of March. The momentum is clearly driving the train right now.”

Caterpillar (CAT) and Bank of America (BAC) were the biggest percentage winners on the Dow in recent trading, climbing nearly 2% a piece. Alcoa (AA), which had earlier been higher, and Traveler's (TRV) were the biggest drags on the index.

Despite the hot streak, some remain concerned about a possible pullback for stocks.

"I am thrilled to see my portfolio increase in value -- across the board -- but I am still more comfortable selling than buying. There are some unique opportunities overseas -- in China specific -- but by and large I do feel as though selling rather than buying just makes more sense," Peter Kenny, managing director at Knight Capital Group, said in a note.

Stocks hit session highs just before the release of the Philly Fed survey, which showed manufacturing activity in the Mid-Atlantic climbed in September to the highest level since June 2007. The index jumped from 4.2 last month to 14.1 in September, beating economists' forecast for a reading of 8. Any positive reading indicates expansion. The news lifted shares of manufacturers like GE and United Technologies (UTX).

The markets initially struggledto rally around a Labor Department report that suggested the job market continued to slowly improve last week. The government said initial jobless claims fell by 12,000 last week, surprising analysts who expected a modest rise. However, the number of people who remained on unemployment benefits for more than a week jumped by 129,000 to 6.28 million.

“Bottom line, the data continues to reflect that the pace of firing is moderating but the pace of hiring still remains sluggish,” Peter Boockvar, equity strategist at Miller Tabak, wrote in a note.

Economists have pointed to the still-weak job market as a potential hurdle for the U.S. economy to return to steady growth. High unemployment threatens consumer spending, which accounts for some 70% of U.S. GDP.

Meanwhile, the Commerce Department said housing starts in August rose by 1.5%, less than half the expected rise from economists. Home building stocks like Centex (CTX) and Hovnanian (HOV) were mixed on the news.

In the commodity markets, crude oil alternated between positive and negative territory ahead of the close. Crude was recently down 14 cents a barrel, or 0.19%, to $72.37. After closing at exchange records the previous two sessions, gold fell in recent trading $5.90 an ounce, or 0.58%, to $1014.30.

Business software giant Oracle (ORCL) saw its shares tumble almost 3% a day after the company reported worse-than-expected revenue. Oracle did meet the Street’s non-GAAP EPS view of 30 cents but its shares sank

Corporate Movers

FedEx (FDX) said it suffered a 53% decline in quarterly profit but the economic bellwether’s EPS of 58 cents widely beat Wall Street’s expectations. FedEx said its revenue tumbled by a worse-than-expected 20% amid weaker shipping demand. FedEx backed its fiscal second-quarter guidance for EPS of 65 cents to 95 cents. Analysts have been forecasting EPS of 83 cents.

Discover Financial (DFS) weighed in with better-than-expected earnings for its third quarter, saying it earned $577.5 million, or $1.07 a share, considerably better than the 11-cent loss analysts were looking for. The results included a one-time $287 million after-tax gain related to an antitrust settlement with Visa (V) and MasterCard (MA).

Citigroup (C) is poised to unveil a new advertising campaign aimed at restoring the onetime Dow component’s battered image, the New York Post reported. As soon as next month, Citi plans to launch an ad blitz that will highlight its virtues and attempt to boost confidence in its management team, the Post reported. While several reports in recent days suggest Citi is looking to pare the government’s stake in the bank, regulators have been wary of letting that happen too soon, the paper reported.

American International Group’s (AIG) board of directors shot down new CEO Robert Benmosche’s request for personal use of the bailed-out insurer’s private jet, according to a published report. The board said the use of the aircraft should be limited to business purposes because an exception would require permission from the Treasury Department, Bloomberg News reported. A spokeswoman denied the conflict to the news agency.

Eastman Kodak (EK) said it will receive $700 million in fresh financing from the private equity firm Kohlberg Kravis Roberts & Co. Kodak, which has been a multi-year turnaround plan after its primary product of film became nearly irrelevant, plans to use the cash to potentially pay off debt due next year. However, the financing may give the firm a 20% stake in Kodak.

XenoPort (XNPT) saw its stock soar more than 25% after the company said a pain drug it co-markets with GlaxoSmithKline (GKS) successfully decreased pain intensity. The companies said the drug, gabapentin enacarbil, met the primary goal of a Phase II clinical trial of 376 subjects with post-herpetic neuralgia, which is a neuropathic pain syndrome.

Ivanhoe Energy (IVAN) saw its shares soar to 52-week highs Thursday morning after the Canadian company announced a “major technical breakthrough” in its heavy-to-light technology and an independent review of an Ecuadorian oil field. Ivanhoe said an independent review confirmed a best estimate of 6.4 billion barrels of oil in place at the company’s Pungarayacu oil field.

AMR Corp. (AMR), the parent of American Airlines, said it has obtained $2.9 billion in fresh financing and announced plans to drastically cut back its presence in St. Louis.American Airlines said it will receive $1 billion in liquidity through the advance sale of frequent flier miles to Citigroup, along with $1.6 billion in sale-leaseback deals General Electric (GE).

Global Markets

European markets hit new 2009 highs. The U.K's FTSE 100 climbed 0.78% to 5163.95, France's CAC 40 gained 0.56% to 3835.27 and Germany's DAX rose 0.54% to 5731.14.

In Asia, Japan's Nikkei 225 jumped 1.68% to 10443.80, Hong Kong's Hang Seng climbed 1.71% to 21768.51 and China's Shanghai Composite soared 2.02% to 3060.26.

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Early Market Movers: AMR, United Western Bancorp

Stock futures were mixed and mostly flat as traders evaluate the latest jobless claims and housing starts data.

Here are some of the early-market movers for Thursday.

AMR Corp. (AMR)

The parent company to American Airlines announced it raised $2.9 billion by selling aircraft and frequent-flyer miles strengthening its balance sheet and possibly paving the way for an expansion of its relationship with Japan Airlines with a further equity stake. AMR shares were up 24.2% in pre-market trading.

Cerus Corp (CERS)

Shares of Cerus were up 11.5% in pre-market trading after analysts at Avondale Partners raised their rating to “market outperform” from “market perform” citing the company’s improved cash position after raising $12 million from a share placement earlier this month.

ImmunoGen, Inc. (IMGN)

ImmunoGen, which develops anticancer treatments announced it had entered into a licensing agreement with Amgen for exclusive rights to use the Amgen’s Maytansinoid Targeted Antibody Payload (TAP) technology to develop new cancer treatments. Amgen will receive $1 million up front and milestone payments that could top $34 million. ImmunoGen shares were up 9.3% in pre-market trading.

Synovus Financial Corp. (SNV)

Dilution concerns had Synovus shares down 9.9 % in pre-market trading after the company announced it has priced a public offering of 150 million shares at $4.00 per share.

United Western Bancorp Inc. (UWBK)

Union Western announced the pricing of its 20 million share stock offering after the bell Wednesday at $4.00 per share. Dilutive pressure had the stock down 5.6% in pre-market trading Thursday.

Rigel Pharmaceuticals (RIGL)

Shares of Rigel Pharmaceuticals were down 3.4% in pre-market trading after the company announced it filed to offer 6 million shares of common stock.

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Market Winners & Losers: Teradyne, Citigroup

Some strong words from Fed Chairman Ben Bernanke on the state of the economy pushed the major indices higher Tuesday, with the Dow closing up 0.6%, the S&P adding 0.3% and the Nasdaq gaining 0.5%.

Here are Tuesday’s winners and losers:

Winners

Teradyne Inc. (TER)
The semiconductor manufacturer rose 11.5% after an upgrade by Oppenheimer. TER shares last traded at $9.22, a gain of 95 cents on the day.

Zions Bancorp. (ZION)
Zions led the regional banks, gaining 10.8%. ZION shares closed Tuesday at $18.12, up $1.76 on the day.

Regions Financial Corp. (RF)
Some positive words regarding troubled loans from the CEO helped the regional gain 9.8%. RF shares ended the session at $6.06, a gain of 54 cents on the day.

Interpublic Group of Cos. (IPG)
The advertising company bounced back Tuesday with shares last trading at $7.18, up 59 cents on the day.

Alcoa Inc. (AA)
The aluminum producer joined the rally on Tuesday to close up 8.1%. AA shares ended the session at $13.99, a gain of $1.05 on the day.

Losers

Citigroup Inc. (C)
The big bank announced it wants to reduce the government’s stake in the company and shares tumbled 8.9%. Citi closed at $4.12, down 40 cents on the day.

Kroger Co. (KR)
The grocer watched shares fall 7.5% after earnings disappointed investors. KR shares last traded at $20.46, a loss of $1.65 on the day.

Coventry Health Care Inc. (CVH)
The diversified health-care company finished the session with a 7.1% loss. CVH shares ended Tuesday’s trading at $23.07, down $1.75 on the day.

American International Group Inc. (AIG)
The insurer followed sector trends, posting a 5.6% loss. AIG shares last traded at $38.80, a loss of $2.31 on the day.

Best Buy Co. Inc. (BBY)
The electronics retailer fell 5.2% on quarterly earnings results. BBY shares closed at $38.32 down $2.09 on the day.

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Recovery Rally Rolls On: Stocks Make New '09 Highs

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Stocks climbed to fresh 2009 highs on Tuesday as Wall Street’s recovery hopes were bolstered by two unlikely camps: cash-strapped consumers and the normally tight-lipped Ben Bernanke.

Today's Markets

The Dow Jones Industrial Average rose 56.61 points, or 0.59%, to 9683.41, the Standard & Poor's 500 added 3.29 points, or 0.31%, to 1052.63 and the Nasdaq Composite picked up 10.86 points, or 0.52%, to 2102.64. The consumer-friendly FOX 50 gained 1.66 points, or 0.22%, to 762.74.

Led by surging commodities and basic materials stocks, the latest wave of economic optimism was fueled by the biggest jump in retail sales in three years and the Federal Reserve chairman declaring the recession is over.

“There is this broadening sense that we are going to see significant improvement in growth and a recovery -- and sooner rather than later,” said Peter Kenny, managing director at Knight Capital Group.

That economic optimism pushed the markets into the green for the seventh day of the last eight, building on this summer’s huge surge off the March lows. Despite considerable fear that the typically-bearish month of September would halt the rally, the Dow and S&P 500 ended on Tuesday at their best levels since early October 2008.

“The bulls are clearly in control of this market. Until something comes up to derail the bullishness, you’re just going to continue to see buyers pour money into stocks,” said Michael James, senior equity trader at Wedbush Morgan Securities.

Caterpillar (CAT) and Alcoa (AA), two companies likely to benefit the most from a strong recovery, led the way up on the Dow, soaring 6% and 8% respectively. Conglomerate General Electric (GE) and chemical giant DuPont (DD) also closed sharply higher. The biggest drags on the benchmark index were its defensive plays, including discount retailer Wal-Mart (WMT) and drug maker Pfizer (PFE).

Underscoring investors’ increased risk appetite, the dollar tumbled to a nine-month low versus the Euro on Tuesday, sending gold to a new exchange record high and commodity-related stocks like U.S. Steel (X) surging. The basic materials sector was the biggest winner, jumping 2.2%.

Bernanke, Data Boost Stocks

The markets received a rhetorical lift from Bernanke, who after giving a speech said, “the recession is very likely over at this point."

“He’s a man who is very cautious in his commentary. He tends to really avoid extreme statements,” said Kenny. “If he’s saying we’re out of the recession, then we’re well out of the recession. This is the most positive he’s been.”

However, Bernanke also warned that “it’s still going to feel like a very weak economy for some time.”

Tuesday's economic data supported Bernanke’s bullish statement as the government said retail sales jumped 2.7% in August, thanks in part to the government’s “Cash for Clunkers” program. That represents the biggest jump since Jan. 2006 and easily exceeded the 2% rise economists had forecasted. Excluding autos, sales rose 1.1%, well above analysts’ view for a 0.4% rise.

Wall Street pays close attention to these figures as consumer spending accounts for more than two-thirds of the U.S. economy. Amid high unemployment and the weak housing market, many have been fearful weak consumer spending will limit the strength of an economic recovery. Discount retailers like Costco (COST) tumbled on the data as the markets bet luxury retailers like Saks (SKS) and Nordstrom (JWN) will outperform during a rebound.

Also on the economic front, the New York Fed said its Empire State Manufacturing Survey jumped from 12.08 last month to 18.88 in September -- the highest level since late 2007. The regional manufacturing index tumbled as low as -38.23 in March amid the depths of the recession.

Meanwhile, crude oil snapped its two-day losing streak, settling at $70.93 a barrel, down $2.07, or 3.01%. Gold rose $5.10 an ounce, or 0.51%, to close at $1,005.

Corporate Movers

Citigroup (C) is considering a secondary offering where the onetime Dow component would sell stock but also allow the Treasury Department to unload part of its stake too, FOX Business confirmed. It’s not clear when a secondary offering would occur but the move could allow the bank to get U.S. regulators out of its daily business. Citi's shares tumbled almost 9% on the news as the offering would dilute current shareholders.

Best Buy (BBY) disclosed a 22% slide in net income and a worse-than-expected non-GAAP profit of 40 cents a share. However, the electronics retailer boosted its fiscal-year earnings outlook and said its revenue rose 12% to $11.02 billion, beating the Street’s view.

Kraft (KFT) is mulling a sale of assets like Maxwell House and Oscar Mayer to help finance its proposed $16.7 billion stock-and-cash buyout of British candy company Cadbury (CBY), according to a published report. The value of Kraft’s bid has dropped in recent days as Kraft’s stock price has tumbled. The Dow component could beef up the cash portion of its bid possibly by selling certain assets, the New York Post reported. However, a Kraft spokeswoman told Dow Jones Newswires the company does not need to sell assets to finance the sale.

Kroger (KR) weighed in with worse-than-expected earnings as the grocery chain giant experienced tighter profit margins during its second quarter.Kroger, which owns grocery stores across the nation under a variety of names, said it earned 39 cents a share, missing the Street's view of 44 cents a share.

EBay (EBAY) saw its shares climb to 52-week highs after Piper Jaffray reportedly upgraded the stock to “overweight” on better customer feedback and a boost in Web traffic. According to Reuters, Piper Jaffray also lifted its price target on eBay from $19 to $30 and had previously rated the stock “underweight.”

Lexicon Pharmaceuticals (LXRX) surged 61% and hit a 52-week highs after the company said its diabetes treatment showed favorable results in an early-stage trial. Lexicon said in the wake of the promising Phase 1 study it has initiated a Phase 2 clinical trial of the drug candidate in patients with type 2 diabetes mellitus. The stock closed well off its highs.

Data Dump

On the inflation front, the Labor Department said producer prices rose 1.7% in August, much more than the 1% rise expected by economists. Much of that unexpected jump stemmed from an 8% rise in crude and energy prices.

The government said business inventories tumbled by 1% in July as businesses continued to deplete their supplies. Economists had expected a slightly more modest decrease of 0.9%.

Global Markets

European markets rallied across the board to fresh 2009 highs. The U.K.'s FTSE 100 rose 0.46% to 5042.13, France's CAC 40 advanced 0.58% to 3752.21 and Germany's DAX gained 0.16% to 5628.98.

In Asian markets, Japan's Nikkei 225 climbed 0.15% to 10217.62, Hong Kong's Hang Seng fell 0.31% to 20866.37 and China's Shanghai Composite rose 0.23% to 3033.73.

Stocks tumble amid investors’ worriesBernanke-Inspired Rally; Sixth Daily Gain for Dow

Coca-Cola China Employees Detained in Corruption Probe: Reports

One or more employees of a Coca-Cola (KO) bottling plant in Shanghai have been detained by police in Shanghai on corruption and bribery accusations, according to reports.

A Coca-Cola spokesman said on Sunday that a former employee at its Shanghai Shenmei Beverage & Food Co bottling plant was being held by police in a corruption investigation, Reuters reported.

The New York Times reported that Coke spokesman Kenneth Kaerhoeg said a female middle manager at the plant was detained by the Shanghai police this year, and subsequently dismissed by the bottling company.

Xinhua, the Chinese media organ, reported Monday that Shanghai police said “several” employees of that Coke bottling plant were under investigation for allegedly taking bribes, and that “some” people had been handed over to local authorities.

The Coke developments could make international companies more nervous about dealing with China, especially on top of the arrest of several Rio Tinto (RTP) employees previously on bribery charges. But corruption is widely believed to be rampant in China, and some might welcome a crackdown on bribery in the country.

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