Stocks stabilize on Wall St. after sell-off
NEW YORK (AP) — The steep losses stopped Wednesday as the stock market turned calm, a day after one of its biggest sell-offs of the year. Indexes ended with slight losses after the Federal Reserve said the U.S. economy still needs support.
The Dow Jones industrial average closed down 25.19 points at 13,077.34, a day after one of its worst drops this year.
The Standard & Poor’s 500 index fell 4.36 points to close at 1,408.75 while the Nasdaq composite index fell 8.76 points to 2,991.70.
“Today we’re assessing the damage,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “Everybody just got clobbered yesterday.”
Lower corporate revenue and expectations for the rest of the year drove the Dow down 243 points Tuesday, its third-biggest drop this year. DuPont, 3M, UPS and Xerox all reported lower sales than a year ago.
Singapore Airlines to end longest flights
NEW YORK (AP) — The world’s longest commercial flight — Singapore to Newark, N.J. — is being cancelled.
Singapore Airlines announced Wednesday that it will end its nonstop flight between Singapore and Newark, a distance of about 9,500 miles. A slightly shorter route between Singapore and Los Angeles will also end. The two routes were flown on gas-guzzling Airbus A340-500s.
The airline found the only way to make the routes profitable was by configuring the plane with 98 business class seats that sell for about $8,000 roundtrip. Other airlines operate the same plane with about 250 seats in first, business and economy classes.
The flight from Newark, right outside New York, to Singapore takes about 18 hours. The trip from Los Angeles is about 1,500 miles shorter but takes 18 hours and 30 minutes.
Former Goldman exec sentenced to 2 years
NEW YORK (AP) — A former Goldman Sachs and Procter & Gamble Co. board member was sentenced to two years in prison Wednesday, culminating a spectacular fall from grace for a man whose good deeds worldwide brought him leniency after he was convicted of feeding inside information about board dealings to a billionaire hedge fund owner who was his friend.
Rajat Gupta, 63, of Westport, Conn., learned his fate from U.S. District Court Judge Jed Rakoff, who defended the length of the prison term he levied, blasting federal sentencing guidelines that he said called for Gupta to serve at least 6½ years behind bars. He also ordered him to pay a $5 million fine.
Citing information he received under seal, Rakoff said Gupta’s crimes may have occurred because Gupta may have “longed to escape the straightjacket of overwhelming responsibility, and had begun to loosen his self-restraint in ways that clouded his judgment.”
The Harvard-educated businessman long respected on Wall Street was one of the biggest catches yet for the federal government in its five-year crackdown on insider trading that has so far resulted in 69 convictions.
Gupta was ordered to report to prison on Jan. 8.
Reading from a statement, he said: “The last 18 months have been the most challenging period of my life since I lost my parents as a teenager.
“I regret terribly the impact of this matter on my family, my friends and the institutions that are dear to me. I’ve lost my reputation I built for a lifetime. The verdict was devastating.”
The dealings by Gupta that were highlighted at his spring trial stemmed from his relationship with Sri Lanka-born Raj Rajaratnam. The one-time billionaire hedge fund boss controlled up to $7 billion in accounts, giving him a firm footprint in the financial markets and influence that impressed someone as widely regarded as Gupta.
“His conduct has forever tarnished a once-sterling reputation that took years to cultivate,” U.S. Attorney Preet Bharara said after sentencing. “We hope that others who might consider breaking the securities laws will take heed from this sad occasion and choose not to follow in Mr. Gupta’s footsteps.”
Prosecutors described how Gupta raced to telephone Rajaratnam with stock tips sometimes only minutes after getting them from board conference calls, helping Rajaratnam make more than $11 million in illegal profits for him and his investors. Rajaratnam is serving an 11-year prison sentence after his conviction last year.
The narrower insider trading case against Rajaratnam and his co-conspirators resulted in 26 convictions and was described by Bharara as the biggest insider trading case in history, successful in part because of unprecedented use of wiretaps more familiar to juries at mob and drug trials.
Prosecutors say Rajaratnam earned up to $75 million illegally through his trades while Gupta’s attorneys point out that their client earned no profits.
At trial, Gupta was convicted of three counts of securities fraud and one count of conspiracy, insider trading charges that prosecutors said should result in a prison sentence of up to 10 years in prison.
Rejecting defense arguments that a community service sentence would be sufficient, Rakoff said a prison sentence was necessary to send a message to insider traders that “when you get caught, you will go to jail.”
“While no defendant should be made a martyr to public passion, meaningful punishment is still necessary to reaffirm society’s deep-seated need to see justice triumphant,” the judge said. “No sentence of probation, or anything close to it, could serve this purpose.”
Defense attorney Gary Naftalis promised to appeal, saying his client had suffered a fall “of Greek tragedy proportions.”
Prosecutors accused Gupta, a former chief of the global consulting firm McKinsey & Co. and a onetime director of the huge consumer products company Procter & Gamble, of “above-the-law arrogance” in feeding Rajaratnam inside tips between March 2007 and January 2009.
Nike selling its Umbro soccer brand for $225M
NEW YORK (AP) — Nike has found a buyer for its Umbro brand, known for its soccer jerseys, in Iconix Brand Group Inc. The clothing licensing company is purchasing Umbro for $225 million in cash.
Nike Inc. had bought Umbro in 2008 for $582 million. The Beaverton, Ore., company had announced in May that it planned to sell the Umbro and Cole Haan brands to cut costs and focus on its namesake brand, along with Jordan, Converse and Hurley.
Strong demand for Nike’s shoes and clothes has helped the company charge past many rivals. But, like most consumer product makers, Nike faces rising costs for labor and other raw materials, and it’s dealing with an uncertain economy in Europe and a slowdown in orders in China.
Iconix will be adding Umbro to its 29 consumer brands, which include Candie’s, Danskin and Badgley Mischka.
Founded in 1924 in Manchester in the United Kingdom, Umbro was one of the first makers of soccer gear. Today, it carries soccer jerseys as well as shoes, jackets and other clothing. The brand has licensees in more than 100 countries, and has a “devout following,” said Iconix CEO Neil Cole.
The acquisition is expected to close by year’s end. It’s Iconix’s second purchase from Nike. The New York company bought the athletic clothing brand Starter in 2007.
Nike shares added 25 cents to $93.07 in morning trading. Iconix stock gained 39 cents, or 2.1 percent, to $18.84.