Graham: Hagel ‘clueless’ on Iran
WASHINGTON (AP) — Republican Sen. Lindsey Graham said Tuesday Chuck Hagel “seems clueless” on U.S. policy toward Iran and he urged the Obama administration to reconsider its defense secretary nominee.
In a statement, the South Carolina lawmaker stopped short of saying he would filibuster the choice if the president pushes forward as expected. No Democrat has come out in opposition to Hagel and he picked up more support on Tuesday as Sen. Kay Hagan, D-N.C., announced that after meeting with Hagel, that she would vote for the former two-term Republican senator and decorated Vietnam combat veteran.
Two Republican senators back Hagel and several others, including Sen. John McCain, say they wouldn’t support a filibuster.
“Chuck Hagel is a good man, but these are dangerous times,” Graham said. “What kind of signal are we sending to the Iranians when our nominee for secretary of defense seems clueless about what our policy is? I hope the Obama administration will reconsider his nomination.”
U.S. sues S&P over 2008 crisis
WASHINGTON (AP) — The U.S. government says Standard & Poor’s knowingly inflated its ratings on risky mortgage investments that helped trigger the 2008 financial crisis.
The credit rating agency gave high marks to mortgage-backed securities because it wanted to earn more business from the banks that issued the investments, the Justice Department alleges in civil charges filed in federal court in Los Angeles.
The government is demanding that S&P to pay at least $5 billion in penalties.
The case is the government’s first major action against one of the credit rating agencies that stamped their approval on Wall Street’s soon-to-implode mortgage bundles.
Dell to go private in $24.4B deal
SAN FRANCISCO (AP) — Slumping personal computer maker Dell is bowing out of the stock market in a $24.4 billion buyout that represents the largest deal of its kind since the Great Recession dried up the financing for such risky maneuvers.
The complex agreement announced Tuesday will allow Dell Inc.’s management, including eponymous founder Michael Dell, to attempt a company turnaround away from the glare and financial pressures of Wall Street.
Dell stockholders will be paid $13.65 per share to leave the company on its own. That’s 25 percent more than the stock’s price of $10.88 before word of the buyout talks trickled out three weeks ago.
But it’s a steep markdown from the shares’ price of $24 six years ago when Michael Dell returned for a second go-round as CEO.
Dell shares rose 15 cents to close at $13.42, indicating that investors don’t believe a better offer is likely.
The chances of a successful counter offer look slim, given the forces lined up behind the current deal.
Michael Dell, the company’s largest shareholder, is throwing in his 14 percent stake and an undisclosed sliver of his $16 billion fortune to help finance the sale to a group led by the investment firm Silver Lake.
“We recognize that (transformation) will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision,” Michael Dell said in a statement.
Stocks rebound on home prices
NEW YORK (AP) — The stock market bounced back Tuesday following a surge in U.S. home prices and signs of recovery in Europe’s economy. Strong earnings reports also helped power the gains.
The Dow Jones industrial average ended the day 99.22 points higher at 13,979.30, erasing a large part of its loss from Monday. The index traded above 14,000 during the day before falling back in the last hour.
The Standard & Poor’s 500 gained 15.59 points to 1,511.29. The Nasdaq composite was up 40.41 points to 3,171.58.
The rise follows two days of whiplash. On Monday, the Dow dropped 129 points, its worst sell-off of the year so far, as fears about Europe’s finances resurfaced. On Friday, the index gained 149 points, closing above 14,000 for the first time since 2007. The Dow is now 185 points below the record high of 14,164 it reached on Oct. 9, 2007.
After strong gains for stocks this year, investors are wondering whether they should sell now, or wait and see if the rally still has legs, said Brad Reynolds, chief investment officer at LJPR, Inc.
“The market is extremely skittish right now, that’s why we’re seeing such big moves,” said Reynolds.
Tuesday’s advance was driven by new data showing that U.S. home prices rose in December at the fastest pace in more than six years. CoreLogic, a real estate data provider, reported that home prices rose 8.3 percent. In Europe, a measure of manufacturing and service businesses rose to a 10-month high January.
Estee Lauder rose $3.66, or 6 percent, to $64.71 after reporting earnings that beat analysts’ expectations. Profits surged 13 percent at the beauty products company as sales in the U.S. and emerging markets rose. Computer Sciences Corp., an information technology services company, was the biggest gainer in the S&P 500. CSC rose $3.84, or 9.2 percent, to $45.75 after the company said it was raising its earnings outlook for the year because its cost-cutting efforts were yielding better results than it had expected.
Stocks have gotten off to a strong start this year. The Dow advanced 5.8 percent in January, its best start to the year since 1994, according to data compiled to S&P Dow Jones indices. The S&P 500 rose 5 percent last month.
Lance Roberts, chief economist at Streettalk Advisors in Houston, Texas, said that’s related more to the Federal Reserve’s commitment to keep money cheap than to companies’ performance. If earnings are beating estimates, he said, it’s largely because expectations were so low.
“If you lower the hurdles enough, companies can get over them,” Roberts said.
The fact that individual investors are starting to return to stocks, as they have in recent weeks, is another sign that the market is due for a correction, Roberts and other analysts have said.
McGraw-Hill Cos., parent of the Standard & Poor’s ratings agency, fell $5.38, or 10.7 percent, to $44.92, after the federal government sued S&P. The government said that S&P knowingly misled investors about the quality of the mortgage-backed securities it was rating in the run-up to the financial crisis that caused the Great Recession. The stock dropped 14 percent on Monday after early reports about the lawsuit leaked out.