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THE U.S. OFFERED to hold talks with Iran if it suspends development of nuclear technologies, a major policy shift for Bush.
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Iraq’s prime minister declared a monthlong state of emergency in the southern city of Basra, amid mounting sectarian violence. Separately, a car bomb killed at least five policemen in Mosul.
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India has surpassed South Africa in total number of HIV cases, a U.N. group said, underscoring the impact AIDS is having on the Asian subcontinent.
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Relief efforts for an estimated 650,000 people displaced by Indonesia’s earthquake picked up with a surge of foreign aid workers coming into the region and the reopening of a key airport.
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Lithuania’s prime minister resigned after the withdrawal of a key partner left his coalition government in tatters.
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Indonesia averaged one human death from bird flu every 2½ days in May, and is on pace to pass Vietnam as the hardest-hit country.
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More foreign troops landed in East Timor to help quell mob violence roiling the capital as Australian officials warned a long-term force may be needed.
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Fighting resumed in Somalia after a five-day lull, killing at least 13, as Islamic militants expanded their control in a fight against secular warlords.
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Afghan lawmakers passed a motion calling for the prosecution of U.S. soldiers involved in a deadly crash that sparked Kabul’s worst riots in years.
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The Supreme Court has issued a number of decisions generally favorable to business interests so far this year, and still has several significant cases left among the almost 30 remaining on the docket.
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The FDA approved a copycat version of human growth hormone made by a unit of Novartis, amid debate over how to move toward generic biotechnology drugs.
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Youths attacked riot police in the suburbs of Paris in a second night of violence, raising memories of rioting that rocked the nation last year.
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Parts of New Orleans are sinking far more rapidly than scientists first thought, more than an inch a year, new research suggests.
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A Dutch investigator cleared Lance Armstrong of doping in the 1999 Tour de France and raised the possibility of misconduct by anti-doping authorities.
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Recent fatalities have spurred coal-mining firms to enhance safety training for miners and equipment makers to introduce new devices designed to protect workers.
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Venezuela’s Chávez signed crude-oil and natural-gas deals with Ecuador, in a move that extends his clout in Latin America.
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Chinese environmental experts are calling for an urgent cleanup of the Yangtze River, saying worsening pollution can kill the country’s longest river within five years.
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CollaGenex Pharmaceuticals received FDA approval for Oracea to treat inflammatory skin lesions caused by rosacea.
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NEW YORK (Dow Jones)–Stocks ended the month with a solid gain, as NRG Energy, ADC Telecommunications and ATI Technologies moved on deals, both real and contemplated.
The Dow Jones Industrial Average rose 73.88, or 0.67%, to 11168.31, after losing 184.18 on Tuesday. For May, the Dow industrials lost 1.7%, their biggest monthly decline since June 2005 and first monthly drop so far this year.
The Nasdaq Composite Index gained 14.14, or 0.65%, to 2178.88. For the month, the Nasdaq fell 6.2%, its largest monthly decline since July 2004.
The Standard & Poor’s 500 Index added 10.25, or 0.81%, to 1270.09. For the month, the S&P 500 declined 3.1%, its worst May performance since 1984.
Stocks started out well as the price of oil fell and ended up building on those gains in a bit of a delayed reaction to the mid-afternoon release of minutes from the Federal Reserve’s last meeting.
“The minutes contained something for everyone,” said Phil Dow, director of equity strategy at RBC Dain Rauscher. “Looking at them you could make an equally strong case for either a pause or a hike.”
NRG Energy leapt 6.74, or 16%, to 49.75, the biggest percentage rise on the Big Board. Mirant said it made an unsolicited offer earlier this month to acquire the fellow power generator for $7.85 billion, but in a rejection letter sent May 23, NRG called the cash-and-stock offer “the wrong deal at the wrong time.” Still, investor optimism persisted. Mirant shed 37 cents, or 1.5%, to 24.88.
ADC Telecommunications plunged 4.46, or 20%, to 17.92 and Andrew added 34 cents, or 3.5%, to 10.12, both on the Nasdaq. ADC agreed to acquire Andrew, merging ADC’s wireline business with Andrew’s wireless-infrastructure assets into a company with a combined revenue of $3.3 billion.
ATI Technologies (Nasdaq) jumped 1.36, or 9%, to 16.51. RBC Capital Markets said Advanced Micro Devices could soon announce a strategic “tie-up” between AMD and the graphics chip maker or an outright acquisition of ATI. Chip maker Advanced Micro rose 41 cents, or 1.4%, to 30.89.
Tiffany & Co. rose 1.69, or 5.2%, to 34.19. The upscale retailer’s first-quarter profit rose 7.7% despite sluggish U.S. jewelry sales, as business in Japan and other markets overseas was better than expected.
Rambus lost 1.58, or 6.1%, to 24.26 on the Nasdaq. The memory-technology company said its board is investigating the timing of past stock-option grants.
Royal Caribbean Cruises rose 2.39, or 6.7%, to 38.08. The cruise ship operator expects to buy back about 4.1 million shares as part of a number of financial transactions.
Freddie Mac dropped 1.54, or 2.5%, to 60.04. The mortgage buying giant reported a 27% drop in net income for 2005 to $2.13 billion from $2.94 billion a year earlier, reflecting the costs of settling shareholder suits, losses on Hurricane Katrina and accounting changes.
Healthways (Nasdaq) advanced 2.52, or 5%, to 53.14. One of the country’s biggest disease-management companies said it agreed to buy one of its largest rivals, closely held LifeMasters Supported SelfCare, for $307.5 million in cash.
L-3 Communications lost 4.91, or 6.3%, to 72.96. CIBC World Markets cut its rating on the shares of the defense contractor to sector performer from sector outperformer, citing uncertainty over option grant timing, recent pricier acquisitions and lack of visibility with succession planning.
Ebay (Nasdaq) fell 40 cents, or 1.2%, to 32.81. Merrill Lynch lowered its price target for the Internet auctioneer to $44 from $51, citing slightly more conservative multiple assumptions given a more difficult consumer environment.
Monsanto rose 1.98, or 2.4%, to 84.16. The biotechnology and agricultural-products company raised its earnings forecast for fiscal 2006, citing strength in its U.S. corn-seed and trait business.
Dell (Nasdaq) gained 36 cents, or 1.4%, to 25.38. The computer maker unveiled a set of new personal computers it said would expand its moves into the consumer-entertainment market.
E*Trade Financial gained 84 cents, or 3.6%, to 24.27. The online financial-services company plans to acquire Retirement Advisors of America, a Dallas investment adviser that E*Trade said was managing more than $1 billion of assets as of the end of 2005. Terms were not disclosed.
Marvel Entertainment lost 72 cents, or 3.6%, to 19.10. The entertainment and licensing company announced new appointments in its studios division, with Avi Arad giving up the posts of chairman and chief executive of Marvel Studios but remaining involved with an independent production deal.
Oregon Steel Mills gained 3.22, or 7.4%, to 46.93. UBS upgraded its rating on the shares of the steelmaker to buy from neutral, citing valuation and potential earnings from the company’s energy infrastructure business.
On the New York Stock Exchange, there were 2,480 issues advancing, 842 declining and 142 unchanged.
NYSE volume totaled 1,990,598,670 shares, compared with 1,559,898,230 Tuesday.
The NYSE Composite Index was 8,186.58, up 75.59. The average price per share rose by 42 cents.
Applebee’s International (Nasdaq) lost 82 cents, or 3.9%, to 20.22. The restaurant chain said May same-store sales, or sales from restaurants open at least a year, fell 1.9% system-wide, declined 2% at domestic franchise locations and dropped 1.9% at company-owned restaurants.
Expedia (Nasdaq) advanced 36 cents, or 2.6%, to 14.21. Credit Suisse said near-term downside is limited for the online travel agency, and so it upgraded its rating on the stock to neutral from underperform.
Nasdaq-traded Altera rose 55 cents, or 2.9%, to 19.56. The maker of chips used in products such as Internet routers and flat-panel televisions said it still sees second-quarter sales growing sequentially at a rate of 7% to 10%.
Costco Wholesale (Nasdaq) lost 63 cents, or 1.2%, to 52.93. The warehouse-club retailer said its fiscal third-quarter profit rose 12% on a solid sales increase, but the results fell slightly short of Wall Street’s expectations amid a higher tax rate and thin margins on gasoline sales.
Hexcel rose 98 cents, or 5%, to 20.58. Deutsche Bank raised its rating on the company’s shares to buy from hold, because of Hexcel’s exposure to long-cycle, defensive and global markets.
By Karen Talley, Dow Jones Newswires
Dow Jones News Top Stories Of The Day – May 31, 2006 May 31, 2006Posted by notapundit in Economic News, Main.
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FED SEES UPSIDE INFLATION, DOWNSIDE ECONOMIC RISKS
In what appears to have been a wide-ranging discussion of monetary policy, U.S. Federal Reserve officials conclude that there are both upside risks to inflation and downside risks to economic growth, according to minutes of May 10 meeting. Discussion ranged “from leaving the stance of policy unchanged to increasing the federal funds rate 50 basis points,” before the unanimous decision for a 16th straight rate increase of 25 basis points.
CHICAGO PMI TOPS ESTIMATES AT 61.5
National Association of Purchasing Management Chicago says its index of area business activity rose to 61.5 in May on seasonally adjusted basis from 57.2 in April. May level is well above Wall Street expectations; economists projected a reading of 56.0.
AMERICAN EAGLE MAY SALES UP 11%
American Eagle Outfitters says same-store sales climbed 11%, helped by favorable customer response to company’s summer lines. Analysts projected a rise of 9.3%. Company also reiterates its 2Q earnings projection. Shares fall 2% late.
FORMER ENRON UNIT HEAD CONVICTED IN RETRIAL
Former broadband unit finance chief Kevin Howard is convicted after his original case ended in a hung jury. Former in-house accountant Michael Krautz is acquitted of five counts of fraud, conspiracy and falsifying records after a month-long trial.
OPEC PANEL SAYS MAINTAIN OUTPUT
An OPEC advisory panel has recommended the group hold output unchanged, continuing a pump-at-will policy that’s held for months against a backdrop of strong demand in the industrialized world.
DELTA PILOTS AGREE TO 14% PAY CUT
Delta Air Lines pilots approve an agreement with the bankrupt carrier that calls for $280 million in annual concessions, including an initial 14% pay cut, union says. The vote by the airline’s rank-and-file pilots is 61% in favor.
US AGREES TO TALKS WITH IRAN
In a major policy shift, the U.S. says it will join other nations in holding direct talks with Iran on its nuclear program if Tehran first agrees to stop disputed nuclear activities that the West fears could lead to a bomb.
GOOGLE CEO SAYS COMPETITION EXPANDS MARKET
Heating competition for search-advertising dollars is expanding the market for everyone and will continue to for the foreseeable future, Google Chief Executive Eric Schmidt says.
MICROSOFT OPERATING COSTS TO KEEP RISING
CEO Ballmer tells investors the software giant will continue to increase operating expenses as it seeks to take on Google and adapt Windows and its other products to the Web. New security product will be released Thursday.
SYMANTEC CUTS 2007 EPS FORECAST
Company now expects its 2007 profit to come in between 41c and 52c a share on revenue of $5.1 billion to $5.3 billion from prior forecast of earnings between 46c to 57c a share, on revenue of $5.2 billion to $5.4 billion.
SKYPE, DELL REACH DEAL ON SOFTWARE
Skype says it has reached agreement with Dell to ship Skype software with new Dell XPS mobile systems. Financial terms aren’t disclosed. Skype, a unit of eBay, provides voice and video Internet calling software. Dell shares rise 1%; eBay falls 1%.
HOLDERS GIVE EXXON VOTE OF CONFIDENCE
Despite concerns over company’s compensation practices, majority of Exxon Mobil shareholders have voted in support of company’s board. None of the 12 directors receives less than 79% of the “for” votes cast.
ALCOA, UNION TALK AS PACT FACES EXPIRATION
With hours left before their current contract expires, Alcoa and the United Steelworkers union continue intense negotiations after reporting progress yesterday.
ADC TELECOM TO BUY ANDREW CORP
ADC will issue 0.57 share for each Andrew share, valuing Andrew at $12.76 a share, a 30% premium to yesterday’s closing price. ADC CEO is focused on the deal’s long-term value. ADC shares slump 19%; Andrew rises 4%.
ANALYSTS SAY MIRANT NOT GOOD FOR NRG
Mirant’s $7.8 billion bid for fellow electricity producer NRG presents significant risks and may not ultimately benefit NRG shareholders, say market analysts who watch both companies. NRG rejects the bid and Mirant sues.
AEP TO DROP FIDELITY AS PLAN PROVIDER
American Electric Power plans to drop Fidelity Investments as the service provider for its $2.8 billion retirement savings plan, replacing it with JP Morgan.
GM DISCUSSING DELPHI’S COST STRUCTURE
General Motors Chief Executive Rick Wagoner says auto maker is discussing its top supplier’s weighty cost structure as it negotiates a bailout deal with Delphi and the United Auto Workers union. GM shares up nearly 2%.
VONAGE REITERATES PLEDGE TO BANKERS
Vonage reiterates language in its initial public offering prospectus about paying back underwriters for any unsold IPO shares ordered by its customers. Vonage shares fall 4%.
LSE CEO MEETS WITH NASDAQ CEO
London Stock Exchange Group’s top executives met with LSE’s largest shareholder, Nasdaq Stock Market, early today, a person familiar with the matter says. LSE Chief Executive Clara Furse met her Nasdaq counterpart, Robert Greifeld, in London.
CHRYSLER SEES JUNE DECISION ON SMART
DaimlerChrysler CEO Zetsche says company to decide in June about possible U.S. launch of ultra-compact car unit Smart. Zetsche optimistic Smart will return to profitability in 2007, but declines to give any sales projection for U.S.
======= DOW JONES NEWSWIRES ANALYSIS AND COMMENTARIES =======
POINT OF VIEW
Inflation Expectation Worry Key To Fed
The May 10 minutes imply the Fed will raise rates again when it next meets in June, Neal Lipschutz writes, since there’s unlikely to be dramatic directional shifts indicated by the economic news to be reported before then.
Minutes Up Odds On June Rate Hike
Meeting minutes from Federal Reserve’s last monetary policy meeting may be setting stage for another rate hike, but economists caution the next two days will prove definitive in answering the question of whether that action is needed, Michael S. Derby writes.
============ U.S. MARKETS ACTION ===========
DJIA up 73.88 points to 11168.31
NASDAQ up 14.14 points to 2178.88
S&P 500 up 10.25 points to 1270.09
10-year T-note down 12/32 at 100 00/32 yield 5.123
NYMEX Spot Crude down $0.74 at $71.29/bbl at close
Dollar/Euro down 0.0059 at 1.2810
OIL FUTURES: Nymex Crude Down On US Iran Overture May 31, 2006Posted by notapundit in Economic News, Main.
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NEW YORK (Dow Jones)–Oil prices ended moderately lower Wednesday after selling off on hopes of a diplomatic solution to the Iran nuclear standoff.
Hopes of an end to the Iran nuclear crisis rose after U.S. Secretary of State Condoleezza Rice, in a major policy shift, announced that Washington was ready to join multinational talks with Tehran if Iran suspends all disputed nuclear activities.
Iran has in the past offered to suspend its controversial nuclear enrichment program to find a way out of the crisis, and the surprise U.S. diplomatic overture triggered a knee-jerk selloff in oil futures.
However, while there was no immediate official reaction from the Iranian government, the Islamic Republic’s official news agency dismissed the overture as a U.S. “propaganda initiative.”
Asserting that Rice has previously broached the subject, the Islamic Republic News Agency wrote, “of course, the Islamic Republic of Iran will only accept proposals and conditions that take into account the interests of the people and the nation (of Iran). Suspending enrichment absolutely will not safeguard these interests.”
The unofficial dismissal “called the whole thing into question” and led to a short covering rally late in the session, said Tom Bentz, an analyst at BNP Paribas Futures in New York. “To be honest, why anyone believed that the Iranians would respond positively is the question.”
The nearby July crude contract on the New York Mercantile Exchange ended 74 cents lower at $71.29 a barrel after falling as low as $70.05 a barrel.
The June gasoline contract rose 4.51 cents to $2.1900 a gallon after trading as low as $2.0725 a gallon.
The June heating oil contract closed 3.89 cents lower at $1.97 a gallon.
Final settlement prices weren’t in yet.
Bill O’Grady, an analyst at A. G. Edwards in St. Louis, said that if Iran formally rejects the U.S. offer of talks, oil prices could make new highs.
“Then the odds of something happening start to accelerate,” he said.
On the other hand, Iranian acceptance would mean more losses for oil, with crude prices potentially dropping into the mid- to low-$60s, he said.
By Masood Farivar, Dow Jones Newswires
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WASHINGTON (AP)–President George W. Bush said Wednesday he was troubled by allegations that U.S. Marines had killed unarmed Iraqi civilians and that, “If in fact laws were broken, there will be punishment.”
It was Bush’s first public comment on allegations that Marines killed about two dozen Iraqis in the western city of Haditha last November.
Bush said he had discussed Haditha with Gen. Peter Pace, chairman of the Joint Chiefs of Staff. “He’s a proud Marine. And nobody is more concerned about these allegations than the Marine Corps. The Marine Corps is full of honorable people who understand the rules of war.
“If in fact these allegations are true,” Bush said, “the Marine Corps will work hard to make sure that that culture – that proud culture – will be reinforced. And that those who violated the law, if they did, will be punished.”
The president was asked about the Iraq allegations during an Oval Office photo opportunity with the president of Rwanda, Paul Kagame.
“I am troubled by the initial news stories,” Bush said. “I’m mindful that there’s a thorough investigation going on. If in fact, laws were broken, there will be punishment.”