Stocks edge lower at the open

NEW YORK (CNNMoney)

The Dow Jones industrial average fell 0.1% and the S&P 500 lost 0.2%. The Nasdaq was little changed.

The government reported a jump in initial jobless claims following two weeks of declines. Claims rose 38,000 to 368,000 in the latest week. Analysts were expecting 345,000 claims.

Separately, outplacement firm Challenger, Gray & Christmas reported the number of planned job cuts surged 24% to 40,430 in January.

Those figures are worrying ahead of the all-important monthly jobs report due Friday. Analysts are expecting that employers added 180,000 jobs in January, and that the unemployment rate ticked down to 7.7% from 7.8% in December.

Meanwhile, personal income in December rose 2.6%, while spending inched up 0.2%, according to the Commerce Department.

"This morning's data adds to our view that the economy is not accelerating," said Steven Ricchiuto, chief economist at Mizuho Securities.. "Instead, it is stuck on a shallow growth trajectory."

Thursday's reports come a day after the government reported a surprise drop in economic activity during the fourth quarter, although the GDP data contained some hints of underlying improvement.

Investors were also rattled Wednesday by the latest statement from the Federal Reserve, which said economic growth had paused.

Still, stocks have enjoyed a strong start to 2013.

Related: What's behind the bull market

The Dow is up more than 6% so far in January, while the S&P 500 has climbed 5% and the Nasdaq is up 4%. The Dow is just 2% away from its record high, hit in October 2007, while the S&P 500 is about 5% away from its record high, also reached in October 2007.

In corporate news Thursday, shares of UPS (UPS, Fortune 500) declined after the shipping giant's fourth-quarter earnings came in below of forecasts. The company's guidance for 2013 was also weaker-than-expected.

Shares of Dow Chemical (DOW, Fortune 500) also declined on an earnings miss.

Facebook (FB) shares dropped after the firm said late Wednesday that its fourth-quarter mobile user growth had slowed slightly versus the third quarter. Facebook's fourth-quarter earnings and sales beat Wall Street estimates.

Related: Fear & Greed index near record high

European markets were lower in afternoon trading as weak corporate earnings weighed on sentiment. Results from oil major Shell and drinks group Diageo (DEO) missed expectations, while Deutsche Bank (DB) posted a $3.5 billion quarterly loss on legal and restructuring charges. Telecoms equipment maker Ericsson bucked the trend, posting strong gains after beating expectations.

Asian markets ended mixed, with the Hang Seng slipping 0.4%.

Are you invested in the U.S. stock market right now? Are you one of the investors coming in from the sidelines? We want to hear from you. E-mail Hibah.Yousuf@turner.com for the chance to be included in an upcoming story.

First Published: January 31, 2013: 9:42 AM ET

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U.K. banks' next $1 billion payout

U.K. officials are examining the sale of complex hedging products to small business by HSBC, Barclays and two other major banks.

LONDON (CNNMoney)

Following an investigation, HSBC (HBC), Barclays (BCS), Royal Bank of Scotland and Lloyds have agreed to examine the sale of thousands of complex interest rate hedging products to small businesses that neither fully understood them nor needed them, and provide compensation.

"Small businesses will now see the result of the review as the banks look at their individual cases," chief banking regulator Martin Wheatley said in a statement. "Where redress is due, businesses will be put back into the position they should have been without the mis-sale."

The interest rate swap scandal is the latest example of unethical or illegal behavior by the banking industry. Banks have paid out billions of pounds in compensation, settlements or fines related to the mis-selling payment protection insurance, manipulating Libor benchmark interest rates and breaching money-laundering rules.

Bank of England Governor Mervyn King warned in November that U.K. banks may have to raise more capital because they weren't recognizing fully the cost of past misconduct, among other risks.

Related: British banks may need more capital

The Financial Services Authority (FSA) found serious failings in the sale of interest rate swaps, which were supposed to limit the buyer's exposure to the rising costs of servicing loans by capping or fixing interest rates, or keeping them in an agreed-upon range.

When rates fell, many companies were left with higher costs or punitive penalties for exiting the products, in some cases pushing them into bankruptcy.

A review of 173 cases found that over 90% of the sales did not comply with at least one regulatory requirement, the FSA said in a statement.

Bank staff, under pressure to hit targets, did not disclose exit costs fully, failed to make sure customers understood what they were buying and offered inappropriate advice, the FSA found.

The four banks have already set aside over $1 billion and the cost may rise. The FSA estimates that some 40,000 interest-rate protection products have been sold to small firms.

Related: UK lawmakers urge tougher banking reform

The FSA is currently reviewing sales by six other banks -- Santander, Allied Irish Bank, Bank of Ireland, Co-Operative Bank and Clydesdale and Yorkshire banks -- and hopes to reach agreement with them on compensating customers by the middle of February.

To claim compensation, small and unsophisticated firms -- such as bed-and-breakfast businesses -- will have to show that the rate-hedging breaks' costs weren't clearly stated or the product was inappropriate for the size of the loan. Subsidiaries of multinational companies will not be eligible for compensation.

"The announcement today will give clarity to businesses and will enable the banks to put in place the steps needed to resolve each case for customers," banking lobby group BBA said in a statement. "Where customers have suffered unfairly the banks have all agreed that they will put it right."

First Published: January 31, 2013: 9:34 AM ET

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Income surged in December, amid fiscal cliff fears

NEW YORK (CNNMoney)

Personal income rose 2.6%, the biggest one-month gain since December 2004, the Commerce Department said Thursday.

Americans decided to sock away that extra income more than spend it. While consumer spending ticked up only 0.2%, the personal savings rate rose dramatically. On average, people saved about 6.5% of their disposable income in December, up from 4.1% in November. That's the highest saving rate since May 2009.

The dramatic one-month gain was partly due to companies bringing dividend and bonus payments forward to avoid paying higher individual taxes in 2013, the Commerce Department said.

Lump-sum payments of Social Security benefits and a recovery from Superstorm Sandy also had a small impact.

Excluding those factors, the Commerce Department estimates that disposable income increased only 0.4% in December.

Economists expect the personal income, spending and savings figures to drop in January, as they come off this temporary surge and reflect the expiration of the payroll tax cut.

"The extra strength will be offset by extra weakness in January," said Jim O'Sullivan, chief U.S. economist for High Frequency Economics, in a note to clients.

Related: A couple's 5-year plan to pay off $93,600 in debt

For middle class Americans, there was no escaping higher taxes in 2013. The expiring payroll tax cut means workers have to pay 2% more in taxes this year.

That drop in income in January has already weighed on consumer confidence. The Conference Board announced Tuesday that its Consumer Confidence Index recently fell to its lowest level in 14 months, largely reflecting a weak economic outlook and the payroll tax cut.

"Consumers are more pessimistic about the economic outlook and, in particular, their financial situation," said Lynn Franco, director of economic indicators at the Conference Board, in a statement. "The increase in the payroll tax has undoubtedly dampened consumers' spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock."

First Published: January 31, 2013: 9:39 AM ET

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Stocks open little changed after GDP

NEW YORK (CNNMoney)

Gross domestic product declined 0.1% last quarter, marking the first year-over-year contraction since the second quarter of 2009. The drop, largely due to a 22% decline in defense spending, was a big surprise, as analysts were expecting that the economy grew 1% last quarter, according to a consensus estimate from Briefing.com.

The Dow Jones industrial average and the S&P 500 rose less than 0.1%. The Nasdaq gained 0.2% helped by a 6% jump in Amazon (AMZN, Fortune 500), which reported a 22% jump in fourth-quarter sales late Tuesday.

Research in Motion (RIMM) was also a big winner on the tech-heavy index. Investors are gearing up fro the long-awaited launch of BlackBerry 10, which the ailing RIM hopes will change its fortunes in the smartphone market.

Also in corporate news, Boeing (BA, Fortune 500), which has been dogged over the past few weeks by problems with its now-grounded 787 Dreamliner fleet, topped fourth-quarter earnings forecasts. The aircraft makers says it does not expect a significant financial impact from the grounding of the 787s. Shares of Boeing edged higher.

Oil producer Phillips 66 (PSX) shares rose after the company's beat earnings expectations.

Facebook (FB) headlines the list of firms reporting after the close.

Shares of Chesapeake Energy (CHK, Fortune 500) surged 10% after the natural-gas producer announced that embattled CEO Aubrey McClendon will retire in April.

Related: Fear & Greed index deep in extreme greed

Meanwhile, payroll processor ADP said private employers added 192,000 jobs in January, higher than the 175,000 jobs that analysts were expecting. The ADP report is the first of three this week to provide a snapshot of nation's job market.

In the afternoon, the Federal Reserve's Open Market Committee will release a statement upon the conclusion of its latest meeting, which investors will scrutinize for clues about when the central bank's bond-buying program will end.

Minutes from the Fed's December meeting showed that some members were weighing whether the central bank should wrap up the program, known as QE3, before the end of this year.

"While we expect QE3 will end before year-end, the Fed is in full-speed-ahead mode now," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in a note to clients. "We see virtually know chance of officials suggesting that QE3 might end soon in today's statement."

Related: Meet the Fed's newest voters

While O'Sullivan is not expecting any significant changes to the central bank's statement, he does anticipate that policymakers will "at least acknowledge the improved tone in financial markets -- globally as well as in the United States."

U.S. stocks closed higher Tuesday, pushing the Dow and the S&P 500 closer to new all-time highs. The Dow is less than 2% away from its all-time high of 14,198.10 reached in October 2007, while the S&P 500 is less than 5% away from its record high of 1,576.09, also reached in October 2007.

European markets were down in afternoon trading. Asian markets finished with solid gains, led by Japan's Nikkei, which gained 2.3% to close above 11,000 points.

The 10-year yield on the U.S. Treasury was solidly above 2% as prices declined. The yield first topped 2% on Monday for the first time since April 2012.

The dollar declined versus the euro and the pound, but gained ground versus the Japanese yen.

Oil and gold prices edged higher.

First Published: January 30, 2013: 9:47 AM ET

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ADP: Private sector adds 192,000 jobs

The private sector added 192,000 jobs in January, according to payroll processing firm ADP.

NEW YORK (CNNMoney)

Analysts were expecting the private sector to add 175,000 jobs in the month, according to Briefing.com.

Small businesses led the way, hiring 115,000 workers. Medium-sized businesses added 79,000 jobs, while large firms cut 2,000 positions.

"That's a good solid number," said Mark Zandi, chief economist for Moody's Analytics, which works with ADP on the report. "The job growth is broad-based, across may industries."

Most jobs were created in the service sector, which added 177,000 positions. The goods producing sector added 15,000. Bright spots included construction, trade, and professional services. The manufacturing sector lost 3,000 jobs.

Related: U.S. economy contracts for first time since recession

The ADP report is closely monitored since it comes before the government's monthly reports on payrolls and unemployment. The Labor Department will release those figures Friday morning. Economists are expecting 180,000 jobs were added and that the unemployment rate dipped slightly to 7.7%. Economists say the economy needs to create at least 150,000 jobs a month just to keep pace with population growth. Job growth has been near those levels for the past six months.

Last week, the number of people filing for unemployment claims fell for the second week in a row, and is now hovering near a five-year low.

But Friday's relatively strong ADP numbers were tempered by a government report showing a surprise contraction in the economy for the fourth quarter of 2012. That news could raise more concerns about the health of the labor market, although many economists felt the dip was more of a one-off event related to cuts in defense spending.

First Published: January 30, 2013: 8:27 AM ET

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Good housing numbers don't help stocks

NEW YORK (CNNMoney)

Despite a report that home prices posted their biggest jump in 6 years, the Dow Jones Industrial Average was stuck in neutral, while the S&P 500 and the Nasdaq dropped between 0.1% and 0.2%.

After their recent four-week winning streak, investors say stocks, which are hovering around 5-year highs, may be due for a pullback.

"Good numbers are priced in at this point, particularly in housing," said Joe Saluzzi, co-head of Themis Trading. "Investors really want to see more."

While the Case-Shiller 20-city home price index beat expectations, investors are also waiting for data from the Conference Board's monthly Consumer Confidence Index due out at 10 a.m. ET.

Ford (F, Fortune 500) was a major drag on the broader market. The car company posted higher fourth-quarter income and sales, boosted by strong results in North America. But worse-than-expected weakness from Europe weighed on Ford's shares, which slid more than 3%.

Drug companies fared better. Shares of Pfizer (PFE, Fortune 500) inched higher on better-than-expected quarterly results, as did rival Eli Lilly and Co (LLY, Fortune 500), which also reported fourth-quarter earnings and sales that topped expectations.

Related: Apple dragging down hedge funds

Glass maker Corning' (GLW, Fortune 500)s stock jumped after the company delivered earnings and sales ahead of forecasts.

Shares of data storage equipment maker EMC (EMC, Fortune 500) plunged after the company's earnings outlook fell short of estimates.

Shares of Apple (AAPL, Fortune 500) gained more than 1%, after the company announced a new iPad with more storage.

Yahoo (YHOO, Fortune 500) shares rose after the company posted earnings that beat expectations late Tuesday.

Amazon.com (AMZN, Fortune 500) results are due after the closing bell.

Tuesday also marks the start of the Federal Reserve's first monetary policy meeting of the year. At the conclusion of the two-day meeting Wednesday afternoon, investors will look for clues from the central bank's statement for when the bond buying program could end.

Related: Fear & Greed Index hitting extreme greed

U.S. stocks finished mostly flat Monday.

European markets were mixed in afternoon trading. Asian markets ended mixed, as Hong Kong's Hang Seng edged lower while the Shanghai Composite and Japan's Nikkei both posted gains of about 0.3%.

The dollar declined versus the euro and the British pound, but gained ground against the Japanese yen.

Oil prices and gold prices slipped.

The price of the 10-year Treasury slipped, pushing the yield up to 1.97%.

First Published: January 29, 2013: 9:51 AM ET

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Apple releases new iPad with 128 GB of storage

A new 128 GB iPad will hit store shelves on Feb. 5.

NEW YORK (CNNMoney)

Everything else about Apple's tablet is the same, including the dual-core A6X processor, 2 gigabtyes of RAM, and 10 hours of battery life.

To account for the added storage space, the 128 GB Wi-Fi model will now cost $799, while the LTE model will cost $929.

To offer some differentiation from its other iPads -- which start at $329 for the iPad mini -- Apple is targeting the new model primarily at professional users, including those in the architectural and medical fields who handle large files. Gamers, movie fans and avid magazine readers are also likely to appreciate the extra storage space.

The abrupt release marks a shift in how Apple (AAPL, Fortune 500) is updating the iPad. Instead of rolling out new iPads once a year or so, as it does with iPhones and iPods, Apple is now treating the iPad more like its Mac line, releasing incremental updates to existing models. (Tech blogs began publishing leaked reports about the new iPad two days ago.)

In late 2012, Apple released a fourth-gen iPad with new processor a mere six months after the release of the third-generation Retina iPad. Much like in this most recent update, all other specs remained the same.

Apple has not explicitly announced this strategy shift, so it's an open question whether or not we'll see a more significant iPad update this year.

The 128 GB iPad will be available starting on Tuesday, February 5.

First Published: January 29, 2013: 9:31 AM ET

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Home prices post biggest jump in 6 years

NEW YORK (CNNMoney)

The latest reading of the closely watched S&P Case-Shiller index is another sign of the growing recovery in the long-battered housing market.

The last time prices jumped this much was in August 2006, when the housing bubble was still inflating. Soon after that, prices went into a steep decline that led to a flood of foreclosures. That sparked the most serious economic downturn since the Great Depression.

"Housing is clearly recovering," said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. "Prices are rising as are both new and existing home sales. These figures confirm that housing is contributing to economic growth."

Housing prices have been helped by a number of factors in recent months, including increased sales of both new homes and previously-owned houses, a drop in foreclosures, and near record low mortgage rates. A drop in the nation's unemployment rate also is helping.

The rise in home prices is good news for more than just people hoping to sell their home. The higher prices rise, the fewer homeowners that will be underwater on their mortgage, meaning they owe more on their homes than they are worth. That can help many homeowners refinance and save money, which would pump more cash into the economy.

"The ongoing price appreciation is significant, because we expect housing wealth effects to be an important factor driving economic growth in 2013, possibly matching the direct impact on economic output from the rebound in homebuilding," said Joseph LaVorgna, chief U.S. economist for Deutsche Bank.

Related: Housing to drive economic growth (finally!)

Michael Gapen, senior U.S. economist for Barclays, said the fundamentals for the housing market are now strong enough that his firm is forecasting another 6% to 7% rise in prices in 2013, and a 5% to 6% rise again next year. He said the tight supply of homes for sale on the market should support continued price increases, and that the decline in foreclosed homes for sale is reducing the drag that those distressed properties had on overall prices.

"I'm not worried about these increases being overdone," he said. "Home prices overcorrected a bit on the downside, and what we're seeing now is a recovery from that."

Related: Home building surges 12%

The S&P Case-Shiller index tracks home prices in 20 major markets. The latest reading showed 19 of them posting a gain in prices, with only New York posting a modest decline from a year earlier. Phoenix, one of the markets hit hardest by the housing crisis, posted the biggest increase, with home prices there climbing 22.8%.

San Francisco and Las Vegas, markets that were also hit by the housing boom and bust, also posted double-digit increases, while Miami, another bubble market, posted a 9.9% rise. Detroit, a city where economic problems led to a high rate of foreclosures, enjoyed an 11.9% price increase.

But even with November's strong gains, the overall index stands 29% below the home price peak reached in the summer of 2006.

First Published: January 29, 2013: 9:25 AM ET

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Toyota reclaims global auto sales crown

Final sales numbers confirm that Toyota's 2012 car sales topped those of General Motors and Volkswagen.

NEW YORK (CNNMoney)

Earlier this month, General Motors (GM, Fortune 500) announced global sales of 9.29 million vehicles for the year. In late December, Toyota Motor (TM) said it expected that global sales for 2012 hit 9.7 million vehicles, and it confirmed that Monday when it reported global sales of 9.75 million.

Volkswagen Group (VLKAY), which includes the VW, Audi and Porsche brands, came in at No. 3 with 9.09 million vehicles, the first time the company has topped 9 million.

GM is the leading automaker in the world's two largest markets, China and the United States. But Toyota is a clear leader in its home market of Japan, where non-Japanese automakers have had trouble competing due to limited dealerships. And Toyota enjoyed a bounce-back year in Japan, with sales rebounding 35% from 2011, when they were hurt by the earthquake and tsunami.

Toyota's sales totals also were helped by the fact that it made more than 600,000 heavy-duty trucks and buses during the year, a vehicle segment GM essentially shed in its home market.

Toyota is No. 3 in terms of sales in the U.S., a key market where Ford Motor (F, Fortune 500) is No. 2. Ford took back that ranking back from Toyota in 2010 when the Japanese automaker was hit with recall problems that forced it to stop selling its most popular models for a period of time.

Related: Bringing GM back from the brink

GM topped global sales for 77 years through 2007, when it finished just barely ahead of Toyota. Both automakers' sales suffered in 2008 as the bottom fell out of the U.S. economy, but high gas prices and a looming bankruptcy at GM ultimately nudged Toyota into the lead, where it stayed for the next two years.

The federal bailout of GM in 2009, and the problems at Toyota the next two years allowed the U.S. company to recapture the lead much quicker than most expected.

Neither GM nor Toyota had a comment on the rankings earlier this month when GM's sales figures essentially insured Toyota would move back into the global sales lead.

Related: Cool cars from Detroit auto show

Mike Wall, auto analyst for IHS Global Insight, said it's possible GM could come out on top in 2013. A territorial dispute between China and Japan could adversely affect Toyota, while the recession in Europe could be a drag on Volkswagen's sales growth.

"In terms of GM returning to the lead, I certainly wouldn't count them out, especially with the product they're set to introduce this year," he said. "I actually think all three will be huddled close together for the next few years."

Wall says GM is a much healthier company today at No. 2 than when it held the sales lead but posted huge financial losses in the previous decade.

"The sales lead makes for bragging rights, but GM is a stronger company than it was then," he said.

First Published: January 28, 2013: 7:18 AM ET

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Stocks: Caterpillar, durable goods give early lift

Click the chart for more premarket data.

NEW YORK (CNNMoney)

The Census Bureau said durable goods orders rose 4.6% in December. Analysts were looking orders to rise just 1.6% last month, following a 0.7% uptick in November.

Caterpillar's fourth-quarter earnings topped analyst expectations, sending shares of the company up more than 1% in premarket trading. As the biggest seller of construction equipment in the world, with major operations in China, Caterpillar (CAT, Fortune 500) is considered a bellwether for the global economy.

Yahoo (YHOO, Fortune 500) earnings are up after the bell. The company's fourth-quarter results are a big test for CEO Marissa Mayer, who shocked the world last summer by taking the top spot at Yahoo. The results will be a look into Yahoo's new business strategy -- the results of which Mayer began laying out in an all-staff meeting in September.

Of the 141 companies in the S&P 500 that have reported earnings so far, 67% have reported results above analyst expectations, according to Thomson Reuters. Overall, fourth-quarter earnings are expected to grow 2.8% from a year ago.

Related: 4 ways the market could really surprise you

Also on the corporate front, shares of Apple (AAPL, Fortune 500) will be in focus Monday, with shares edging slightly higher in premarket treading. The iPhone and iPad maker's stock is down almost 20% this year. On Friday, Apple lost its title as the world's most valuable company to Exxon (XOM, Fortune 500) as shares closed at a 1-year low.

Following the opening bell, the National Association of Realtors will release pending home sales for December.

Related: Fear & Greed Index steeped in extreme greed

U.S. stocks have had quite a run in 2013, with four straight weeks of gains so far this year. The Dow finished Friday at its highest level since October 2007, while the S&P 500 closed above the 1,500 mark for the first time since December 2007. The Dow is now just 2% away from its all-time high, and the S&P 500 is off about 5% from its record high.

European markets were slightly higher in morning trading Monday, while Asian markets ended finished mixed. The Shanghai Composite added more than 2%, closing at its highest level since June, while the Nikkei tumbled nearly 1%. The Hang Seng in Hong Kong edged slightly higher.

First Published: January 28, 2013: 6:35 AM ET

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Stocks edge higher at the open

NEW YORK (CNNMoney)

The Dow Jones industrial average and the Nasdaq gained 0.2%. The S&P 500 was little changed.

In the bond market, the yield on the 10-year Treasury note rose above 2% for the first time since April 2012. The rise in yield, which reflects a fall in price, came after Fitch said the temporary increase in the U.S. debt limit removes the "near-term risk" that America's credit rating will be downgraded.

The Census Bureau said durable goods orders rose 4.6% in December. Analysts were looking for orders to rise just 1.6% last month, following a 0.7% uptick in November. The increase, driven by strength in new orders for transportation and defense goods, is consistent with economic growth of 1% in the fourth quarter, according to Action Economics.

Caterpillar (CAT, Fortune 500) said fourth quarter profits fell 55% to $1.04 per share, reflecting a previously disclosed $580 million charge. Excluding the one-time item, Caterpillar's results topped analyst estimates, sending shares up 2% in early trading.

Caterpillar, the biggest seller of construction equipment in the world, said the U.S. economy will continue to improve this year, but warned that "growth is expected to be relatively weak." Despite an uncertain outlook for the global economy, Caterpillar said 2013 could be a record year for the company.

Yahoo (YHOO, Fortune 500) earnings are up after the bell. The company's fourth-quarter results are a big test for CEO Marissa Mayer, who shocked the world last summer by taking the top spot at Yahoo. The results will be a look into Yahoo's new business strategy -- the results of which Mayer began laying out in an all-staff meeting in September.

Of the 141 companies in the S&P 500 that have reported earnings so far, 67% have reported results above analyst expectations, according to Thomson Reuters. Overall, fourth-quarter earnings are expected to grow 2.8% from a year ago.

Related: 4 ways the market could really surprise you

Also on the corporate front, shares of Apple (AAPL, Fortune 500) will be in focus Monday. The iPhone and iPad maker's stock is down almost 20% this year. On Friday, Apple lost its title as the world's most valuable company to Exxon (XOM, Fortune 500) as shares closed at a 1-year low.

After the opening bell, the National Association of Realtors will release pending home sales for December.

Related: Fear & Greed Index steeped in extreme greed

U.S. stocks have had quite a run in 2013, with four straight weeks of gains so far this year. The Dow finished Friday at its highest level since October 2007, while the S&P 500 closed above the 1,500 mark for the first time since December 2007. The Dow is now just 2% away from its all-time high, and the S&P 500 is 5% from its record high.

European markets were slightly higher in morning trading Monday, while Asian markets ended finished mixed. The Shanghai Composite added more than 2%, closing at its highest level since June, while the Nikkei tumbled nearly 1%. The Hang Seng in Hong Kong edged slightly higher.

First Published: January 28, 2013: 9:46 AM ET

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Boeing keeps building Dreamliners it can't fly

Boeing hasn't slowed production of its 787 Dreamliner despite the federal probe that has grounded the jet.

NEW YORK (CNNMoney)

A federal probe into electrical fires has grounded all 50 Boeing 787 Dreamliners around the world. But Boeing has little choice but to keep its assembly lines in South Carolina and Washington State running at their normal pace, building five jets a month. A significant slowdown in production, let alone a full shutdown, would be too costly for both Boeing and its suppliers who are counting on making parts for the aircraft.

"Stopping production is not going to happen," said Carter Leake, an aerospace analyst with BB&T Capital Markets. A halt in production or even a slow down would risk crucial suppliers going out of business. "They need to keep the lines running to support the supply chain. They can't do that to suppliers that barely survived the three year delay in producing the first plane."

National Transportation Safety Board Chairman Deborah Hersman said Thursday that investigators have yet to determine what caused the two lithium battery fires earlier this month that led the FAA to ground all Dreamliners. So even though Boeing has no idea what kind of fix to the aircraft will eventually be required, it continues to make the planes as if there is no problem.

Related: What's wrong with the Dreamliner?

"If it stopped it would be very difficult to start production again," said Chris DeNicolo, aerospace credit analyst for Standard & Poor's. And Boeing still has 800 Dreamliner orders left to fill for airlines.

Related: Dreamliner - Where the parts come from

Boeing spokeswoman Kate Bergman confirms the manufacturer hasn't changed its production schedule since the Dreamliners were grounded. Indeed, the manufacturer still plans to double production by year's end. The company would not say how many planes have been built since the FAA grounded the jets on Jan. 16, or what it will do with the completed aircraft since it can't fly them off Boeing's property.

NTSB's Hersman said the probe is only in the very early stages and suggested it could take a long time to resolve.

"This is not something we expect will be solved overnight," she said. "We are prepared to be methodical."

Related: United: Passengers will 'flock' back to Dreamliner

Leake said he is worried that the relatively quick fix that many investors were hoping for is becoming less and less likely. Airlines eager for the jet's improved fuel economy have yet to cancel any orders due to the grounding. But that won't necessarily be the case forever.

"It does sound like we're in the first inning," Leake said. "I don't know what the tipping point is. If it's three months, they'll be no cancellations, six months, some cancellations, Nine months, it's a big problem."

Working in Boeing's favor is the fact that it has more than $11 billion in cash and short-term investments on its balance sheet.

"There's an ability [for it] to absorb the additional costs," said DeNicolo. "The rest of its commercial airplane business is doing quite well."

The Dreamliner was supposed to be a major profit driver for Boeing, but that won't be the case as long as it's building planes that it can't deliver.

First Published: January 25, 2013: 4:44 PM ET

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RIM to advertise BlackBerry 10 during Super Bowl

NEW YORK (CNNMoney)

It's RIM's (RIMM) first-ever Super Bowl commercial, and while the company didn't say how much it spent, Super Bowl broadcaster CBS (CBS, Fortune 500) previously told CNNMoney that 30-second spots are going for a record high of at least $4 million.

RIM will unveil the BlackBerry 10 platform at events on Wednesday, as well as the first two devices to run on the new platform. It's been a long time coming: The software had previously been slated for release in early 2012, which was pushed to late 2012, and again to the first quarter of 2013.

While delays in tech do happen, the news was damning for the struggling RIM because BlackBerry 10 is meant t to be the crown jewel of the company's turnaround plan. Critics wondered if RIM would even survive long enough to launch the OS.

Now that launch day is nearly upon us, RIM is doing all it can to market BlackBerry 10. In addition to the Super Bowl ad, RIM said it will push BlackBerry via online ads and on social networks before and after the game. Launch day on Wednesday includes BlackBerry events around the globe.

Related story: RIM's fate hangs on BlackBerry 10

So RIM will survive to see BlackBerry 10 launch, but the delay has left the company stuck in a holding pattern. Everyone from Apple (AAPL, Fortune 500) to Nokia (NOK) to Microsoft (MSFT, Fortune 500) released new gadgets in the fall, but RIM was essentially forced to wait for the BlackBerry 10 software before selling any significant new hardware.

The company has said BlackBerry 10 will run on a smaller number of devices with essential smartphone features: a much-improved camera, a modern Web browser and social-networking integration. The software will allow customers to access e-mail with one swipe from any app, and it will shift automatically between personal and corporate modes.

RIM's main problem is its lost stronghold in the corporate market, where it once dominated. Rather than issuing company BlackBerries, many employers now have workers bring their own devices into work, usually Apple's (AAPL, Fortune 500) iPhone and Google's (GOOG, Fortune 500) Android devices.

First Published: January 25, 2013: 5:32 PM ET

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China's growth to hit 8% in 2013

Davos, Switzerland (CNNMoney)

"I think China's growth rate will be about 8% this year," Yi Gang said during a debate at the World Economic Forum in Davos, Switzerland. He said consumer price inflation could reach 3% or slightly higher.

The world's second-biggest economy grew by 7.8% last year, well below the average 10% growth seen in the past three decades but better than the government's own target of 7.5% and above analyst expectations.

The annual figure was boosted by a recovery in industrial production and exports in the fourth quarter, which grew 7.9%, prompting economists to forecast a slow but steady recovery in 2013

The acceleration in the last three months of 2012 followed seven quarters of slowing growth as China felt the impact of weak activity in the United States and Europe, as well as its own efforts to control a real estate boom and contain inflation.

Related: China's hottest companies

China's manufacturing sector showed more signs of improvement this month, with a preliminary reading of purchasing managers' sentiment rising to its highest level in two years.

Inflation rose to 2.5% in December, as a spurt of extremely cold weather drove food prices higher. That compared with 2% in November, but still represents tame inflation -- the government aims to keep annual inflation below 4%.

China is trying to rebalance its economy, placing greater emphasis on consumption. Yi said domestic demand was playing an ever more important role in the economy as growth in incomes outpaced GDP growth.

"Consumption is very robust," he said.

China would continue to aim for a reduction in its current account surplus as a percentage of GDP, he said. The figure stood at 2.8% of GDP in 2012.

First Published: January 26, 2013: 11:42 AM ET

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Chicago mayor asks banks to cut off gun makers

Chicago Mayor Rahm Emanuel wants banks to stop lending to gun makers.

WASHINGTON (CNNMoney)

Emanuel, mayor of the nation's third-largest city and former chief of staff to President Obama, wrote the CEOs of Bank of America (BAC, Fortune 500) and TD Bank (TD), since they finance gun makers that lobby against federal and local efforts to toughen gun control laws.

Bank of America gives Sturm, Ruger & Company Inc. (RGR) a $25 million line of credit and TD Bank gives Smith & Wesson (SWHC) a $60 million line of credit, according to the letter.

"I ask you to use your influence to push this company to find common ground with the vast majority of Americans who support a military weapons and ammunition ban, and comprehensive background checks," Emanuel wrote to Bank of America CEO Brian Moynihan. He wrote a similar letter to TD Bank CEO Bharat Masrani.

Both Bank of America and TD declined to comment.

Smith & Wesson and Sturm, Ruger make a wide variety of firearms, including the semiautomatic rifles that are known variously as assault weapons or modern sporting rifles.

Related: Gun industry thrives in face of ban proposal

Emanuel pushed for tougher gun control measures long before the slayings of children and teachers at a Newtown, Conn., elementary school last month. Two years ago, the Supreme Court overturned the city's handgun ban, forcing the city to rewrite its laws. Chicago maintains some of the nation's toughest gun control laws, including registration of any kind of gun and a ban on assault weapons.

"Doing business with gun manufacturers might benefit the banks' bottom line, but they put our police officers, our children, and our communities at risk," Emanuel said in a Friday statement.

His office has also ordered city pension and retirement funds to divest shares in gun makers. This week, the Chicago Municipal Employees Annuity and Benefit Fund agreed to shift $1 million from manufacturers of assault rifles, including Freedom Group, Smith and Wesson and Sturm, Ruger.

- CNN's Todd Sperry contributed to this report.

First Published: January 25, 2013: 2:56 PM ET

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Boeing keeps building Dreamliners it can't fly

Boeing hasn't slowed production of its 787 Dreamliner despite the federal probe that has grounded the jet.

NEW YORK (CNNMoney)

A federal probe into electrical fires has grounded all 50 Boeing 787 Dreamliners around the world. But Boeing has little choice but to keep its assembly lines in South Carolina and Washington State running at their normal pace, building five jets a month. A significant slowdown in production, let alone a full shutdown, would be too costly for both Boeing and its suppliers who are counting on making parts for the aircraft.

"Stopping production is not going to happen," said Carter Leake, an aerospace analyst with BB&T Capital Markets. A halt in production or even a slow down would risk crucial suppliers going out of business. "They need to keep the lines running to support the supply chain. They can't do that to suppliers that barely survived the three year delay in producing the first plane."

National Transportation Safety Board Chairman Deborah Hersman said Thursday that investigators have yet to determine what caused the two lithium battery fires earlier this month that led the FAA to ground all Dreamliners. So even though Boeing has no idea what kind of fix to the aircraft will eventually be required, it continues to make the planes as if there is no problem.

Related: What's wrong with the Dreamliner?

"If it stopped it would be very difficult to start production again," said Chris DeNicolo, aerospace credit analyst for Standard & Poor's. And Boeing still has 800 Dreamliner orders left to fill for airlines.

Related: Dreamliner - Where the parts come from

Boeing spokeswoman Kate Bergman confirms the manufacturer hasn't changed its production schedule since the Dreamliners were grounded. Indeed, the manufacturer still plans to double production by year's end. The company would not say how many planes have been built since the FAA grounded the jets on Jan. 16, or what it will do with the completed aircraft since it can't fly them off Boeing's property.

NTSB's Hersman said the probe is only in the very early stages and suggested it could take a long time to resolve.

"This is not something we expect will be solved overnight," she said. "We are prepared to be methodical."

Related: United: Passengers will 'flock' back to Dreamliner

Leake said he is worried that the relatively quick fix that many investors were hoping for is becoming less and less likely. Airlines eager for the jet's improved fuel economy have yet to cancel any orders due to the grounding. But that won't necessarily be the case forever.

"It does sound like we're in the first inning," Leake said. "I don't know what the tipping point is. If it's three months, they'll be no cancellations, six months, some cancellations, Nine months, it's a big problem."

Working in Boeing's favor is the fact that it has more than $11 billion in cash and short-term investments on its balance sheet.

"There's an ability [for it] to absorb the additional costs," said DeNicolo. "The rest of its commercial airplane business is doing quite well."

The Dreamliner was supposed to be a major profit driver for Boeing, but that won't be the case as long as it's building planes that it can't deliver.

First Published: January 25, 2013: 4:44 PM ET

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RIM to advertise BlackBerry 10 during Super Bowl

NEW YORK (CNNMoney)

It's RIM's (RIMM) first-ever Super Bowl commercial, and while the company didn't say how much it spent, Super Bowl broadcaster CBS (CBS, Fortune 500) previously told CNNMoney that 30-second spots are going for a record high of at least $4 million.

RIM will unveil the BlackBerry 10 platform at events on Wednesday, as well as the first two devices to run on the new platform. It's been a long time coming: The software had previously been slated for release in early 2012, which was pushed to late 2012, and again to the first quarter of 2013.

While delays in tech do happen, the news was damning for the struggling RIM because BlackBerry 10 is meant t to be the crown jewel of the company's turnaround plan. Critics wondered if RIM would even survive long enough to launch the OS.

Now that launch day is nearly upon us, RIM is doing all it can to market BlackBerry 10. In addition to the Super Bowl ad, RIM said it will push BlackBerry via online ads and on social networks before and after the game. Launch day on Wednesday includes BlackBerry events around the globe.

Related story: RIM's fate hangs on BlackBerry 10

So RIM will survive to see BlackBerry 10 launch, but the delay has left the company stuck in a holding pattern. Everyone from Apple (AAPL, Fortune 500) to Nokia (NOK) to Microsoft (MSFT, Fortune 500) released new gadgets in the fall, but RIM was essentially forced to wait for the BlackBerry 10 software before selling any significant new hardware.

The company has said BlackBerry 10 will run on a smaller number of devices with essential smartphone features: a much-improved camera, a modern Web browser and social-networking integration. The software will allow customers to access e-mail with one swipe from any app, and it will shift automatically between personal and corporate modes.

RIM's main problem is its lost stronghold in the corporate market, where it once dominated. Rather than issuing company BlackBerries, many employers now have workers bring their own devices into work, usually Apple's (AAPL, Fortune 500) iPhone and Google's (GOOG, Fortune 500) Android devices.

First Published: January 25, 2013: 5:32 PM ET

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Lew: What the would-be Treasury chief is worth

Treasury Secretary nominee Jack Lew is worth between $748,000 and $1.7 million, putting him among the least wealthy Treasury Secretaries in recent history.

WASHINGTON (CNNMoney)

That's partly due to the fact that, as an investor, he's quite conservative.

Lew is worth between $748,000 and $1.7 million according to financial disclosures filed with the Office of Government Ethics, which requires government officials to declare ranges of assets and liabilities. Lew reported no debt.

President Obama nominated Lew to the post earlier this month. Treasury Secretary Tim Geithner's last day on the job is Friday.

Lew spent two days meeting this week meeting with senators on Capitol Hill, including New York Democrat Charles Schumer and Utah Republican Orrin Hatch. Congressional aides said that a confirmation hearing have yet to be scheduled, but Washington insiders say the Senate is likely to confirm Lew.

Related: How House Republicans would defuse debt ceiling

Lew's net worth is not far off from Geithner, who is worth somewhere between $239,000 and $6 million. The wide range is due to his four mortgages that he reported to be worth a total of between $1.35 million and $2.75 million.

But Lew's net worth doesn't compare to that of Treasury Secretaries who served during President George W. Bush's administration. Henry Paulson was worth at least $91 million, John Snow was worth about $62 million and Paul O'Neill was worth about $63 million.

What the three had in common was that they left lucrative jobs as the heads of prominent companies -- Paulson from Goldman Sachs (GS, Fortune 500), Snow from CSX Corp (CSX, Fortune 500)., and O'Neill from Alcoa (AA, Fortune 500) -- to run Treasury.

The Treasury Secretary runs U.S. fiscal policy and is charged with collecting federal taxes and managing public debt, among other duties. The job pays $199,700 a year.

Related: How much is a Treasury Secretary worth?

Lew has spent most of his career working in the federal government in Washington. But he also spent three years working for Citigroup (C, Fortune 500), first as the chief operating officer of wealth management and later as chief operating officer at Citi Alternative Investments.

In his 2009 financial disclosure, Lew reported making $945,000 in salary and restricted stock payouts from his work at Citigroup.

His move to public service prompted Lew to get rid of some stock at a bad time. He sold Citigroup (C, Fortune 500) shares in April 2009 at between $50,000 and $100,000, more than 90% below the peak during his tenure at the economy.

In 2011, the most recent disclosure available, Lew reported that most of his retirement money is in TIAA-CREFF managed assets and much of the rest of his investments are in index funds. He also has less than $1,000 in U.S. Treasuries and at least $50,000 in State of Israel bonds.

Lew lives in the Riverdale neighborhood of New York's borough of The Bronx. He also reports owning an apartment in Queens worth up to $250,000.

First Published: January 25, 2013: 8:12 AM ET

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Stocks advance on strong earnings

NEW YORK (CNNMoney)

The Dow Jones industrial average, the S&P 500 and the Nasdaq added between 0.2% and 0.5%.

Procter & Gamble (PG, Fortune 500) shares rose 3.6%, leading the gains on the Dow. The company, which makes a variety of household goods, topped earnings expectations and raised its outlook for earnings and share repurchases in 2013.

AT&T (T, Fortune 500) was also a big winner on the blue chip index. The wireless carrier's shares rose more than 1% after it beat on sales but missed on earnings.

Halliburton (HAL, Fortune 500) shares jumped 6%, making it among the best performers in the S&P 500. The company reported earnings that beat analysts' expectations, driven by strength in the company's international divisions.

A 4.4% increase in Starbucks (SBUX, Fortune 500) shares also boosted the broader market. The company reported earnings late Thursday that were in line with analysts' estimates.

On the downside, shares of Hasbro (HAS) were under pressure after the company said it expects full year earnings to come in below analysts' expectations, citing the "challenging growth prospects" in the toy industry.

Overall, S&P 500 companies are expected to report earnings growth of 4.45% for the last three months of 2012, according to S&P Capital IQ.

Of the 142 companies that had reported results as of Thursday evening, 66% have exceeded analysts' expectations.

Related: Bull market winding down. Don't panic

Investors will also get another look at the strength of the housing recovery on Friday, with the Census Bureau set to release data on new home sales for December at 10 a.m. ET.

U.S. stocks ended Thursday mixed, with Apple (AAPL, Fortune 500) weighing on the Nasdaq. The tech giant's shares fell more than 12% after it said sales in the current quarter would come in below analysts' expectations, even though earnings in the most recent quarter rose to a record $13.1 billion.

Extreme greed drives market higher

Overseas, European markets were higher in afternoon trading, with the DAX (DAX) in Germany adding more than 1%. London's FTSE 100 (UKX) edged higher early Friday, despite data showing the U.K. economy shrank 0.3% in the fourth quarter. The weaker-than-expected performance raised concerns that Britain could slide back into recession.

Asian markets ended mixed. Shares in Shanghai and Hong Kong fell sightly, but the Nikkei (N225)in Japan surged more than 2%. Japanese stocks have rallied as investors bet recent moves by the Bank of Japan and newly-elected prime minister Shinzo Abe will revive the nation's economy.

The dollar declined versus the euro and the British pound, but gained ground versus the Japanese yen.

Oil prices edged higher, while gold prices slipped.

The price of the 10-year Treasury slipped, pushing the yield up to 1.92% from 1.84% from late Thursday.

First Published: January 25, 2013: 9:47 AM ET

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Europe eyes growth windfall from US trade pact

Davos, Switzerland (CNNMoney)

With their economies stagnating, and austerity measures depressing activity in the region, German Chancellor Angela Merkel and British Prime Minister David Cameron both used keynote speeches at the annual meeting of the World Economic Forum to push for a deal.

"We need to do this, we can do this and we will all benefit," Merkel said.

Cameron said he would make trade one of his priorities for the G-8 group of leading industrial nations this year. An agreement between the EU and the U.S. could be worth more than $80 billion to the European economy alone, he said.

Trade between the U.S. and the EU is worth some $5 trillion annually, accounting for almost one-third of global flows, according to the U.S. Chamber of Commerce.

The chamber has calculated that the removal of all tariffs could add $180 billion to combined EU-U.S. gross domestic product over five years. Eliminating only half the non-tariff barriers to trade could add a further 3% to GDP for both the EU and the U.S.

Governments are looking for ways to stimulate growth without adding further to national debt, while central banks have already pumped trillions of dollars into the world economy and some are beginning to question the impact of more money-printing.

"Trade is stimulus without the government having to intervene," U.S. trade representative Ron Kirk told CNN on Friday.

Kirk said he hoped a high-level working group of EU and U.S. officials would conclude their exploratory work on ways to further liberalize trade shortly. A decision on whether to move to formal negotiations would follow.

The U.S. and EU have been focusing on bilateral deals with trading partners as it became clear that talks at the World Trade Organization on a global deal -- the Doha round -- were making little progress.

Kirk said the Obama administration believed further trade liberalization was central to future growth, and a U.S.-EU deal presented a huge opportunity for both economies.

But the work of the high-level group was critical to avoid negotiations being derailed by familiar disputes over issues such as subsidies to farmers or aircraft manufacturers.

"What we don't want to do is get halfway down this road and find out these same issues that have frustrated us in the past have reared their head again, and that's why we're trying to do the hard work now," Kirk said. "If we get started on this we want to be able to move very quickly."

Pascal Lamy, director general of the WTO, said it was inevitable that protectionist pressures were on the rise given high levels of global unemployment, but so far governments had resisted that pressure.

"But it remains a matter of concern because we all know protectionism is the only catastrophe that didn't happen yet," he told CNN.

And he cautioned that the current generation of political leaders may lack the energy necessary to work together on issues of common concern.

First Published: January 25, 2013: 10:10 AM ET

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Obama to tap Mary Jo White as SEC chairman

WASHINGTON (CNNMoney)

The nomination will be announced later Thursday, an administration official told CNN.

In addition, Obama will nominate Richard Cordray to a full term as director of the Consumer Financial Protection Bureau. Cordray has already been heading the agency, but has been serving on a recess appointment due to Republican opposition to the agency itself, which has blocked a Senate vote on his confirmation.

White is best known for her nine years as the the chief federal prosecutor for the Southern District of New York, a territory that includes Wall Street. She built a reputation as a tough prosecutor, taking on complicated financial fraud, terrorism and organized crime.

Under her watch, Ramzi Ahmed Youself was convicted of bombing the World Trade Center, Omar Abdel Rahman, "the blind sheik," was convicted of planning that bombing, and Mafia don John Gotti was convicted of murder and racketeering.

Her office also officially indicted Osama bin Laden for attacks on U.S. embassies in Africa.

She left the post in 2002 and has been in private practice since, serving as a partner at Debevoise and Plimpton, the firm at which she had previously worked.

She's since spent the last decade as a go-to corporate defender, representing high profile firms that were themselves under SEC investigation.

She could face criticism in Senate confirmation hearings for defending former Bank of America (BAC, Fortune 500) CEO Ken Lewis, when New York Attorney General Andrew Cuomo charged the bank with fraud for failing to disclose billions of dollars worth of bonuses paid to Merrill Lynch chiefs as it was failing. The SEC also investigated that case and struck a $150 million settlement agreement with BofA.

President Bill Clinton first appointed White to be U.S. attorney for the Southern District in 1993. She was also on the board of Nasdaq Stock Market.

White would take over the top job running the SEC from Elisse B. Walter, who stepped up to the position last November when Mary Schapiro stepped down. Walter had made it clear she would only serve a brief time.

Cordray had previously served as Ohio Attorney General before joining the CFPB. The agency was created under the Dodd-Frank legislation that was passed during Obama's first term.

First Published: January 24, 2013: 8:49 AM ET

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Jobless claims fall to another 5-year low

Initial claims for unemployment benefits fell for a second week in a row, and are hovering at their lowest level since January 2008.

NEW YORK (CNNMoney)

First-time claims for unemployment benefits fell by 5,000 last week to 330,000, down from 335,000 the previous week. That's the lowest level since January 2008.

It's unclear why claims have fallen so dramatically recently, but economists point to seasonal distortions in the data, which seem to happen every January. Over the last two weeks, initial claims have plummeted by 45,000.

"Weekly data are noisy, particularly at this time of year, so keep that in mind," said Jennifer Lee, senior economist at BMO Capital Markets. She pointed to a decline in the four-week moving average, which smooths out some of the choppiness, as an encouraging sign though.

Amid the recession, weekly claims had surged above 600,000. It took until the end of 2011, for them to fall below 400,000. Since then though, they've largely been stuck in the 350,000 to 400,000 range.

Related: A $5 million scheme to steal unemployment benefits

Meanwhile, continuing claims, a closely watched measure of those who remain on unemployment benefits for a second week or more, totaled about 3.16 million in the week ended Jan. 12, the most recent data available, a 71,000 drop from the week before.

Did you get a job recently? Tweet your story to @CNNMoney with the hashtag #igotajob.

First Published: January 24, 2013: 8:56 AM ET

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Stocks: Tech shares dragged down by Apple

NEW YORK (CNNMoney)

Apple (AAPL, Fortune 500) shares fell nearly 11% after the company said sales in the current quarter would come in below analysts' expectations, even though earnings in the most recent quarter rose to a record $13.1 billion.

The stock has lost more than a quarter of its value in the past four months amid worries demand for the iPhone may be waning as lower-cost smartphones gain market share.

Apple drove the Nasdaq down 1.5%. Apple was also the biggest decliner on the S&P 500, which slid 0.2%. Offsetting the declines on both indexes were shares of Netflix, which surged 38% after the online-video-rental company surprised investors by reporting a fourth-quarter profit late Wednesday.

The Dow Jones industrial average gained nearly 0.2%.

Related: Fear & Greed Index deep in extreme greed

Before the market opened, 3M (MMM, Fortune 500) said profits rose 4.4% in the fourth quarter, driven by record sales. The company, which makes everything from tape to touchscreen displays, reaffirmed its outlook for earnings this year.

Shares of Nokia (NOK) slumped after the company said its board will propose that no dividend payments be made for 2012. The Finish phone maker reported fourth-quarter earnings were unchanged from last year at 6 cents per share.

Xerox (XRX, Fortune 500) shares rose after the company reported results that were in line with expectations.

Still to come, Microsoft (MSFT, Fortune 500), AT&T (JZJ) and Starbucks (SBUX, Fortune 500) report after the bell.

Overall, S&P 500 companies are expected to report earnings growth of 4.3% for the last three months of 2012, according to S&P Capital IQ. Of the 112 companies that have reported so far, 75 have beat analysts' expectations.

U.S. stocks finished higher Wednesday, with the S&P 500 and the Dow hitting new 5-year highs.

In economic news, the government said first-time claims for unemployment benefits fell by 5,000 last week to 330,000. The Conference Board will release its index of leading economic indicators at 10 a.m. ET. The index is expected to show an increase for December, after falling in November, according to economists surveyed by Briefing.com.

The mood was gloomy in Davos, where business and political leaders gathered for the World Economic Forum. The International Monetary Fund lowered its outlook Wednesday for economic growth in the euro area, and urged U.S. policymakers to address long-term debt issues.

President Obama will nominate Mary Jo White, a former federal prosecutor in New York, to head the Securities and Exchange Commission, an administration official told CNN.

Related: Japan spurs talk of currency war

Asian stocks ended mixed after China's manufacturing sector showed more signs of improvement this month, with a preliminary reading of purchasing managers' sentiment rising to the highest level in two years.

Stocks in Hong Kong and Shanghai fell, but the Nikkei rallied 1.3%. Japan reported a trade deficit of ¥6.9 trillion for 2012, compared with ¥2.5 trillion in 2011. The nation has logged deficits for the past six months as imports have outpaced exports, but analysts said exports could ramp up in 2013 as Tokyo moves to boost the economy.

European markets rose in afternoon trading. The FTSE 100 in London rose 0.7%, while shares in Paris and Frankfurt both gained about 0.2%.

First Published: January 24, 2013: 9:49 AM ET

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Couple needs to take more risk with $455,000 savings

Paul and Linda Schilling, ages 60 and 59, Coral Springs, Fla.

NEW YORK (Money Magazine)

In 16 years of managing a successful UPS store six days a week, the couple have rarely been able to take more than a day off work at a time or see their favorite Florida Gators college football team play, never mind plan a real vacation.

"We want to travel while we're still healthy," says Linda. They would like to retire in six years -- or sooner -- and hope to begin taking two big trips a year.

With retirement in sight, though, the ups and downs of the stock market are making them nervous. "After clawing our way back from the crash, we've become much more conservative," says Paul. And how.

Their once stock-heavy portfolio -- which had lost 65% of its value at one point during the 2007-09 downturn -- is now almost all in cash. The couple aren't sure how to give themselves some potential for growth without taking on too much risk.

Related: 12 ways you're wasting money

Otherwise, the Schillings have been pounding away at their goal.

After their son, Stephen, now 29, graduated from college, the Schillings began socking away as much as 15% of their annual income. Their small mortgage and car loan will be paid off within four years. And they expect to sell their business for at least $200,000.

Occupations: Together own and operate a UPS store franchise

Goals: To make savings last in retirement and afford frequent travel

Total income: $134,000

Total assets: $905,000

Retirement savings: $455,000; Home equity: $230,000; Cash: $20,000; Value of business: $200,000

THE PROBLEM

One word: inflation. With their savings in cash, "Paul and Linda will have a negative return as inflation eats away at their principal," says Ben Tobias, a financial planner in Plantation, Fla.

THE ADVICE

Add stocks. Despite an impressive savings rate, the Schillings will have difficulty funding a long retirement with their current investments.

Tobias suggests a conservative 28% stock/72% bond mix mostly made up of intermediate-and short-term bonds and large-cap U.S. stocks.

Though nervous, Paul and Linda say they're open to diversifying. "Ben makes a good argument," Paul says.

Related: 10 retirement planning tips

Adding the cash from the sale of the business and their expected $50,000 Social Security benefit, Tobias projects the Schillings can afford to retire in six years, withdrawing 4.6% from their portfolio initially and less later on when they scale back on travel expenditures.

Buy long-term-care insurance. Tobias says he doesn't advise most of his clients to get this pricey coverage, but the Schillings are an exception.

"They have enough assets to protect but not enough to self-insure," he says, noting that an extended long stay in a long-term-care facility for one of them could wipe out all their savings for the other.

Related: 25 Best Places to Retire

Paul balks at a policy that could cost more than $6,200 a year, but long-term-care specialist William Dyess says they can save $1,000 a year by scaling down the policy, choosing, for example, to extend the waiting period for benefits from 30 to 60 days.

Hang on to the home. Paul and Linda don't want to move out of their four-bedroom home, valued at about $270,000.

That's fine for now, says Tobias. If the couple get to their seventies and find that their financial picture isn't as bright as they thought it would be, they could downsize to beef up their savings. Says Tobias: "The home is their ace in the hole."

Taking a little more risk

By holding a diversified mix of stocks and bonds instead of all cash, the Schillings can increase the chances they'll be able to replace 78% of their current income over 30 years.

	Cash	Bonds	U.S. stocks	International stocks	Chance portfolio will last 35 years
Current portfolio	97%	0%	0%	3%	40%
Recommended	2%	70%	28%	0%	93%

NOTE: Assumes 4.6% initial withdrawal rate and less thereafter; 4.7% annualized return, and 3% annual inflation. SOURCE: Ben Tobias, Tobias Financial Advisors

First Published: January 23, 2013: 6:20 AM ET

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U.S. delaying debt reckoning - UBS chief

UBS chief Axel Weber says the U.S. economy faces trouble down the road

DAVOS, SWITZERLAND (CNNMoney)

Weber, former president of Germany's Bundesbank, said quantitative easing to pump cash into developed economies had been the right policy from 2007-2010, but it had helped create the impression that central banks were "the only game in town".

"Central banks can only do certain things," he said at the World Economic Forum in Davos, Switzerland. "Deeper issues are still there."

The Fed has indicated it intends to keep buying assets such as Treasuries in order to stimulate the economy until the labor market improves "substantially."

But even though economists predict unemployment will still be at 7.5% at the end of this year, little improved from the current 7.8% rate, they are divided on whether the Fed will stop its purchase program this year.

Weber said U.S. debates about the fiscal cliff and debt ceiling were backward. Rather than viewing the ceiling as a limit on borrowing and a requirement to find ways to bring down debt, the focus seemed to be on how to increase it

Related: Bernanke won't be back in 2014, say economists

The House of Representatives is expected to vote Wednesday on a Republican bill that would let the Treasury Department borrow new money until mid-May. President Obama will not oppose the bill, even though he would prefer a longer term debt ceiling increase, the White House said.

"This is just buying time," Weber said. "We are now living at the expense of future generations -- that's not a long-term sustainable solution."

The deal Congress struck on Jan. 1 to avert the fiscal cliff postponed difficult decisions on the debt ceiling, a series of automatic spending cuts and a 2014 budget resolution.

Central banks in the U.S., Europe and Japan have spent trillions buying government bonds to keep interest rates low and promote lending to businesses and households. Some central bankers have argued that quantitative easing is reaching the limit of its effectiveness.

"Going forward (central banks) have to answer the bigger question of how they will orderly exit from where they are now," Weber said.

First Published: January 23, 2013: 6:56 AM ET

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Tech earnings lift stocks

Click chart for more markets data.

NEW YORK (CNNMoney)

The Dow Jones Industrial Average, the S&P 500, and the Nasdaq edged up between 0.1% and 0.5%, the day after both the Dow and S&P hit new 5-year highs.

Investors were encouraged by tech earnings released late Tuesday, after IBM (IBM, Fortune 500) and Google (GOOG, Fortune 500) both reported earnings that topped forecasts.

US Airways (LCC, Fortune 500) added to the enthusiasm when it reported earnings Wednesday morning that beat forecasts. Shares of McDonald's (MCD, Fortune 500) ticked down slightly though after the company warned that same-store sales could fall in January. Its earnings did top estimates, however.

Investors are now waiting for Apple (AAPL, Fortune 500) and Netflix (NFLX), which are scheduled to report quarterly results after Wednesday's close.

Related: Microsoft buying a chunk of Dell would be smart (for Microsoft)

Apple has been under pressure recently amid concerns about waning iPhone sales. Expectations for earnings vary widely, but many forecasters expect Apple to report a drop in profit for the first time in 9 years.

Overall, S&P 500 companies are expected to report earnings growth of 3.8% for the last three months of 2012, according to S&P's Capital IQ.

Still not all earnings reports have been positive. Luxury retailer Coach (COH)disappointed investors. Revenue missed forecasts and Coach said holiday sales were "challenging." Shares fell more than 15%.

Investors are also keeping an eye on the World Economic Forum in Davos, Switzerland, where business and political leaders have gathered to discuss economic issues. JPMorgan Chase (JPM, Fortune 500) Chief Executive Jamie Dimon, who attended the event Wednesday, apologized again to shareholders for trading losses the bank suffered on credit derivatives last year, although he said "life goes on."

U.S. stocks finished higher Tuesday.

Related: Fear & Greed Index moves deeper into extreme greed

European markets were mixed in afternoon trading, while Asian markets ended mostly flat, with the exception of the Nikkei, which slumped 2%.

The dollar was also lower versus the yen and the British pound, but flat against the euro.

Oil and gold prices edged lower.

The price of the 10-year Treasury increased slightly, pushing the yield down to 1.83% from 1.84%.

First Published: January 23, 2013: 9:49 AM ET

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11 EU states to introduce tax on stock trades

DAVOS, SWITZERLAND (CNNMoney)

The countries planning to introduce the tax include the eurozone's top four economies, Germany, France, Italy and Spain. Austria, Estonia, Belgium, Greece, Portugal, Slovakia and Slovenia are also on board. The group of states decided to move ahead after attempts to adopt a trading tax at the EU and eurozone-wide level failed in 2011.

The United Kingdom, Europe's leading financial center, will not adopt the new levy and abstained during the vote, along with Luxembourg, the Czech Republic and Malta.

Many eurozone governments are desperate to identify new sources of revenue to plug holes in their budgets, made larger by the recession, without placing further burden on individuals. They also face popular pressure to ensure the banking industry pays a bigger share of the cost of dealing with the economic fallout of the financial crisis.

The tax could raise more than €37 billion, and up to €57 billion if applied across the EU as a whole. Such levies are often dubbed "Tobin taxes" after Nobel Prize winning economist James Tobin, who proposed taxing foreign exchange transactions in the 1970s to curb speculation.

But some nations are worried that the tax will drive investors away and act as a brake on economic growth. It also risks opening up new divisions in the EU just as the eurozone looks to cooperate more closely in fiscal, monetary and banking policy to build stronger foundations for the euro currency.

Officials at the European Commission will now come up with ways of implementing the tax, based on a 2011 proposal that called for a minimum levy of 0.1% on trading in all financial instruments, except derivatives which would incur a rate of 0.01%.

"Those who want to move ahead, and who appreciate the merits of working more closely on taxation at EU-level, can do so," said European tax commissioner Algirdas Semeta. "This is a highly significant and very welcome advance."

Semeta hailed the first adoption of a financial transaction tax at a regional level.

But it also marks the first time the EU has pushed ahead with a tax measure without the support of all its members. States can cooperate on legislation provided at least nine member states participate, the measure gains the support of a majority of states and others can join at a later date.

First Published: January 22, 2013: 9:39 AM ET

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Only half of Verizon iPhone sales were iPhone 5

There were long lines at Verizon stores when the iPhone 5 launched, but only half of all Verizon iPhone sales in the fourth quarter were of the new device.

NEW YORK (CNNMoney)

Supply constraints plagued the iPhone 5 during the quarter, particularly in the first two months, when many eager subscribers were hoping to upgrade. The steep $100 and $200 discounts on Apple's older devices, the iPhone 4S and iPhone 4, also likely influenced buying decisions.

Verizon (VZ, Fortune 500) said it sold 6.2 million iPhones -- about 48% more than the company sold a year ago. But just 3.1 million were the iPhone 5.

Analysts at Wall Street firm Monness Crespi & Hardt lowered their share price target for Apple on the news, saying that 50 million overall iPhone sales for the quarter -- Wall Street's consensus -- would now be a "positive surprise."

Apple (AAPL, Fortune 500), which will report its quarterly results on Thursday, does not break out different iPhone versions when reporting sales. The tech giant does, however, hint at how well the new version is selling by providing its average iPhone sales price.

The iPhone still remains the device of choice for customers with two-year contracts on Verizon, Sprint (S, Fortune 500) and AT&T (T, Fortune 500). The nation's largest wireless company said the iPhone made up nearly two-thirds of its smartphones sales last quarter.

All iPhone models carry an upfront subsidy that costs Verizon hundreds of dollars per device -- significantly more than the subsidies for rival smartphones. Because of that cost, Verizon said it recorded a wireless service profit margin of just 41.4% for the quarter, by far its lowest in years.

The company said it expects wireless margins to average between 49% and 50% for all of 2013. That huge comeback will be fueled by the 5 million net new customers Verizon added in 2012 and strong profit growth from its new "Share Everything" plans, which require users to pay per gigabyte. Verizon also said its expenses will fall significantly in 2013 as the rollout of its 4G network winds down.

The company said Hurricane Sandy cost it $200 million during the quarter, $135 million of which was devoted to the recovery effort. Verizon said in the storm's aftermath that its financial impact would be "significant."

First Published: January 22, 2013: 10:05 AM ET

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Wall Street's $11 billion windfall from fiscal cliff deal

Wall Street scored the extension of a lucrative tax break in the fiscal cliff deal.

WASHINGTON (CNNMoney)

Among the myriad of sweeteners in the deal was a break that helps Wall Street banks and giant companies such as General Electric lower their tax bills. The break costs taxpayers a total of $11 billion in 2012 and 2013.

Corporations typically face a 35% federal income tax, although many end up never paying that amount. While the companies that sell things overseas can defer taxes of profits from those items, financial services companies can't do that because of the nature of their business.

So they get what's called an "active financing exemption" that allows them to defer U.S. taxes on overseas profits on financial transactions.

"Active financing exemption puts financial services headquartered in the United States on a level playing field with international competitors and other U.S. businesses that have major foreign operations," said Payson Peabody, tax counsel at the Securities Industry and Financial Markets Association, a lobbying group for financial brokerage firms.

Related: Estimating your new taxes: It's worse than you think

But, to critics, active financing exemption is the poster child for offshore tax loopholes. They call it an undeserved taxpayer gift to Wall Street.

"It allows them to play games and move profits offshore to avoid paying taxes," said Rebecca Wilkins, a federal tax policy expert for the left-leaning Citizens for Tax Justice.

During the 2009 and 2010 tax years, the active financing exemption was a key reason behind conglomerate General Electric (GE, Fortune 500)'s zero tax bill, experts say.

"We are pleased that Congress has acted to keep in place the longstanding provision for taxing global finance income for an additional two years," said GE spokesman Seth Martin in a statement.

It plays such a big role in reducing taxes that many big companies, such as Citigroup (C, Fortune 500), Goldman Sachs (GS, Fortune 500), Bank of New York Mellon (BK, Fortune 500), American Express (AXP, Fortune 500), Bank of America (BAC, Fortune 500)'s Merrill Lynch and GE, have warned in public filings that their tax bills could go up "significantly" should the tax break go away.

These companies have spent millions on lobbyists to defend it over the last 16 years. In fact, Wall Street banks banded together to create their own lobbying effort calling it the Active Finance Working Group. The group spent $1.19 million since May 2009 solely on this tax break, according to Senate records.

Congress, with the blessing of the White House, decided to extend the break.

In Washington, it's no big surprise, as the tax break has been extended every one or two years since 1997, after a 10-year hiatus. Groups that represent Wall Street say it's no special break -- it should be in the code permanently.

The Senate Democrat who runs the Budget panel has sponsored a bill to make the tax break permanent. And the Obama administration has long had the Wall Street tax break for active financing on its wish list of those to be extended, even if only for a year.

First Published: January 22, 2013: 10:07 AM ET

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Carriers brace for a nasty quarter

NEW YORK (CNNMoney)

It sounds backwards, but the more smartphones carriers sell, the worse their profit margins get. The new phone you buy for $199 costs your carrier two or three times as much when they buy it from the manufacturer. They pay the heavy upfront subsidy to get you hooked on a long-term contract. The longer you hang on to your phone, the better their bottom line gets.

For the past two years, the earnings cycle went like this: Profit margins start rising in the first quarter, as smartphone purchases taper off after the holidays. The lift continues in the second quarter, then peaks in the third as rumors swirl about the new iPhone (it does your laundry!). Everyone holds out until October to get the gadget.

Wheeeeeeeee! Down we plunge as tens of millions of customers upgrade, generating record record sales for the carriers but devastating their profit margins.

This past quarter might have been the scariest roller-coaster drop of all time. Early reports from Verizon, AT&T and other cell phone companies show that smartphone sales were way better than expected, driven to record highs by the Apple's (AAPL, Fortune 500) iPhone 5.

AT&T (T, Fortune 500)said Thursday that it had sold 10.2 million devices during the quarter, and that its margins will experience pressure "due to the high subsidies on these devices."

Verizon said at this month's Consumer Electronics Show that it added a record 2.1 million net customers under contract. It activated 9.8 million smartphones last quarter, mostly iPhones. As a result, it forecasts that its its wireless service margin for the quarter will drop to a multi-year low.

The iPhone's subsidy typically runs about $400 per device -- the highest of any smartphone on the market. Citing heavy smartphone upgrades, Deutsche Bank lowered its earnings per share estimates on Wednesday by 25% for Verizon and 12% for AT&T.

But there are signs this roller coaster is about to stop -- or, at least, that the peaks and valleys won't be quite so dramatic.

The smartphone boom is approaching its end in the United States. The majority of Americans already have smartphones, and carriers are making upgrades more expensive and onerous. The pace of change is also slowing. The newest phone models offer only incremental improvements over their predecessors.

"The smartphone market, and particularly the iPhone market, will slow this year after very strong shipments of the next iPhone through year-end," said Kevin Smithen, an analyst at Macquarie Securities.

That's why Smithen estimates that Verizon's wireless service profit margin will fall by just two percentage points from the third to fourth quarters in 2013 -- much less than the expected nine-point sequential drop he thinks Verizon had during this past quarter. Verizon (VZ, Fortune 500) is scheduled to report its financial results on Tuesday.

For AT&T, Smithen predicts a seven point drop during 2013 holiday quarter, down from the 12-point plummet he forecasts for the fourth quarter of 2012. Sprint (S, Fortune 500), too, is expected to have a much more muted drop.

That's good news for the wireless carriers, but might not be such welcome news for consumers. They're eager for the next big thing to rev the roller coaster back up.

Wheeeeeeeee!

First Published: January 21, 2013: 6:39 AM ET

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PayPal: 'Aggressive changes' coming to frozen funds policy

NEW YORK (CNNMoney)

The eBay (EBAY, Fortune 500)-owned payments processor, like other financial companies, has policies in place to ensure that fraudsters aren't using its system to transfer ill-gotten gains. But PayPal also traps legitimate businesses and charities in its filters, and proving you're no scam involves a ton of paperwork and time.

PayPal says it's finally ready to deal with the problem. It's promising to roll out a massive overhaul of its system within the next several months -- but details are scant for now.

"These are not minor -- these are aggressive changes," said Anuj Nayar, PayPal's senior director of communications. "This is a fundamental shift in our business operations."

Nayar said he can't go into specifics about what will change, but transparency is a major focus. "We want to be clear about how people can get out of the [frozen funds] situation," he said. "We need to get better about helping people, or explaining why actions are being taken."

PayPal customers have complained for years about the Kafkaesque nightmare of trying to pry frozen funds loose.

The company routinely freezes funds for 21 days if it thinks there's a fraud risk, and its terms give it the right to extend the freeze for up to 180 days. To get access to their money, users are often asked asked to provide the kind of documentation that a product seller would have, like several months' worth of sales records. But if you're running a fundraiser or selling tickets to an upcoming conference, you don't have that paperwork.

Even for those with extensive paper trails, the appeals process can take months to resolve. The Web is filled with enraged blog posts, websites like paypalsucks.com, and a Tumblr called "Conferences Burned by PayPal."

Nayar first discussed PayPal's plan for "big changes" in a TechCrunch article posted last week, after science fiction author Jay Lake found his account frozen. Lake, who is battling advanced colon cancer, is raising money for an experimental genome-sequencing process.

Thanks to his own fame and the aid of friends like Neil Gaiman, Lake's fundraising effort went viral. Just five hours after launching his campaign, he had $20,000 in contributions. At about 4 p.m. Pacific time the next day -- January 11, a Friday -- Lake tried to transfer the funds into a bank account. Instead, he received an alert that his PayPal account was frozen.

"They wanted me to provide receipts, shipping information, business paperwork," Lake told CNNMoney. "That obviously didn't apply to me, but there was no way to bypass the process. I called, and they said appeals take 24 to 72 hours to get going. I asked, 'How I do prove I'm not conducting transactions?'"

After Lake fired off a sarcastic tweet at PayPal, his fans and famous friends lobbied for help. His account was restored by 6 p.m., and PayPal tossed in a corporate donation to Lake's fund.

"If it weren't for my small bit of fame, if I were the guy down the street, this could have taken months," Lake said.

Related story: 5 pay-by-phone apps tested

That's what happened to Brook Drumm, an entrepreneur who sells 3-D printers. After running a successful Kickstarter campaign, he launched an online store to sell his Printrbot machines. More than $100,000 rolled in.

"PayPal freaked out and froze our funds," Drumm said. "They needed references and bank statements and tax records. This went on for months. And even with all that paperwork, they still ended up holding $50,000. We finally got the money, but it was an untold amount of stress and sleepless nights."

Nayar, the PayPal rep, said the company can't comment on specific cases.

"We've made a commitment to be clearer with consumers on how they can get out of these situations," he said.

For example, the issue that Jay Lake faced -- being asked to mail in receipts and other paperwork that doesn't apply to fundraisers?

"We're fixing a lot of that," Nayar said. "At a minimum, the fact that someone needs to mail in something to an online payments company is a problem. 2013 is going to be the year that we fix a lot of those pain points."

It will take time, he cautioned. PayPal has multiple, complex security systems in place, and all of them need a fresh look.

Ironically, Lake understands better than most what PayPal is up against. As a sideline to his writing, Lake consults with financial institutions about their communications systems -- for example, the automated calls you receive when your credit card may be compromised. He's familiar with the fraud protection process, and he thinks PayPal's has plenty of room for improvement.

"There's a guilty until proven innocent bias to it, and that needs to change," he said.

PayPal can't afford to be complacent much longer. The field that it once monopolized is now full of competition: WePay, Square, Stripe and smartphone-based systems like Google Wallet are only a few of the up-and-coming rivals.

"We are committed to getting back to being the center of our customers' financial lives," PayPal's Nayar pledged. "Big changes are coming."

First Published: January 21, 2013: 6:44 AM ET

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