The Daily Intelligencer from Doylestown, Pennsylvania • Page 22

Dow Jones 12,501.11 SAP 500 1,380.95 NASDAQ 2,417.59 Wednesday, January 16,2008 www.phlllyburltt.com/lnten Citigroup reports $10B loss THE ASSOCIATED PRESS NEW YORK Bad bets on mortgages drove a $10 billion loss for Citigroup Inc. in the last three months of 2007, the worst in its 196-year history, adding to a wave of weak economic data pointing toward a recession. The nation's largest bank also announced Tuesday it had cut 4,200 jobs and slashed its dividend, and the poor performance forced Citi to turn to foreign investors for an infusion ofcash. citigroupj The news helped drag the Dow Jones industrial average down more than 277 points and wiped out almost $10 billion in market value in Citi- group stock alone. Shares in the bank skidded 7 percent to a new five-year low.

The biggest hit came from a $19.1 billion writedown in the value of the bank's investment portfolio. But it also set aside $4 billion Tuesday to cover anticipated losses on loans to U.S. consumers a sign that deflated home prices, high energy and food costs and rising unemployment are making it difficult for many customers to keep up with their payments. In other business news: Oil prices fall sharply NEW YORK Oil futures dropped sharply Tuesday as a dismal retail sales report confirmed a growing view among investors that the economy is slowing and that demand for energy is likely to fall. Investors who have already been selling heavily on concerns about a weak economy dumped contracts again after the Commerce Department said retail sales fell by 0.4 percent in December.

Light, sweet crude for February delivery fell $2.30 to settle at $91.90 a barrel on the New York Mercantile Exchange. Justices rule against Investors WASHINGTON The Supreme Court ruled Tuesday against investors who sue businesses that help manipulate stock prices of publicly traded companies. In a 5-3 decision that split along conservative-liberal lines, the court gave a measure of protection from securities lawsuits to suppliers, banks, accountants and law firms that do business with corporations engaging in securities fraud. The ruling comes at a pivotal point for a similar class- action lawsuit covering more than a million shareholders who invested in scandal-ridden Enron Corp. Stockholders in Enron, once the nation's seventh-largest company, are seeking more than $30 billion from Wall Street investment banks, alleging they schemed with Enron to hide its financial problems.

Grammy show Is threatened LOS ANGELES The striking Hollywood writers guild likely will bar its members from working on next month's Grammys telecast, a union spokesman said Tuesday. Grammy organizers have yet to ask for a waiver allowing writers to work on the show and if requested, "it is unlikely to be granted," Writers Guild of America spokesman Gregg Mitchell said. Mortgage lender to lay off 2,400 LOS ANGELES Mortgage lender IndyMac Ban- corp Inc. said Tuesday it will slash its work force by 24 percent, laying off 2,403 employees in a bid to cut costs as it tries to weather the worsening housing slump and sagging demand for home loans. Retail sales take a dive Retail sales Total monthly retail sales, seasonally adjusted $382.9 BY MARTIN CRUTSINGER THE ASSOCIATED PRESS WASHINGTON Consumer spending, the critical bulwark that has kept the country out of a recession, is showing signs of cracking.

Retail sales plunged by 0.4 percent last month as consumers battered by a sinking housing market, rising unemployment and the credit crunch, handed retailers their worst Christmas in five years. The Commerce Department's sales report Tuesday was just the latest in a string of weaker-than- expected numbers that have economists worried that the current economic expansion, now in its seventh year, could be in danger of faltering. Analysts said the worry is that all the problems weighing on the economy could prompt consumers who account for two- thirds of economic activity to sharply limit or even stop shopping. Already, consumer confidence has slipped significantly amid the oil price spiral and the continuing housing slump. At the same time, some of the nation's biggest financial institutions have reported billions of dollars in losses stemming from a meltdown in the mortgage market.

"There is certainly enough out there to make people worry," said David Wyss, chief economist at Standard Poor's in New York. "We think we are getting very close to a recession." That view was echoed by former Federal Reserve Chairman Alan Greenspan, who said the country may already be in a downturn. "The symptoms are clearly there," he said in a Wall Street Journal interview published Tuesday. "Recessions don't happen smoothly. They are usually signaled by a discontinuity in the market place and the data of recent weeks could very well be characterized in that manner." Even before the problems with December retail sales, businesses were seeing inventories rise, including a 0.4 percent increase in November.

An unwanted rise in inventories can translate into future production cutbacks by factories. A key gauge of manufacturing activity gave a recession reading earlier this month, falling to its lowest level in five years. In other news Tuesday, the Labor Department said that wholesale inflation, which had shot up in November by 3.2 percent, the largest amount in 34 years, actually dipped by 0.1 percent in December. That reflecting a big drop in energy costs at the time. However, for all of 2007, wholesale prices rose by 6.3 percent.

It was the biggest annual increase in 26 years. Analysts said the dip in wholesale prices for the month of December, if followed by a benign report today on consumer prices, should give the Federal Reserve the leeway it needs to more aggressively attack the economic slowdown Apple unveils super-slim laptop The new computer is less than an inch thick. BY MAY WONG AND JORDAN ROBERTSON THE ASSOCIATED PRESS AN FRANCISCO Apple Inc. Chief Executive Steve Jobs took the wraps off a super-slim new laptop at the Macworld trade show on Tuesday, unveiling a personal computer less than an inch thick that turns on the moment it's opened. Jobs also confirmed the consumer electronics company's foray into online movie rentals, revealing an alliance with all six major movie studios to offer films over high-speed Internet connections within 30 days after they're released on DVD.

Always a showman, Jobs unwound the string on a standard-sized manila office envelope and slid out the ultra-thin MacBook Air notebook computer to coos and peals of laughter from fans at the conference. At its beefiest, the new computer is 0.76 inches thick; at its thinnest, it's 0.16 inches, he said. It comes standard with an 80-gigabyte hard drive, with the option of a 64GB flash- based solid state drive as an upgrade. The machine doesn't come with a built-in optical drive for Jeff Press Apple PJEO Steve Jobs holds up the new MacBook Air after giving the keynote address at the Apple MacWorld Conference in San Francisco on Tuesday. The super-slim laptop turns on the moment it's opened.

reading CDs and DVDs, a feature Jobs says consumers won't miss because they can download movies and music over the Internet and access the optical drives on other PCs and Macs to install new software. They can buy an external drive, however, that will retail for $99. Trading in Apple stock was heavy Tuesday, the first day of the Macworld Conference Expo in San Francisco. Shares fell $9.74, or 5.5 percent, to close at $169.04. Caris Co.

analyst Shebly Seyrafi said the MacBook Air's price tag "may have been higher than people would have hoped for." Investors also may be "incrementally" concerned that Apple's iPhone was not updated so that it can connect to faster cellular networks, he said. The new laptop, which has a 13.3-inch screen and full-sized laptop keyboard, will cost $1,799 when it goes on sale in two weeks, though Apple is tak- ing orders now. The company's Web site is already touting the machine. The price is competitive with other laptops in its market segment. The machine helps fortify Apple's already-sizzling Macintosh product lineup and burnish its polished image as a purveyor of cool.

Apple's Macintosh business hit record sales of 7 million units in the company's fiscal 2007, up more than 30 percent from the previous year. DJFMAMJJASONO 2006 2007 SOURCE: Department ot Commerce AP with interest rate cuts. Federal Reserve Chairman Ben Bernanke last week sent a strong signal that the central bank is more worried at the moment about weak growth than inflation, prompting markets to believe the Fed will cut a key interest rate by a half- point when Fed officials meet at the end of this month. CBO likes stimulus proposals WASHINGTON (AP) Economic stimulus proposals favored by Democrats, including tax rebates, extended unemployment benefits and a temporary increase in food stamps are cost- effective ways for Congress to try to boost the economy, the Congressional Budget Office said Tuesday. At the same time, CBO said, some options floated by Republicans such as extending President Bush's tax cuts, cutting corporate tax rates and giving businesses new incentives to invest may be less cost-effective in the short term.

The nonpartisan CBO echoed the views of many economists who say the most effective way to stimulate the economy is to provide money either through tax cuts or direct payments such as food people most likely to spend it quickly. The study should provide fuel for the stimulus debate already consuming lawmakers. It said lump-sum tax rebates like the $300-600 rebates delivered to taxpayers seven years ago are among the more cost-effective ways for Congress to jumpstart the economy, though CBO cautioned that rebates are more effective when given to middle- and lower-income taxpayers more likely to spend it. CBO also gave high marks to cash payments to the poor and the unemployed. Dow falls 277 points on recession fears BY JOE BEL BRUNO THE ASSOCIATED PRESS NEW YORK A growing conviction that the U.S.

is headed toward recession sent Wall Street plunging Tuesday, with weak retail sales figures and disappointing results Citigroup Inc. exacerbating investors' pessimistic mood. The Dow Jones industrials tumbled nearly 280 points. Investors backed away from stocks amid growing concerns that consumer spending will wane and contribute to an economic downturn. The latest evidence that consumers are retrenching came from the Commerce Department, which said retail sales fell in December while it also revised its November figures lower.

Spending by consumers, which accounts for more than two-thirds of U.S. economic activity, has been key to staving off economic slowdowns in recent years. There is also a growing fear that the Federal Reserve hasn't done enough to keep the economy going especially as investors continue to see the fallout from the summer's subprime mortpge crisis. Citigroup, the nation's biggest bank, announced on Tuesday a hefty $18.1 billion write-down for bad mortgage assets and slashed its dividend. Fourth-quarter earnings reports aren't helping matters.

After the close of the market Tuesday, Intel world's largest chip maker, posted results below projections; the company is seen as a leading indicator for the rest of the tech sector, and other companies as well. Brian Gendreau, investment strategist for ING Investment Management, said the market is now seeing "a decisive shift" toward a recession. "The sectors that are outperforming are defensive plays, like consumer staples," he said. "People don't buy them unless you're worried about sustained weakness." Investors have sold stocks sharply lower so far this year on increasing worries about the economy. The Dow fell 277.04, or 2.17 percent, to 12,501.11, the latest in a string of triple-digit slides.

stock indicators also lost ground. The Standard Poor's 500 index dropped 35.30, or 2.49 percent, to 1,380.95, and the Nasadaq composite index lost 60.71, or 2.45 percent, closing at 2,417.59. Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where consolidated volume came to 4.42 billion shares, compared to 3.51 billion on Monday. FDA OKs food from cloned animals BY LAURAN NEERGAARD Till- ASSOCIATED PRESS WASHINGTON Just over a decade after scientists cloned the first animal, the last major barrier to selling meat and niilk from clones has fallen: The U.S. government declared this food safe Tuesday.

Now, will people buy it? Consumer anxiety about cloning is serious enough that several major food companies, including the big dairy producer Dean Foods Co. and Smithfield Foods say they aren't planning to sell products from cloned animals. And the industry says most Americans would never eat a cloned animal for sheer economic reasons: At $10,000 to $20,000 per cloned cow compared with $1,000 for an ordinary steer they're too valuable. They would be used primarily for breeding, to produce a steady supply of cattle that are particularly tender, for instance, or for prize dairy cows. It would be offspring of clones that consumers would eat.

But it will be hard to tell which foods dp contain ingredients originating from cloned animals. The Food and Drug Administration ruled that labels won't have to reveal whether the food comes from cloned cows, pigs or goats, or the clones' offspring, because those ingredients are no different than meat or milk from livestock bred the old-fashioned way. "We found nothing in the food that could potentially be hazardous. The food in every respect is indistinguishable from food from any other animal," FDA food safety chief Dr. Stephen Sundlof said.

"It is beyond our imagination to even find a theory that would cause the food to be unsafe." Still, the government asked producers to continue a voluntary moratorium on sales of meat or milk from clones for a Hide longer, for marketing reasons. a cloned calf, stands near her surrogate mother in a pasture outside of Austin, Texas..