11/17/2007

Hobby Lobby recalls Halloween baskets

Hobby Lobby Stores has recalled about 10,000 Halloween-themed baskets with emblems that have been painted with excess levels of lead, the U.S. Consumer Product Safety Commission released Friday.

A person at the Hobby Lobby in Salina, 2450 S. Ninth, declined comment.

The baskets, made in China, were sold at Hobby Lobby stores nationwide from August through November, for about a dollar.

Hobby Lobby's Web site recommended that buyers of the baskets keep them away from children and return them to the nearest Hobby Lobby store. They will receive $2 exchange card for every basket.

For information from Hobby Lobby, call 1-800-326-7931, or visit the firm's Web site www.hobbylobby.com

Fannie again draws scrutiny; stock sinks

WASHINGTON -- Fannie Mae's bookkeeping is drawing scrutiny from Wall Street -- again.

Three years after a stunning accounting scandal that forced it to restate earnings by $6.3 billion, the giant government-sponsored company that buys and sells home loans is on the defensive over a change in how it calculates potential losses from the growing mortgage crisis.

The fear among investors is that a new accounting methodology masks the number of bad loans held by Fannie, downplaying potential losses.

Shares of Fannie, the largest U.S. player in the market for mortgages that packaged into tradable securities, tanked for the second straight day on Friday, even as executives tried to assuage skeptical Wall Street analysts on a telephone conference call.

The stock, which fell $2.35, or 5.5 percent, to $40.69 percent, recovered from an earlier dive of more than 16 percent that brought shares to a 10-year low, following a 10 percent drop the day before. In bond markets, the risk premium on Fannie's debt -- what it costs to insure its mortgage-backed securities -- climbed.

Gas prices fall for first time in weeks

NEW YORK -- Gas prices fell slightly for the first time in weeks, raising doubts that pump prices would rise another 10 cents to 15 cents in coming weeks to catch up with skyrocketing crude prices, as some had thought.

Oil futures, meanwhile, rose Friday on investors' belief that supplies aren't as plentiful as a government report at first suggested.

The national average price of a gallon of gas dropped 0.3 cent overnight to $3.109, according to AAA and the Oil Price Information Service.

Dollar falls, gold rises in Europe

LONDON -- The U.S. dollar was mostly lower against other major currencies in European trading Friday. Gold fell.

The euro traded at $1.4632, up from $1.4612 late Thursday in New York. Later, in midday trading in New York, the euro fetched $1.4651.

Other dollar rates in Europe, compared with late Thursday, included 110.47 Japanese yen, up from 110.39; 1.1176 Swiss francs, down from 1.1228; and 0.9795 Canadian dollars, down from 0.9848.

The British pound was quoted at $2.0446, up from $2.0434.

In midday New York trading, the dollar bought 111.03 yen and 1.1173 Swiss francs, while the pound was worth $2.0477.

Gold traded in London at $789.90 per troy ounce, down from $792.40 late Thursday. In Zurich, gold traded at $787.45 bid per troy ounce, down from $788.70.

Silver traded in London at $14.51, down from $14.60.

Stocks end volatile day with comeback

NEW YORK -- Wall Street ended a volatile week with a late-day comeback Friday after investors set aside some concerns about the banking sector and the health of the overall economy.

Stocks began Friday's trading having fallen in six of the prior seven sessions as investors fretted about whether consumers would succumb to higher energy prices, rising mortgage costs and an anemic dollar. Continuing credit turmoil has also stirred concerns about the soundness of corporate balance sheets and profits. A sharp rally Tuesday was largely undone by subsequent pullbacks; on Friday, the market appeared headed to another down day before the major indexes, which had flip-flopped all day, turned higher in the last half-hour.

Financial stocks fell, partly due to a Fortune story that raised the possibility Fannie Mae could be masking the true magnitude of credit-related hits to its profits. Company executives defended a change in the way the largest U.S. buyer and backer of home loans calculates losses on home loans.

Giving investors further reason for worry, FedEx Corp. lowered its earnings expectations for the fiscal second quarter and full year and Starbucks Corp. slashed its earnings forecast for the fourth quarter after it reported traffic at stores open at least 13 months dropped by 1 percent.

But tech stocks saw gains. Investors have at times viewed technology companies as likely to fare better during an economic downturn than some groups such as retailers. Cisco Systems Inc., the world's largest network equipment company, said Friday it plans to repurchase an additional $10 billion in stock and an analyst upgraded Hewlett-Packard Co.

Meanwhile, rising oil prices gave a boost to energy names such as Exxon Mobil Corp. and ConocoPhillips.

"You can certainly come up with a list of the top 10 reasons why we should be down," said Art Hogan, chief market strategist at Jefferies & Co. in Boston. He contends the rally indicates the market was oversold.

"I think that's being clearly reflected as we rally into what otherwise would be considered negative catalysts."

The Dow Jones industrial average rose 66.74, or 0.51 percent, to 13,176.79

Broader stock indicators also recovered. The Standard & Poor's 500 index rose 7.59, or 0.52 percent, to 1,458.74. The Nasdaq composite index rose 18.73, or 0.72 percent, to 2,637.24.

Despite the gains in the major indexes, declining issues outnumbered advancers by about 6 to 5 on the New York Stock Exchange, where consolidated volume came to 4 billion shares compared with 3.81 billion traded Thursday.

The major indexes managed gains for the week, with the Dow rising 1.03 percent and the S&P 500 and the Nasdaq each adding 0.35 percent.

Government bond prices fell as stocks fluctuated. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.15 percent from 4.14 percent late Thursday. The dollar slipped against other major currencies, while gold prices rose.

Oil prices rose Friday amid expectations that global crude supplies will remain tight despite a U.S. oil inventory report that showed a surprising build in domestic crude stockpiles. Light, sweet crude rose $1.67 to settle at $95.10 on the New York Mercantile Exchange.

The economic news arriving Friday seemed to offer investors little incentive to bid stocks higher. Industrial production in October showed the sharpest decrease in nine months. The Federal Reserve said output at the nation's factories, mines and utilities fell by 0.5 percent last month -- a much weaker showing than had been expected. The reading revealed a big drop in utility output and continued troubles in sectors tied to automobiles and housing.

Friday's uneven trading followed a 120-point drop in the Dow on Thursday and didn't signal easing of long-simmering concerns about woes in the credit markets. In particular, investors are wondering whether financial companies are facing a further souring of loans and will be forced to write down more than the $45 billion seen in the third quarter and the approximately $30 billion companies have outlined for the fourth quarter.

Fannie Mae fell $2.35, or 5.5 percent, to $40.69 after falling 10 percent Thursday. Chief Financial Officer Stephen Swad said some of the $670 million in provisions for credit losses on soured home loans that Fannie Mae wrote off in the third quarter likely would be recovered.

Reports late Thursday said Residential Capital, the troubled mortgage lending arm of GMAC, was close to breaching bank loan covenants. The unit is operated by private equity fund Cerberus Capital Management and General Motors Corp., which may not step in with an infusion of additional capital, according to the Financial Times and The Wall Street Journal.

Other corporate news weighed on the markets. FedEx fell $4.57, or 4.5 percent, to $96.80 after lowering its forecast amid rising fuel costs and a troubled U.S. freight market. And Starbucks fell 93 cents, or 3.9 percent, to $23.17 after the coffee retailer reported its first-ever decline in traffic at stores open more than a year. The company also said it plans to slow the pace of U.S. store openings.

The strength in technology and energy stocks lent some support to stocks. Cisco rose 64 cents, or 2.2 percent, to $29.94 after saying it would expand its stock buyback program to $62 billion. H-P gained after Morgan Stanley raised its rating on the largest maker of printers to "overweight" from "equal weight." The stock rose $1.85, or 3.8 percent, to $50.75.

And Exxon rose 61 cents to $85.10, while ConocoPhillips advanced 89 cents to $78.93.

As Friday's flip-flops would suggest, uncertainty remains a big force on Wall Street. Four of the previous five sessions had seen selloffs in the final hour of trading.

The Russell 2000 index of smaller companies fell 2.10, or 0.27 percent, to 769.50.

Overseas, Britain's FTSE 100 fell 1.08 percent, Germany's DAX index fell 0.71 percent, while France's CAC-40 shed 0.61 percent. In Asia, Japan's Nikkei stock average fell 1.57 percent and Hong Kong's Hang Seng index fell 3.95 percent.

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The Dow Jones industrial average ended the week up 134.05, or 1.03 percent, at 13,176.79. The Standard & Poor's 500 index finished up 5.04, or 0.35 percent, at 1,458.74. The Nasdaq composite index ended up 9.30, or 0.35 percent, at 2,637.24.

The Russell 2000 index finished the week down 2.88, or 0.37 percent, at 769.50.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended Friday at 14,727.28, up 17.99 points, or 0.12 percent, for the week. A year ago, the index was at 14,090.95.

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