June 19 - Summary of business headlines: A drop in housing starts lifts hope Fed will act to stimulate economy; Walgreen to become world's biggest buyer of prescription drugs with $6.7 billion stake in Europe's Alliance Boots; FedEx beats forecasts and guides fiscal year targets higher. Conway G. Gittens reports.
Wall Street powers ahead to a five-week high with investors willing to bet the Federal Reserve will pump more stimulus into the economy. Stocks gained around one percent ahead of Wednesday's Fed decision. A sharper-than-expected drop for May housing construction projected boosted hopes of Fed action. But upward revisions and a rise in permits for future building suggest a housing bottom is still in place. Walgreen, America's biggest drug store chain, is on track to become the world's biggest buyer of prescription drugs. The retailer is paying $6.7 billion for a 45 percent stake in Alliance Boots, the privately held parent of popular British pharmacy Boots. There's an option to buy the remaining stake in three years. The controversial part of the deal comes by way of the Alliance side, which is a major drug wholesaler across Europe. Investors are worried Walgreen is taking on exposure to Europe at the wrong time with the region gripped by a debt crisis. Shares of Walgreen were down nearly 6 percent. FedEx beat lowered forecasts and guided estimates higher for the fiscal year. Cost cutting is expected to deliver savings to the bottom line. While it admits international growth is not living up to diminished expectations, "Europe is actually performing very well through the crisis". Push back at G20. Nearly all of the focus is on the European debt crisis, but some officials like EU Commission President Jose Manuel Barroso seem to be fed up. SOUNDBITE: EUROPEAN COMMISSION PRESIDENT JOSE MANUEL BARROSO (ENGLISH) SAYING: "This crisis was not originated in Europe. Since you mention North America, this crisis was originated in North America and many of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market." As for financial markets in Europe stocks pushed to one-month highs even though Spanish bond yields remain painful. Conway Gittens, Reuters