Feb 05 - Summary of business headlines: Walt Disney beats forecast thanks to improvement in its broadcast TV networks; Zynga outlook a zinger; Dell goes private; DOJ launches $5 billion lawsuit against S&P; Stable growth in U.S. services sector. Conway G. Gittens reports.
Wall Street followed up the biggest loss of the year with the third biggest gain of the year thanks to earnings from cosmetics firm Estee Lauder. The Dow closed just shy of a triple-digit rally. The S&P 500 regained the 1500 and the Nasdaq clawed back 40 points. After the bell, Dow component Walt Disney topped sales and profit forecasts. Income from its cable business was down as costs for sports programming at its ESPN unit rise, but that was offset by a jump at the broadcast division. Revenues from the parks segment were strong enough to compensate for a drop in business at its studios. Zynga results were not as bad as feared but the social gaming company gave an outlook for the current quarter that needed an extra life. Dell officially announced its plans to go private in the biggest leveraged buyout deal since the recent financial crisis. Founder Michael Dell led the charge with help from Microsoft and private equity firm Silver Lake Partners. Shares of the world's No. 3 computer maker rose on the $24.4 billion deal, a 24% premium from the share price before the move was announced. The Justice Department outlined a $5 billion civil lawsuit against Standard & Poor's accusing the ratings service of defrauding investors leading up to the mortgage meltdown. Shares of McGraw Hill slumped another 11 percent one day after the steepest fall since the 1987 crash. And in economic news- the services sector extended a three-year expansion. The Institute for Supply Management's non manufacturing index was down slightly, but at 55.2 still showed growth in January. In Europe, all arrows up on the major indexes as signs of economic recovery in the euro zone.