Feb 13 - Summary of business headlines: S&P flirts with new five-year high; Cisco tops forecasts; Media stocks rally after Comcast purchase of NBC Universal; Dr. Pepper Snapple warns; Retail sales subdued by taxes, gasoline. Conway G. Gittens reports.
A mixed verdict on Wall Street as parts of the market flirts with fresh multi-year highs, but other parts recede. The Dow drops 35 points and is back below 14,000, but the S&P 500 and the Nasdaq crossing the finish line with gains. The Nasdaq was helped by media related stocks, like Netflix, one-day after Comcast agreed to buy the 49 percent of NBC Universal it does not already own for nearly $17 billion. Comcast shares rallied 3 percent. Netflix gained 4.6 percent. Amazon, owner of the Kindle Fire tablet, jumped 4.1 percent. After the close, Cisco beat sales and profit forecasts. The drinks sector fizzled after Dr. Pepper Snapple warned full-year results won't live up to analysts' forecasts, due to higher raw material costs. Pepsi reports on Thursday. Total U.S. retail sales grew a scant 0.1 percent in January. A payroll tax and an unexpected surge in gasoline costs held back consumers. Muted spending means muted economic growth, which begs the question - why is the stock market approaching record highs? Milton Ezrati of Lord Abbett has this answer. SOUNDBITE: MILTON EZRATI, SENIOR ECONOMIST/MARKET STRATEGIST, LORD ABBETT (ENGLISH) SAYING: "The market was priced very low, bracing itself for disaster. We avoided the fiscal cliff, it looks like the European Union is going to hang together, these were all financial things that the market was braced for, and so people are returning to stocks less because they think there is a bright future, than just because some of their worst fears they had have been lifted." One unresolved fear - the debt showdown in Washington. Jack Lew, the White House pick for next Treasury Secretary -up on Capitol Hill to answer questions about mandatory spending cuts. SOUNDBITE: JACK LEW, TREASURY SECRETARY NOMINEE (ENGLISH) SAYING: "We also have to avoid doing anything to degrade our national security or derail the economic recovery through abrupt moves in the short term. That's why we cannot allow the series of harmful automatic spending cuts known as the sequester to go into effect. These cuts would impose self-inflicted wounds to the recovery and would put far too many jobs and businesses at risk." Across the board cuts go into effect in a matter of weeks, if no deal is reached. Finally, European markets up after thirst-quenching earnings from beer company Heineken.