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Wall St. ends best year since 1990s with moderate gains

NEW YORK (Reuters) – Stocks closed out their best year in more than 15 on Tuesday, with major indexes advancing throughout 2013 on the back of the Federal Reserve’s massive stimulus and expectations for accelerating growth going forward.

Wall Street ended 2013 with its positive momentum intact, advancing in its final trading day of the year on the back of positive consumer confidence data.

The SP 500 rose 29.6 percent over the year, its best annual performance since 1997, while the Dow climbed 26.5 percent in its best year since 1995. The Nasdaq jumped 38.3 percent, its best year since 2009.

Both the Dow and the SP 500 finished the final trading day of 2013 at record closing highs.

In a sign of improving sentiment, the CBOE Volatility Index .VIX or VIX fell 23.9 percent over the year, the biggest annual drop for the so-called “fear index” since 2009.

All 10 SP 500 sector indexes ended the year with gains as investors rode the Fed’s extraordinary stimulus in a year that had only the slightest of hiccups. Wall Street even weathered a partial shutdown of the U.S. government, as well as the recent announcement that the Fed would trim its monthly bond purchases in response to an improving economic picture.

“This has been a terrific year, with all the concerns we had in January (2013) proving unfounded, and with current economic growth giving us a strong outlook for 2014,” said John Carey, portfolio manager at Pioneer Investment Management in Boston.

Trading volume was once again light in U.S. markets, which will be closed Wednesday for the New Year’s holiday. Still, investors found reasons to buy after a read on consumer confidence rose more than expected in December.

The SP/Case-Shiller composite index of home prices in 20 metropolitan areas gained 0.2 percent in October from September, but posted the strongest annualized gain in October in more than seven years.

“There’s been a generally positive trend to news, including the confidence report, which bodes well for conditions next year and gives us really no reason to sell,” said Carey, who helps oversee $220 billion in assets.

About 63 percent of stocks traded on the New York Stock Exchange closed higher for the day, while 55 percent of the shares traded on the Nasdaq ended in positive territory.

The Dow Jones industrial average .DJI gained 72.37 points, or 0.44 percent, to end at 16,576.66. The Standard Poor’s 500 Index .SPX advanced 7.29 points, or 0.40 percent, to finish at 1,848.36. The Nasdaq Composite Index .IXIC rose 22.39 points, or 0.54 percent, to close at 4,176.59.

The Dow also touched an all-time intraday high of 16,588.25 on Tuesday, while the SP 500 set a record intraday peak of 1,849.44.

In the fourth quarter, the Dow rose 9.6 percent, the SP 500 gained 9.9 percent and the Nasdaq climbed 10.7 percent. In December alone, the Dow advanced 3 percent, the SP 500 rose 2.4 percent and the Nasdaq shot up 2.9 percent. It was the fourth straight monthly rally for all three.

Gains in the year were led by consumer discretionary stocks, with the sector index .SPLRCD up 40.4 percent. The sectors with the slimmest gains of the year – telecom .SPLRCL, which rose 6.6 percent, and utilities .SPSMCU, up 16.5 percent – are both considered defensive groups.

Among specific names, Netflix Inc (NFLX.O) was the SP 500’s biggest gainer, soaring 295.6 percent. Newmont Mining (NEM.N) was the index’s biggest loser, falling 50.6 percent in 2013. Only 38 stocks in the SP 500 ended the year in the red.

Few investors expect 2014 to deliver the same scale of returns. According to the most recent Reuters equity poll, the SP 500 is seen rising to 1,925 by the end of 2014, which represents an upside of 4.1 percent from current levels.

In the corporate arena, Hertz Global Holdings Inc (HTZ.N) surged 10.5 percent to close at $28.62 after the company said it had adopted a one-year shareholder rights plan in response to “unusual and substantial activity” it has observed in its shares.

Marvell Technology Group Ltd (MRVL.O) jumped 4.5 percent to end at $14.38 after private equity firm KKR Co LLP (KKR.N) reported a 6.8 percent stake in the chipmaker, according to a regulatory filing.

Twitter Inc (TWTR.N) broke its steep two-day losing streak, gaining 5.2 percent to close at $63.65. The stock’s price had tumbled 17 percent between Thursday and Monday.

About 4.31 billion shares traded on all U.S. platforms, according to BATS exchange data, well below the December average of 5.89 billion shares.

(Editing by Jan Paschal)

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Bombardier gets business jet order worth $2.2 billion

(Reuters) – Bombardier Inc (BBDb.TO) said on Tuesday it received a firm order from an undisclosed customer to buy 38 business aircraft in a deal valued at about $2.2 billion.

The Canadian plane maker said the order was for 28 Global business jets and 10 Challenger 605 jets.

Bombardier on Monday announced an order for 10 Challenger 350 business jets from an undisclosed customer in a deal worth about $259 million.

Shares of Bombardier closed at C$4.61 on the Toronto Stock Exchange on Tuesday.

(Reporting By Narottam Medhora in Bangalore; Editing by Maju Samuel)

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Target faces problems with gift cards sold over holidays

NEW YORK (Reuters) – Target Corp, which is dealing with one of the largest ever payment-data breaches in U.S. retail history, said on Tuesday that some of the gift cards it sold over the holiday season were not activated properly.

“We are aware that some Target gift cards were not fully activated and apologize for the inconvenience,” Target spokeswoman Molly Snyder said in an e-mail.

The third-largest U.S. retailer promised to honor the gift cards and said fewer than 0.1 percent of the cards sold during the busy season were affected.

Shoppers can bring the cards to the guest service desk at their local Target stores or call 1-800-544-2943 for assistance, Snyder added.

The news came less than two weeks after the company revealed that hackers had stolen data from up to 40 million credit and debit cards of shoppers who visited its stores during the first three weeks of the holiday season. Target’s consumer perception scores dropped to their lowest level since 2007 after the breach, a survey showed.

(Reporting By Dhanya Skariachan; Editing by Cynthia Osterman)

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Apple says never worked with NSA on iPhone hacks

SAN FRANCISCO (Reuters) – Apple Inc has never worked with the U.S. National Security Agency and is unaware of efforts to target its smartphones, the company said in response to reports that the spy agency had developed a system to hack into and monitor iPhones.

Germany’s Der Spiegel reported this week that a secretive unit of the NSA, which is under fire for the extent and depth of its spying programs around the world, makes specialized gear and software to infiltrate and monitor a plethora of computing devices, including mobile phones.


The report included an NSA graphic dated 2008 that outlined a system in development called DROPOUTJEEP, described as a “software implant” that allows infiltrators to push and pull and retrieve data from iPhones such as contact lists. Der Spiegel referred to it as a “trojan,” or malware that helps hackers get into protected systems.

The report, which surfaced on Sunday, did not suggest that Apple had cooperated with the U.S. spying agency on so-called backdoors.

In a statement issued Tuesday, the NSA did not comment on any specific allegations but said that its interest “in any given technology is driven by the use of that technology by foreign intelligence targets.”

“The United States pursues its intelligence mission with care to ensure that innocent users of those same technologies are not affected,” the agency added.

The iPhone was a relatively innovative gadget in 2008. It hit the market in 2007 and proceeded to help revolutionize the mobile phone industry.

“Apple has never worked with the NSA to create a backdoor in any of our products, including iPhone. Additionally, we have been unaware of this alleged NSA program targeting our products,” the company said in a statement.

“We will continue to use our resources to stay ahead of malicious hackers and defend our customers from security attacks, regardless of who’s behind them.”

(Reporting by Edwin Chan; Editing by Cynthia Osterman)

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Cohen’s SAC ends life as hedge fund with double-digit returns

BOSTON (Reuters) – Billionaire investor Steven A. Cohen’s SAC Capital Advisors is ending its life as a hedge fund with a 20.10 percent gain this year, marking one of the industry’s best returns even after SAC pleaded guilty to insider trading charges, a source familiar with the numbers said.

Cohen reported the number to outside investors on Monday as he prepares to stop managing money for wealthy clients after his firm last month agreed to plead guilty to insider trading and pay a $1.2 billion penalty. One of the conditions of the plea agreement is that Cohen must wind down the business of managing money for outside investors.

The fund said it gained a net 1.88 percent between December 1 and December 27, the source said.

A spokesman for the fund declined to comment.

The number, although not final for the year because it does not include returns made on the last two days of the year, puts SAC among the $2.5 trillion hedge fund industry’s best performers for 2013.

While the Standard Poor’s 500 Index has gained 29 percent this year, the average fund rose only 6.52 percent, according to data from Hedge Fund Research.

The returns, possibly the last that outside investors with Cohen will see, are sure to mark a high point in an otherwise tough year for SAC. The $1.2 billion fine SAC will pay is in addition to a $616 million settlement the firm reached earlier in the year with the U.S. Securities and Exchange Commission.

Cohen, 57, himself has never been accused of criminal wrongdoing. He does face charges of failing to properly supervise his employees in a civil case brought by the Securities and Exchange Commission.

As SAC, which managed $14 billion on July 1, prepares to become a so-called family office that will manage only Cohen’s personal fortune estimated at $9 billion, it has also shed personnel and its reinsurance unit. A handful of traders from its now shut London office have moved to rival BlueCrest.

Earlier this month SAC agreed to sell SAC Re, the year-old reinsurance group, to Hamilton Reinsurance Group.

For two decades, Cohen, 57, has delivered some of Wall Street’s best returns with average annual earnings of 30 percent. While Cohen charged some of the highest fees — including a 50 percent performance fee — his gains nonetheless attracted dozens of wealthy investors including the Blackstone Group. But the returns also sparked what has become a years-long government inquiry into exactly how Cohen and his traders managed to deliver such strong returns so consistently.

Earlier this month a federal jury convicted Michael Steinberg, one of Cohen’s top lieutenants, of insider trading, extending the U.S. government’s winning streak to convictions of 77 people and no trial losses.

The trial of Mathew Martoma, another former SAC portfolio manager charged with having relied on inside information to make $276 million in illegal profits, begins with jury selection on January 6.

(Editing by Jeffrey Benkoe and Bob Burgdorfer)

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Hewlett-Packard to cut 5,000 more jobs

(Reuters) – Hewlett-Packard Co said it would cut 5,000 more jobs, bringing the total number of layoffs to 34,000, or 11 percent of its workforce.

The company said in a regulatory filing on Monday that it would record a charge of $4.1 billion in 2014, up from its prior estimate of $3.6 billion. (

HP is striving to get back to growth through job cuts and focusing on businesses with longer-term potential such as enterprise services.

HP had estimated that it would cut about 29,000 jobs through fiscal year 2014.

The company had about 317,500 employees as of October 31.

Shares of the company were little changed at $27.92 on the New York Stock Exchange on Tuesday. The stock has gained 96 percent so far this year.

(Reporting by Soham Chatterjee; Editing by Don Sebastian)

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World indexes finish vintage year, more gains seen in 2014

NEW YORK (Reuters) – Stocks closed 2013 by setting record highs and world equity markets ended at six-year peaks on Tuesday, while benchmark bond yields posted their first annual rise since 2009.

Ultra-easy monetary policies and an improving economic outlook worldwide led to a stellar year for stocks. Equity strategists see the gains continuing into 2014 as economic growth improves even as the Federal Reserve steadily trims its bond-buying stimulus.

“This has been a terrific year, with all the concerns we had in January proving unfounded, and with current economic growth giving us a strong outlook for 2013,” said John Carey, portfolio manager at Pioneer Investment Management in Boston.

The SP 500 benchmark ended its best year since 1997 with a 29 percent gain. More than 450 of the stocks in the index ended the year higher, the most since SP started collecting that data in 1980. Japan’s Nikkei .N225 ended the year up 56.7 percent and European shares .FTEU3 gained 16 percent.

MSCI’s all-country world equity index .MIWD00000PUS was up 0.22 percent at 408.33, its highest level since late 2007. It has gained 20 percent this year.

The Barclays U.S. Aggregate Index of investment-grade bonds ended with its worst year since 1994, as interest rates rose in anticipation of reduced Fed stimulus and higher-yielding stocks attracted more investment flows.

Assets favored by investors in economic downturns took a beating in 2013, with falling prices driving top-rated U.S. and German bond yields to near their highest levels in around two years and gold limping toward its worst annual performance in three decades, losing more than 27 percent.

The yield on the U.S. 10-year Treasury note, which sets the standard for global borrowing costs, has risen to 3 percent from 1.75 percent at the start of the year, but is seen rising to only 3.35 percent in 2014. The 10-year note was yielding 3.02 percent on Tuesday.

The Dow Jones industrial average .DJI rose 72.37 points, or 0.44 percent, at 16,576.66. The Standard Poor’s 500 Index .SPX was up 7.29 points, or 0.40 percent, at 1,848.36. The Nasdaq Composite Index .IXIC was up 22.39 points, or 0.54 percent, at 4,176.59.

Reuters polls show European stocks are expected to hit new highs in 2014, while Chinese, U.S. and other major stock markets are also seen posting solid gains.

Emerging markets have been a noted exception to the rally in equities. MSCI’s EM Index .MSCIEF fell 5 percent in 2013 on worries that cuts in global monetary stimulus could expose economic imbalances and as funds return to the rich world.

Russian stocks .IRTS hit eight-day lows after two deadly attacks in less than 24 hours that raised security fears ahead of the Winter Olympics.


The euro ended 2013 close to its highest level in two years against the dollar. But a Reuters poll shows it is expected to reverse its upward trend next year as the continued soft stance of the European Central Bank contrasts with the Fed’s.

On Tuesday, the single currency inched down to $1.3756, still up more than 4 percent for the year. The dollar was slightly higher against the yen at 105.32, posting its biggest annual gain against the yen in 34 years, with the Japanese currency hit by the Bank of Japan’s money-printing.

The easing of the euro zone crisis and signs of a pick-up in economic activity even in the bloc’s weakest states have offered strong support to the euro and brought Italian and Spanish debt yields down to just over half their crisis peaks.

In the oil market, U.S. oil futures ended down 87 cents to $98.42. O/R

(Additional reporting by Laurence Fletcher and Richard Leong; Editing by Ruth Pitchford, Dan Grebler and Leslie Adler)

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Self-driving cars to be 9 percent of global auto sales in 2035: study

DETROIT (Reuters) – Sales of vehicles able to drive themselves will account for about 9 percent of global auto sales in about two decades, according to a forecast published on Tuesday by auto industry consultant IHS Automotive.

The study focused on autonomous cars, which can drive with “no attention needed by the driver,” IHS analyst Egil Juliussen said. Such cars are not currently available for sale, but IHS predicts they will be available around 2025.

IHS expects global sales of self-driving cars in 2025 to be 230,000 — less than 1 percent of the 115 million cars expected to be sold that year.

But by 2035, sales of self-driving cars will reach 11.8 million, or 9 percent of the 129 million global auto sales expected that year, said Juliussen.

Most of these sales will be in well-established auto markets like the United States, Western Europe and Japan.

The pace of growth for self-driving cars will exceed that of electric cars, which have been hobbled by the high cost of batteries, Juliussen said.

(Reporting by Deepa Seetharaman; Editing by Dan Grebler)

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China’s largest auto parts company makes last-minute Fisker bid

(Reuters) – China’s largest auto parts company made a surprise bid for Fisker Automotive just days before the bankrupt maker of the Karma plug-in hybrid sports car was to be sold to a Hong Kong tycoon, according to court documents.

Fisker creditors asked the U.S. Bankruptcy Court in Wilmington, Delaware, to scrap Fisker’s agreed sale to a company affiliated with Richard Li and instead hold an open auction at which auto parts supplier Wanxiang America Corp plans to bid.

Wanxiang has agreed to make an initial bid of $24.725 million and said it will assume some liabilities of Fisker, according to documents filed at late Monday’s deadline to object to Fisker’s plans.

A hearing has been scheduled for Friday in Wilmington to consider whether Fisker should proceed with the sale to the Li affiliate or adopt the creditors’ proposal.

The U.S. Bankruptcy Court judge overseeing the case, Kevin Gross, earlier this month raised concerns about Fisker’s rush through bankruptcy, which was filed only a month ago.

James Sprayregen, a Kirkland Ellis attorney who represents Fisker, did not immediately respond to a request for comment left with his office.

Wanxiang outbid Johnson Controls last year in a bankruptcy auction for most of the assets of A123 Systems Inc, which made batteries for Fisker’s cars.

“They are extremely capable and knowledgeable of the industry and know how to get things done,” said William Baldiga, a Brown Rudnick attorney who represents Fisker’s official creditors committee.

Both Fisker and A123 obtained green technology loans from the U.S. Department of Energy. Critics of the government’s loan program tried to get regulators to block the sale of A123 to Wanxiang, arguing that sensitive technology was being transferred to an economic rival.

Baldiga said he does not anticipate similar problems with the sale of Fisker’s assets, which he said are primarily related to automotive design.

Wanxiang plans to restart Fisker production as soon as April and eventually move the manufacturing from Finland to Michigan, according to Wanxiang’s presentation to creditors that was filed with the court.

The Chinese company estimated it would sell more than 1,000 Karma hybrids in the first 18 months in the United States and 500 in Europe. Fisker sold the Karma for more than $100,000 each. Wanxiang said in its presentation it could lower production costs, but did not suggest a price tag.

Fisker filed for bankruptcy in November, about a year after suspending production.

Fisker raised more than $1.4 billion in public and private funds after its founding in 2007, but lavish spending, quality and engineering blunders and other mistakes drained the company’s coffers and delayed the launch of its Karma plug-in hybrid, several people close to the company told Reuters earlier this year.

An entity affiliated with Li planned to buy the company after he paid $25 million for Fisker’s loan from the U.S. government. The Li affiliate planned to buy Fisker’s assets using not cash but a “credit bid” of $168 million owed on that loan, leaving other creditors such as suppliers with next to nothing.

The committee proposed an auction be held at the end of January and asked the bankruptcy court to bar Li’s affiliate from credit bidding more than the $25 million it paid for the government’s loan.

In addition to seeking an auction of Fisker’s assets, the creditors’ committee asked Gross, the Bankruptcy Court judge, for permission to sue former Fisker directors Li and David Manion, as well as Fisker co-founder Bernhard Koehler.

The committee alleges they steered the company away from a proposed sale to Wanxiang earlier this year and toward the plan to buy the government’s loan. The creditors are seeking damages of at least $25 million.

The creditors allegations follow a complaint filed Friday in Delaware federal court by Atlas Capital Management LP that accused the car maker’s founder, Henrik Fisker, and others of failing to disclose the company’s shaky finances to investors.

The creditors’ committee also sought to put the government loan now held by Li’s affiliate at the back of the line for repayment because the scheme by Li and Manion had harmed other Fisker creditors.

“As a proximate result of Manion’s breaches of fiduciary duty as alleged, the valuable assets of Fisker have been or will be stripped from the Debtors for the benefit of Manion, with a minimum value of $25 million,” said the committee complaint.

The case is In Re Fisker Automotive Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 13-13087

(Reporting by Tom Hals in Wilmington, Delaware; additional reporting by Deepa Seetharaman in Detroit; Editing by Chris Reese Editing by Leslie Adler)

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