Stocks rise on hopes for new bank plan

The Obama administration is close to a plan to buy bad assets from financial companies. The House votes today on the president's stimulus plan. Yahoo posts a loss but beats Wall Street's estimate. Target cuts jobs.

Financials are sparking a rally today, on hopes that President Barack Obama will move forward with a "bad bank" plan.

Under the plan, the government would buy the toxic assets weighing on financials' balance sheets to help get the credit markets flowing and give a lift to the troubled sector, CNBC reported late Tuesday.

Federal Deposit Insurance Corp. Chairwoman Sheila Bair is pushing to manage the plan, Bloomberg News reported. A plan could be announced as early as next week.
Stocks were higher on the news. At 11:35 a.m. ET, the Dow Jones Industrial Average was up 126 points to 8,301. The Nasdaq Composite Index had gained 43 points to 1,547, and the Standard & Poor's 500 Index added 20 points at 866.

Crude oil fell 48 cents to $41.10 this morning after tumbling more than $4 Tuesday to close at $41.58 a barrel.

Financials were jumping this morning. JPMorgan Chase (JPM, news, msgs) was up $2.41, or 9.6%, to $27.47; Citigroup (C, news, msgs) had added 71 cents, or 20%, to $4.26; and Morgan Stanley (MS, news, msgs) was up $2.15, or 11%, to $21.67.

The S&P Banking Index ($BIX.X, news, msgs) rose 17.1% as well.

Meanwhile, Obama has a big test today: The House of Representatives will vote on his $825 billion economic stimulus package. Obama has been courting Republicans in an effort for bipartisan support of his plan, but not all Republicans are convinced the plan will work.
"This Democrat bill won't stimulate anything but more government and more debt," Rep. Mike Pence, R-Ind., said Tuesday. "House Democrats (will) use a time of national crisis to fund big government priorities under the guise of stimulating the economy."

And the Federal Reserve will announce its decision on interest rates this afternoon. Economists expect the central bank to keep rates at the current levels of between 0% and 0.25%.

"The Fed's job is going to be to convince markets and the broader public that they can still support the economy . . . even with the funds rate at zero," said Al Broaddus, the former president of the Richmond Fed.

Wells Fargo, Boeing post results
Wells Fargo (WFC, news, msgs) shares were soaring $4.17, or 25.7%, to $20.36 this morning despite the bank's report of a net loss of $2.55 billion, or 79 cents per share, down from profit of $1.36 billion, or 41 cents per share, in the same period a year ago.

Wells Fargo said the loss was mostly due to its merger with Wachovia. Analysts had been looking for profit of 33 cents per share.

The bank said it will not take any more Troubled Assets Relief Program funds and will keep its quarterly dividend.

Meanwhile, Boeing (BA, news, msgs) this morning said it lost $56 million, or 8 cents per share, in the fourth quarter – down from a profit of $1 billion, or $1.36 per share, in the same period a year ago.

Boeing's results included charges related to its machinist strike, difficulties in its 747 program and a litigation issue. Analysts had been looking for earnings of 76 cents per share.

Boeing, a Dow component, said it will earn between $5.05 and $5.35 per share for 2009, shy of Wall Street's estimate of $5.76 per share.

The stock rose 62 cents, or 1.4%, to $43.84 this morning.

And AT&T (T, news, msgs), another Dow stock, reported a 23% drop in profit for the fourth quarter.

AT&T earned $2.4 billion, or 41 cents per share, down from $3.1 billion, or 51 cents per share, in the same quarter a year ago. Excluding items, the company earned 64 cents per share, a penny shy of estimates.

The telecommunications company said it added 2.1 million wireless subscribers in the quarter, including 1.9 million Apple (AAPL, news, msgs) iPhone subscribers.

AT&T shares fell 53 cents, or 2%, to $25.40 today. Apple shares were up $2.26, or 2.5%, to $92.99.

Wall Street bonuses take a dive
Wall Street lost billions in 2008, but New York bankers took home $18.4 billion in bonuses last year.
Still, cash bonuses paid to New York City employees of Wall Street firms fell 44% last year -- from the $32.9 billion executives took home in 2007 -- according to New York State Comptroller Thomas DiNapoli, who stressed the cuts' painful effect on the New York's economy.

"A 44% decline in the bonus pool will ripple through the regional economy and the state and the city will lose major tax revenues," DiNapoli said in a press release. "The securities industry has already lost tens of thousands of jobs and the industry is still continuing to write off toxic assets. It's painfully obvious that 2009 will probably be another difficult year for the industry."

Employment in the securities industry in New York City fell from 187,800 in October 2007 to 168,600 in December 2008, a loss of 19,200 jobs, or 10.2%, the comptroller's office said.
The average bonus declined by 36.7% to $112,000 last year.

Yahoo swings to a loss
Yahoo (YHOO, news, msgs) had a rough fourth quarter.

The Internet company late Tuesday reported a net loss of $303 million, or 22 cents per share, down from $206 million, or 15 cents per share, in profit in the same quarter a year earlier.
Excluding items, Yahoo earned 17 cents per share, topping Wall Street's estimate by 4 cents.
Shares rose 79 cents, or 7%, to $12.13 on the news.

Net revenue at Yahoo slipped 2% to $1.38 billion in the fourth quarter.

Yahoo said expects income from operations will be between $75 million and $85 million in the current quarter, far short of the consensus estimate $165 million.
"The marketplace is extremely difficult right now, we're still seeing strong growth in the search business, and display has slowed down, and I have no idea how advertisers will react over the next two or three quarters," Chief Financial Officer Blake Jorgensen said in an interview with Thomson Reuters.

One analyst was concerned about the outlook.

"This is pretty ugly," Sanford Bernstein analyst Jeffrey Lindsay, told MarketWatch.com. "They're trying to reset expectations as low as possible."

Yahoo CEO: 'Everything's on the table'
Comments from Yahoo Chief Executive Officer Carol Bartz could offer a little hope for investors who want Yahoo to be acquired or to sell its search business.

"If there's something to look at, we'll look at it," Bartz said on a conference call with analysts. "Everything's on the table."

But Bartz did not go quite so far as to talk about any sort of deal. In fact, Bartz tried to reel in any speculation about a sale by saying that she did not join Yahoo with a preconceived notion to do a search deal.

"I'm still learning about the business," Bartz said. "Search is a very valuable part of (the) business."

It's been a year since Microsoft (MSFT, news, msgs) first approached Yahoo and offered $31 per share for the company; Microsoft ended up walking away from a higher $33-per-share bid in May; Yahoo shares have since tumbled. (Microsoft is the publisher of MSN Money.)
Disappointed shareholders blamed then-CEO Jerry Yang -- whom Bartz replaced earlier this month -- for failing to secure the Microsoft deal and for letting an advertising partnership with Google (GOOG, news, msgs) fall apart.

"I think there's a 100% chance they'll have meaningful conversations," Tom Wilde, CEO of video search company EveryZing, told Fortune, referring to Yahoo and Microsoft. "In terms of something meaningful actually happening, I would put that at about 70%."

Microsoft most recently has said it does not want to purchase all of Yahoo but would still be interested in its search business.

Target cuts jobs
Target (TGT, news, msgs) late Tuesday followed in what's become a long line of companies announcing layoffs.

The discount retailer said that it plans to cut its work force by approximately 9%, which would eliminate about 1,000 jobs.

The current plan includes eliminating 600 jobs and 400 open positions, primarily in the Minneapolis/St. Paul area. Most of the layoffs occurred Tuesday.

The company also said it will close its Little Rock, Ark., distribution center, which employs 500 people, later this year.

Target has struggled to compete with Wal-Mart Stores (WMT, news, msgs), which has managed to weather the economic downturn better than most -- if not all -- other retailers.

Shares of Target jumped $1.77, or 5.3%, to $35.11 this morning.

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