Business Blog Posts

The selloff in commodities also halted with copper, which dropped more than $200 a tonne on Tuesday, its steepest decline since late June, gaining $28 to $8,328 a tonne.

Financial markets have been volatile this week as speculation intensifies over how much the Federal Reserve is likely to spend to pump up a faltering recovery and whether such new measures will be carried out swiftly or phased in over time.

Analysts expect choppy market action to persist in the lead up to the November 2-3 policy-setting meeting.

The latest Reuters survey showed most leading economists expect the Fed to buy between $80 billion and $100 billion worth of assets per month, with estimates for how much it will eventually spend varying from $250 billion to $2 trillion.

In a similar Reuters poll of primary dealers on October 8, dealers mostly forecast the total size of the new program at $500 billion to $1.5 trillion.

Market participants have begun to scale back expectations of the Fed's intentions. The Wall Street Journal said on Wednesday the Fed is likely to unveil an asset-purchase program worth a few hundred billion dollars over several months.

It said officials want to avoid a "shock and awe" approach in their announcement, expected next week. The MSCI index of Asia Pacific stocks outside Japan rose 0.6 percent .MIAPJ0000PUS, having slid nearly 2 percent on Tuesday -- its biggest one-day percentage fall since late June. Still, it remained close to a 28-month high hit last week.

"It's going to remain volatile. If nothing else, markets are a bit overbought short term," said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney.

Japan's Nikkei stock average .N225, which was spared the selloff seen in the region on Tuesday, slipped 0.1 percent, while Australia's S&P/ASX 200 index .AXJO rose 1.1 percent and Korea's KOSPI .KS11 gained 0.1 percent.

Among the top performers, shares in Canon Inc (7751.T) rallied more than 4 percent, after the world's largest maker of digital cameras posted strong quarterly results and raised its full-year outlook.

"Shares of firms with bullish earnings are being snapped up, but that hasn't spread to similar stocks or sectors as investors are generally more concerned about the implications from today's BOJ meeting and the U.S. Federal Reserve meeting next week," said Mitsuo Shimizu, deputy general manager at Cosmo Securities.

In Australia, upbeat earnings helped drive ANZ shares (ANZ.AX) up 3.2 percent, while bourse operator ASX (ASX.AX) climbed about 2 percent after two days of sharp losses due to uncertainty over Singapore Exchange's (SGXL.SI) $7.9 billion bid.

The MSCI's emerging market stock benchmark .MSCIEF edged up 0.1 percent.

DOLLAR PAUSES

With the uncertain outcomes of the U.S. elections and a Fed meeting next week, traders positioned themselves for more volatile markets. The CBOE Volatility index .VIX rose 2.4 percent and was up for the third consecutive day.

Materials stocks, which have rallied in recent weeks on expectations of heavy stimulus, were the day's biggest decliners. The S&P Materials index .GSPM lost 0.9 percent.

In recent sessions, investors reduced their bets on the size and timetable of the Fed's potential purchases of Treasury debt. The Wall Street Journal furthered those expectations after reporting the Fed hoped to avoid a "shock and awe" approach.

"People are using that as a reason to take profits after what has been a very strong couple of months for equities," said Tim Holland, co-portfolio manager of Aston/TAMRO Diversified Equity Fund in Alexandria, Virginia.

Among the materials sector's biggest percentage decliners, Freeport McMoRan Copper & Gold Inc (FCX.N) slumped 2.8 percent to $95.50, and AK Steel Holding Co (AKS.N) dropped 3.4 percent to $12.40.

The rise in volatility suggests growing caution among investors. TD Ameritrade chief derivatives strategist Joe Kinahan said investors have been hedging gains through use of options in equity index and exchange-traded funds.

"They don't necessarily want to be out of their current positions," Kinahan said. "By buying protection and hedging recent gains against their current positions, investors now have the ability to pull the cord on the downside."

The Dow Jones industrial average .DJI dropped 43.18 points, or 0.39 percent, to 11,126.28. The Standard & Poor's 500 Index .SPX lost 3.19 points, or 0.27 percent, to 1,182.45. But the Nasdaq Composite Index .IXIC gained 5.97 points, or 0.24 percent, to 2,503.26.

The Nasdaq advanced as Broadcom Inc(BRCM.O) jumped 11.7 percent to $41.56 a day after it unexpectedly forecast a potential rise in fourth-quarter revenue.

Consumer products maker Procter & Gamble Co's (PG.N) quarterly profit beat expectations, helped by strength in emerging markets. The Dow component rose 0.4 percent to $63.08.

The day's economic data was mixed, with sales of new U.S. single-family homes rising more than forecast in September, while demand for durable goods, excluding aircraft, unexpectedly fell in the same month.

U.S.-listed shares of Argentine companies surged following reports of the death of Nestor Kirchner, the country's former president. Kirchner, who was also the husband of Argentina's current president and viewed as a contender for the post in next year's election, was perceived as unfriendly to big business.

The ADRs of Transportadora de Gas Del Sur SA (TGS.N), the operator of Argentina's dominant natural gas pipeline system, soared 9.6 percent to $4.35, while IRSA Investments and Representations Inc (IRS.N) jumped 7.6 percent to $14.98.

Volume was light, with about 7.8 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below the year-to-date moving average of 8.75 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, eight stocks fell for every five that rose.

(Reporting by Chuck Mikolajczak; Additional reporting by Doris Frankel; Editing by Jan Paschal)

The company's shares fell about 2 percent in after-market trading.

"It was maybe not the blowout quarter some investors were expecting," said Signal Hill analyst Mayank Tandon. "I think it's understandable that we're seeing some profit-taking, given that the results were good but not great."

The company also authorized a $1 billion share repurchase and said it expected net revenue to grow 11 percent to 15 percent in its coming fiscal 2011 year.

Chief Executive Joseph Saunders said in an statement that Visa plans to continue investing to expand its business, despite a "very challenging business environment."

Visa and rival MasterCard Inc (MA.N) do not lend at all and were relatively insulated from the massive credit losses that affected banks during the financial crisis. But now they are facing increasing U.S. regulatory scrutiny over their processing businesses.

The new U.S. Dodd-Frank financial reform law will restrict the processing fees that Visa and MasterCard earn from debit card transactions. This month, both companies also settled a Justice Department antitrust lawsuit over their processing rules.

"There's been so much fear that has been built into Visa and MasterCard in general ... I think the concerns over Visa and the industry were overblown by investors," said Jim Tierney, the chief investment officer of W.P. Stewart, which owns shares of both networks.

Visa's shares fell more than 20 percent this past summer, as investors worried that the law would cut deeply into its future profits. The shares have rebounded somewhat since Visa settled the lawsuit, but are still about 10 percent lower than before the law's fee restriction provision was first introduced.

The debit card industry is also awaiting further rules from the Federal Reserve, which will define exactly how the law restricts processing. Visa said on Wednesday it will have a better idea of how its future profits will be affected after seeing those rules.

But "investors had high expectations -- they wanted more clarity," said Evan Staples, equity analyst with First American Funds, which owns Visa shares.

"Some idea of what could or could not happen would have been more positive," he said.

SPENDING AGAIN

Visa, the world's largest credit and debit card processing network, reported net income of $774 million, or $1.06 per share, on Wednesday for its fiscal fourth quarter, ended September 30. That compared with $514 million, or 69 cents per share, a year earlier.

Analysts on average had expected Visa to earn 94 cents per share, according to Thomson Reuters I/B/E/S.

AIG said on Monday that Benmosche had cancer and was receiving aggressive chemotherapy, but intended to stay in his job and work a full schedule. Doctors and governance experts have said he could find it difficult, however, to both run the company and pursue treatment.

AIG's board, which met Wednesday, said Miller would step in if Benmosche "would become unwilling or unable" to continue in his job. He would stay until the company found a permanent replacement in the job.

Miller is a corporate turnaround specialist who has run a number of companies and was immediately seen after Monday's news as a potential short-term CEO for AIG. The company has been making substantial progress in paying down its bailout but still owes the U.S. government around $100 billion.

Miller, who was nominated to the AIG board last year, took over as chairman on July 14 from Harvey Golub. Golub left abruptly after tensions with Benmosche, who told the board that their working relationship as chairman and CEO had become "ineffective and unsustainable."

Miller served in a number of corporate restructurings, heading Delphi Corp, Bethlehem Steel, Federal-Mogul, Waste Management and Morrison Knudsen. He was also a director at UAL Corp during its reorganization.

The board's move to set a decisive plan about how Benmosche would be succeeded in the short- and long-term is likely to silence corporate governance critics who said the company did well to announce his illness but should have gone further in explaining how it would replace him.

But the board also said it was comfortable with its current succession planning timetable, which contemplates Benmosche staying on until 2012. It plans to look at both internal and external candidates for the job.

"The process would then be concluded when, over the next two years, it is appropriate to name Bob's eventual successor," the board said in its statement, which it said was issued unanimously.

(Reporting by Ben Berkowitz and Paritosh Bansal; Editing by Phil Berlowitz)