Wall Street Rumors – March 19, 2009

Daily rumors covering the global markets. Subscribe to the update feed here.

Some Will Pay Back AIG Bonuses
Some top employees of American International Group Inc.’s (NYSE:AIG) disgraced Financial Products group have agreed to return hefty retention bonuses under mounting public outrage over $165 million in payouts to a unit that brought the insurer to its knees.

Fed in Bond-Buying Binge to Spur Growth
The Federal Reserve ramped up its effort to revive the economy, declaring it would buy as much as $300 billion of long-term U.S. Treasury securities in the next few months and hundreds of billions of dollars more in mortgage-backed securities. The Fed had already cut its benchmark interest-rate target to near zero. Unable to go lower, the central bank now is essentially printing money to raise the supply of credit and thus push down the longer-term rates paid by families and companies on mortgages and other key loans. The impact was immediately felt.

Stocks Rise; MSCI World Has Longest Streak of Gains Since 2006
Stocks climbed, sending the MSCI World Index to the longest stretch of gains since 2006, as the Federal Reserve said it will buy $300 billion of government bonds to combat the first global recession since World War II. The MSCI World advanced for an eighth day, led by banks and raw-material producers, the past year’s worst performers. Gains in Standard & Poor’s 500 Index futures were limited after U.S. stocks closed at a one-month high yesterday as some investors questioned whether the Fed’s efforts will end the economic contraction.

FedEx to Extend Pay, Job Cuts as Profit Falls 75%
FedEx Corp. (NYSE:FDX), the second-largest U.S. package-shipping company, said quarterly profit slid 75 percent and sales fell for the first time in at least a decade as domestic air shipments fell in the worsening economy. The company said it would extend pay cuts to some non-U.S. workers and cut an unspecified number of jobs as it seeks to remove $1 billion from operating costs by next year.

Oracle profit slips, but sales steady
Oracle Corp. (NASDAQ:ORCL) reported a reduced profit for its third fiscal quarter, citing the impact of currency exchange rates, though its final result still topped Wall Street’s estimates. The business software giant also declared its first-ever quarterly dividend of 5 cents a share. Oracle stock rose more than 7% Thursday in premarket action.

Final Chapter for Sun Micro Could Be Written by IBM
Sun Microsystems Inc. (NASDAQ:JAVA) has been at the leading edge of some of the biggest trends in computing since the 1980s. But the Silicon Valley company has often lagged behind at making money from them. The disclosure of talks for Sun to sell itself to International Business Machines Corp. (NYSE:IBM) caused Sun’s stock to jump nearly 79% Wednesday to $8.89 on the Nasdaq Stock Market.

Cisco Systems to Buy Pure Digital for $590 Million in Stock
Cisco Systems Inc. (NASDAQ:CSCO), the world’s largest maker of networking equipment, said it agreed to buy Pure Digital Technologies Inc. for $590 million in stock, acquiring a maker of flip-open camcorders small enough to fit in one hand.

Citi files to launch exchange offer, reverse split
Citigroup Inc. (NYSE:C) on Thursday filed a registration statement with the Securities and Exchange Commission to seek shareholder approval to convert preferred shares into common stock under its previously announced plan to build capital. Citi said in a Securities and Exchange Commission filing Thursday that it has reached definitive agreements with private preferred shareholders to convert $12.5 billion of the securities into common shares.

Discover Profit Drops as More Borrowers Default; Dividend Cut
Discover Financial Services (NYSE:DFS), the Riverwoods, Illinois-based credit-card company, said profit fell 50 percent as borrowers fell behind on payments and the company set aside more to cover bad debt. It cut the dividend to 2 cents a share. Discover’s fiscal first-quarter earnings from continuing operations fell to $120 million, or 25 cents a share, from $239 million, or 50 cents a share a year earlier, the company said in a statement distributed by Business Wire today.

Gold Jumps, Oil Tops $50 as Inflation Concern Spurs Commodities
Gold jumped the most since November and oil exceeded $50 a barrel for the first time in two months on speculation the Federal Reserve’s steps to spur growth will revive demand for commodities as a hedge against inflation. Gold futures in New York rose as much as $52.50, or 5.9 percent, to $941.60 an ounce after the Fed said it will buy as much as $300 billion of U.S. government bonds, adding to the supply of dollars. Heating oil rallied 4.5 percent, copper gained 4.2 percent and aluminum advanced 3.6 percent.

Nike profit drops 47% on slower demand
No. 1 athletic-shoe maker Nike Inc.’s (NYSE:NKE) fiscal third-quarter profit fell 47%, hurt by higher costs, slack demand in Europe and weakness at its Umbro brand, financial results showed Wednesday. Net income fell to $243.8 million, or 50 cents a share, down from $263.8 million, or 92 cents a share, in the year-ago period. Nike’s profit was hurt by charges to mark down goodwill and other assets at Umbro, a big seller of soccer gear. Sales fell 2% to $4.44 billion.

Americans Getting Jobless Benefits Reach 5.5 Million
The number of Americans collecting jobless benefits swelled to a record 5.47 million, indicating that former employees are unable to find new work as companies continue to cut costs. The number of people staying on benefit rolls jumped by 185,000 in the week ended March 7, from 5.29 million the previous week, the Labor Department said today in Washington.