Stocks rise on housing data and retailer earnings

NEW YORK — Stocks rose, pushing the Standard & Poor's 500 index back into record territory, as investors assessed earnings reports from retailers and other companies. Home builders gained after sales of new homes jumped in January to fastest pace in more than five years.

KEEPING SCORE: The S&P 500 gained seven points, or 0.4 percent, to 1,852 as of 11:27 a.m. Eastern time. The Dow Jones industrial average gained 63 points, or 0.4 percent, to 16,240. The Nasdaq composite rose 26 points, or 0.6 percent, to 4,314.

HOME HELP: Several home builder stocks rose sharply after the government reported that U.S. sales of new homes rebounded in January to the fastest pace in more than five years. That's a hopeful signs after a slowdown in the housing market last year caused by higher interest rates. PulteGroup rose 56 cents, or 2.7 percent, to $21.24 and Lennar rose $1.51, or 3.5 percent, to $43.76.

HOME SPENDING: Lowe's climbed $2.47, or 5.1 percent, to $50.59. The company said its net income rose 6 percent in the most recent quarter as the home-improvement retailer continued to benefit from a recovery in the housing market.

BOOKING A PROFIT: Barnes & Noble rose 81 cents, or 4.6 percent, to $18.15 after reporting a third-quarter profit. Cost cuts at the company's Nook e-reader unit and elsewhere helped offset declining revenue. Barnes & Noble has been trying to turn itself around as competition from discount stores and online retailers gets tougher and consumers shift to buying digital books.

OTHER RETAILERS: Abercrombie & Fitch jumped $3.13, or 8.7 percent, to $39.13 after posting earnings that exceeded the expectations of Wall Street analysts. Target also rose after reporting its earnings.

DON'T LET THE SUN GO DOWN: First Solar slumped Wednesday after reporting earnings that fell short of financial analysts' expectations. The company's stock fell $6.73, or 11.6 percent, to $51.45.

CLOSE, BUT NO RECORD: The S&P 500 index has climbed above its record closing high of 1,848.38 during the last two days, only to fall below that level before the market closed. The level is starting to turn into a psychological hurdle for traders and investors. The index needs to close decisively above 1,850 before it can climb further, said JJ Kinahan, a strategist at TD Ameritrade.

"That's the level that everyone is just watching to see if we can stay above it and close above it."

BONDS AND COMMODITIES: The yield on the 10-year Treasury note was little changed from Tuesday at 2.70 percent. The price of oil rose 96 cents, or 0.4 percent, to $102.22 a barrel. Gold fell $10.10, or 0.8 percent to $1,332.80 an ounce.

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Assailant hacks ex-Hong Kong editor with cleaver

HONG KONG — The former editor of a Hong Kong newspaper whose abrupt dismissal in January sparked protests over press freedom is in critical condition after being hacked Wednesday by an assailant with a meat cleaver, police said.

Police said a man wearing a motorcycle helmet attacked Kevin Lau in a residential neighborhood and then fled on a motorcycle driven by another man.

Lau was hospitalized in critical condition with slashes in his back and legs, said Kwan King-pan, acting superintendent of Hong Kong Police.

Police did not announce any motive for the attack and appealed to the public for information.

Lau, 49, was named editor of the respected Ming Pao newspaper in 2012 but was replaced last month by a Malaysian journalist with no local experience. Lau was transferred to the parent company's electronic publishing unit. The move raised fears among journalists that the newspaper's owners were moving to curb aggressive reporting on human rights and corruption in China.

The Hong Kong Journalists Association said it was shocked and angered by the attack, calling it a "serious provocation to Hong Kong press freedom." Hong Kong leader Leung Chun-ying visited Lau at the hospital and told reporters, "We strongly condemn this savage act."

Freedom of speech and the press is a growing concern in the semiautonomous Chinese city, where such rights are guaranteed by its mini-constitution. On Sunday, thousands of people took to the streets to protest Lau's dismissal and other recent cases, including the ouster of an outspoken radio host and reports that Beijing-backed businesses were pulling ads from some newspapers over editorial stances.

Hong Kong slipped three places to 61st place on the latest World Press Freedom Index compiled by media watchdog Reporters Without Borders, which said Beijing's growing influence is jeopardizing media independence. Hong Kong ranked 18th on the group's inaugural index In 2002.

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Hoffman's friend creates playwriting foundation

NEW YORK — A close friend of Philip Seymour Hoffman has settled a libel lawsuit against The National Enquirer by creating a playwriting foundation to be initially funded by the tabloid.

In a one-page ad Wednesday in The New York Times, The Enquirer said it "responsibly acknowledged its error" for a story that purported to be an exclusive interview with David Bar Katz. The Enquirer also apologized to Katz, a playwright who discovered Hoffman's body.

The actor died of an apparent heroin overdose Feb. 2.

The Times reported on the settlement and said the ad was part of the agreement.

The American Playwriting Foundation will award $45,000 yearly for an unproduced play that embodies Hoffman's "passion for truth." Katz's lawyer told the Times the amount won't be disclosed.

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Police: No charges for singer Bieber's driver

SANDY SPRINGS, Georgia — Police near Atlanta say they've decided not to charge a driver for Justin Bieber with any crimes after a photographer said his camera was stolen during a confrontation with the singer's entourage.

Sandy Springs police said Wednesday morning in a statement that detectives won't charge 49-year-old Terrance Johnson. They say he was driving one of three Cadillac Escalades that brought the pop star and his associates to the Sandy Springs Funhouse family entertainment complex Tuesday.

A bodyguard for Bieber faces a court date on a felony charge of entering the photographer's automobile. Fulton County sheriff's spokeswoman Tracy Flanagan says 32-year-old Hugo Hesny of Davie, Fla., is scheduled to make his first appearance at 11 a.m. Thursday in Atlanta.

Police on Tuesday said they had taken Hesny and Johnson into custody on felony theft charges.

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Data-breach costs take toll on Target profit

NEW YORK — Target Corp. will be feeling the financial pain for a while from the theft of credit card numbers and other information from millions of its customers.

The retailer said Wednesday that its fourth-quarter profit slumped 46 percent. It also reported that revenue slipped 5.3 percent as the breach scared off customers.

During the holiday shopping season, personal data from millions of Target customers was stolen by hackers who targeted credit card terminals in its stores. The incident has scared shoppers away, and the company says its profits will be affected well into 2014.

"As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests. ... We are encouraged that sales trends have improved in recent weeks," said Gregg Steinhafel, chairman, president and CEO of Target.

The data breach comes on top of other woes, including sluggish sales in the U.S. and a disappointing foray into Canada.

The retailer, based in Minneapolis, said it earned $520 million, or 81 cents per share, for the three months that ended Feb. 1. That compares with a profit of $961 million, or $1.47 per share, a year earlier.

Revenue fell to $21.5 billion from $22.7 billion. Revenue at stores open at least a year, an important retail measurement, fell 2.5 percent.

Analysts had expected a profit of 80 cents on revenue of 21.5 billion, according to FactSet estimates.

The breach resulted in $17 million of net expenses in the fourth quarter, Target said, with $61 million of total expenses partially offset by the recognition of a $44 million insurance receivable. The company said it can't yet estimate how much more the data breach will cost.

Target said expenses may include payments to card networks to cover losses and expenses for reissuing cards, lawsuits, government investigations and enforcement proceedings.

The costs could hurt the company's first-quarter and full-year earnings, it said.

But investors sent shares of Target up nearly 4 percent, or $2.19 to $58.70 in premarket trading Wednesday as the earnings beat Wall Street estimates by a penny. Investors also seemed soothed that sales were recovering. The stock has fallen about 10 percent since the company disclosed the breach in mid-December.

Still, Target has much work to do to bring back customers who are still scared to shop there.

The massive data breach compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15.

Target disclosed the breach Dec. 19 and then on Jan. 10 it said that hackers also stole personal information — including names, phone numbers as well as email and mailing addresses — from as many as 70 million customers.

When the final tally is in, Target's breach may eclipse the biggest known data breach at a retailer, one disclosed in 2007 at the parent company of TJMaxx that affected 90 million records.

Target is offering free credit monitoring services for a year to those who had their data compromised.

John Mulligan, Target's chief financial officer, told The Associated Press Wednesday that the most loyal customers have stuck with Target, but wooing back others will take time.

"We need to remind people why they fell in love with Target," he said.

Target is now accelerating its $100 million plan to implement the use of chip-enabled technology by early 2015 in all 1,800 stores to protect itself against cyber thieves.

It isn't clear when Target will fully recover from the breach, but Avivah Litan, a security analyst at Gartner Inc., puts the costs of the breach at between $400 million and $450 million.

Target's results are also being weighed down by stumbles in its expansion into Canada, its first foray outside the U.S.

Target is trying to fix problems with shortages and Canadians' perception that prices are too high. The company had opened about 124 stores, at locations once owned by Canadian retailer Zellers, by the end of last year.

The company said it expects earnings per share for the current quarter to range from 60 cents to 75 cents. Analysts had previously expected 88 cents.

For the full year, Target expects earnings per share to range between $3.85 and $4.15. Analysts had expected $4.21.

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Stocks open mixed; Lowe's rises on earnings

NEW YORK — The stock market is little changed as investors pick over more earnings reports from retailers and other U.S. companies.

Consumer-focused stocks rose after home retailer Lowe's reported higher earnings.

The Dow Jones industrial average was down 16 points, or 0.1 percent, to 16,161 shortly after the market opened Wednesday.

The Standard & Poor's 500 index fell two points to 1,843 and the Nasdaq composite climbed a point to 4,288.

Lowe's climbed 4 percent after the company reported that its net income rose 6 percent in the most recent quarter as the company benefited from a housing recovery.

Barnes & Noble rose 5 percent after reporting a profit for its third fiscal quarter.

First Solar slumped 11 percent after reporting earnings that fell far short of what analysts were expecting.

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US bank earnings rise 17 pct as loan losses fall

WASHINGTON — U.S. banks' earnings rose 17 percent in the October-December quarter from a year earlier, as losses on loans fell to a seven-year low and banks set aside less to cover losses as well as legal costs.

The data provides fresh evidence of the banking industry's sustained recovery more than five years after the financial crisis struck. Still, the government says banks continue to have difficulty increasing revenues, and are relying on setting aside less for loan losses to boost earnings.

The Federal Deposit Insurance Corp. reported Wednesday that the banking industry earned $40.3 billion in the final quarter of 2013, up from $34.4 billion in the same period in 2012.

For all of 2013, bank earnings increased 9.6 percent to what the agency calls a record annual level of $154.7 billion. It exceeded the previous record earnings of $145.2 billion in 2006.

The number of banks on the FDIC's "problem" list fell to 467 in the final quarter of 2013 from 515 in the third quarter.

Banks' losses on loans dropped 36.7 percent to $11.7 billion, the lowest level for a fourth quarter since 2006, the FDIC said. The largest decline came in home mortgages, which posted a 57.7 percent drop in losses.

FDIC Chairman Martin Gruenberg said the latest results showed "a continuation of the recovery in the banking industry." At the same time, he said, the industry still faces challenges including only modest growth in lending, narrow profit margins and a decline in mortgage refinancing business as long-term interest rates have risen.

Banks with assets exceeding $10 billion drove the bulk of the earnings growth in the October-December period. While they make up just 1.5 percent of U.S. banks, they accounted for about 82 percent of industry earnings.

Those banks include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of them have recovered with help from federal bailout money during the financial crisis and record-low borrowing rates.

Last year, the number of bank failures slowed to 24, still more than normal. In a strong economy, an average of four or five banks close annually. But failures were down sharply from 51 in 2012, 92 in 2011 and 157 in 2010 — the most in one year since the height of the savings and loan crisis in 1992.

In the fourth quarter, the decline in bank failures allowed the deposit insurance fund to continue to strengthen. The fund, which turned from deficit to positive in the second quarter of 2011, had a $47.2 billion balance as of Dec. 31, according to the FDIC. That compares with $40.7 billion at the end of September.

The FDIC, created during the Great Depression to ensure bank deposits, monitors and examines the financial condition of U.S. banks.

The agency guarantees bank deposits up to $250,000 per account. Apart from its deposit insurance fund, the FDIC also has tens of billions of dollars in reserves.

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GE pays $1.7 billion to Shinsei, reducing exposure

FAIRFIELD, Conn. — General Electric will pay $1.7 billion to Shinsei Bank to end its obligation to cover interest refund claims.

GE was required to make the payments as part of the sale of its Japanese consumer finance operations. The sale agreement allowed for a buyout option this year. General Electric Capital Corp. sold the operations to Shinsei for $5.4 billion in September 2008.

Because of the buyout, GE's fourth-quarter and 2013 earnings will be trimmed by 9 cents per share, the company said Wednesday. First-quarter and 2014 results will not be impacted.

Shares of General Electric Co., based in Fairfield, Conn., shed 14 cents to $25.13 in Wednesday morning trading.

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The Ticker

Demoulas CEO loses fight

Market Basket CEO Arthur T. Demoulas lost his court fight challenging the independence of the grocery chain's chairman yesterday.

A Suffolk Superior Court judge ruled that the CEO and shareholders aligned with him as part of a long-running family feud failed to show that chairman Keith

Cowan didn't meet standards of independence as required by a 1998 court order for three of the company's seven directors.

The CEO had alleged that Cowan was "controlled" by cousin Arthur S. Demoulas, a Market Basket shareholder and director with whom he's been locked in a battle over the company's control.

A board spokeswoman did not respond to Herald inquiries, and Arthur T. Demoulas was unavailable for comment.

The court ruling is another setback for the CEO. In September, the same Suffolk Superior Court judge refused his request to block a $300 million shareholder payout as part of the same lawsuit filed that month.

Boston Beer Co. revenue rises

The Boston Beer Co. reported fourth-quarter 2013 net revenue of $205.4 million, an increase of 
$52.4 million, or 34 percent, over the same period last year, mainly due to core shipment growth. Net income for the fourth quarter was $18.1 million, an increase of $1.2 million from the fourth quarter of 2012. This increase was primarily due to shipment increases, partially offset by increased investments in advertising, promotional and selling expenses. 

Reebok signs supermodel Miranda Kerr

Reebok has revealed its new campaign with international supermodel Miranda Kerr for its new shoe, Skyscape. The new shoe features 360 degrees of foam thanks to construction processes borrowed from the lingerie industry.

Today

•  Commerce Department releases new home sales for January.
•  House Transportation and Infrastructure subcommittee hearing on passenger and freight rail safety.

TOMORROW

•  Labor Department releases weekly jobless claims.
•  Commerce Department releases durable goods for January.
•  Freddie Mac releases weekly mortgage rates.

The Shuffle

•  Joseph A. Leonard Jr., left, formerly Massachusetts deputy commissioner of banks and general counsel to the Massachusetts Division of Banks, has joined the law firm of Nutter McClennen & Fish as senior of counsel in its banking and financial services practice, the law firm announced. Leonard will work with banks, credit unions, mortgage companies, and other licensees regulated by the division of banks that are clients of the law firm.s Banking and Financial Services practice. "Joe brings a Division of Banks insider's perspective to our banking practice that will be valuable to our clients," said Kenneth F. Ehrlich, co-leader of the Banking and Financial Services practice group. 

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Cape Wind gets $600M loan from Danish company

BOSTON — The board of a Danish export credit agency has approved a $600 million loan to the Cape Wind offshore energy project.

Cape Wind President Jim Gordon announced the loan from EKF on Wednesday at an offshore wind conference in Boston.

The wind farm proposed for Nantucket Sound off Cape Cod is expected to cost about $2.6 billion. If built, it will be the first offshore wind farm in the U.S.

Gordon says EKF is a "knowledgeable and experienced investor" in the offshore wind industry.

EKF deputy CEO Soren Moller says the loan makes sense given how many Danish companies are already involved in the project.

He says EKF has invested in similar projects in Europe.

The loan is subject to the finalization of due diligence and completion of documentation.

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