After a seemingly relentless sell-off, Wall Street traders bid up stocks today in the wake of a leaked internal memo from Citigroup CEO Vikram Pandit saying that the bank is having its best quarter since 2007 (see item below). That spurred hope that the worst of the financial crisis may be easing. Around 2 p.m. the Dow was up 300 points, or 4.6%, and Citi itself had risen 37%.

Other financial stocks, including Bank of America and JPMorgan Chase, surged as well. And stocks around the world staged their biggest rally of the year. Some analysts expressed the conviction that the U.S. market had finally hit bottom, and that with government rescue efforts starting to buoy up the banks, investors would perceive that stocks are now cheap, creating the basis for a rally.

Source: Bloomberg

Bernanke’s Pledge: No Big Bank Failures

Fed Chairman Ben Bernanke, in a speech before the Council on Foreign Relations, said forcefully that major financial institutions will not be allowed to fail, given the dangers that such failures would pose to the global system. He added that the economy cannot begin to recover until the banks are stabilized and that Washington’s efforts so far are already having beneficial effects. The speech was seen as a rebuttal to certain Republican legislators who have been advocating that the government pull back from propping up the banks. Bernanke pointed out that the failure of Lehman Brothers had disastrous consequences last fall.

Source: CNNMoney.com

Cutbacks at United Technologies

The conglomerate said it will chop 11,600 additional jobs worldwide, or 5% of its workforce, in 2009, for a total of 18,000 cuts. The company also forecast a more difficult year than it had predicted before, saying that annual revenue will fall $2.7 billion short of what it expected in December, and slashed its earnings forecast to a range of $4 to $4.50 a share from $4.65 to $5.15. The Hartford (Conn.) company makes Otis elevators, Sikorsky helicopters, Pratt & Whitney jet engines, and Carrier air conditioners, among other businesses.

Source: Wall Street Journal

Fewer Flights for Delta

Also flying not-so-high: Delta Airlines, whose CEO, Richard Anderson, told employees in a memo that the carrier will pare international flights by 10% in September, with the cuts focused on transatlantic and transpacific markets experiencing “revenue weakness.” Anderson added that domestic capacity would be trimmed more sparingly, but that the cuts would probably mean job losses.

Source: Business Travel Online

Has Citi Turned the Corner?

A leaked memo from Citigroup CEO Vikram Pandit to the company’s 300,000 staff says that the troubled bank booked revenues of $19 billion in the first two months of this year and turned a profit—its strongest quarter-to-date performance since late 2007. Pandit said in his open letter that he was confident of the bank’s capital strength after completing tough internal stress tests. News of the memo, which the bank did not confirm, sparked a rally in shares of Citigroup and other banks in early European trading on Mar. 10. Yet even as Citi may have turned a corner, the Wall Street Journal reports that U.S. officials are weighing what additional steps might be needed to help the bank just one week after its third multi-billion dollar bailout. The discussions among Treasury officials and banking regulators take the form of contingency planning and do not reflect an imminent further rescue operation.

Source: Times of London, Reuters, Wall Street Journal

Dow Chemical Reignites Merger Plan with Rohm and Haas

The contentious $15 billion takeover bid, which foundered in January on Dow’s worries over debt and its credit rating, is back on the table. Under a new proposal announced Mar. 9, Dow will pay for Rohm with a combination of cash and preferred shares.

Source: Financial Times

Ford Workers Approve UAW Contract Changes

Unionized workers at Ford Motor Co. have approved contract changes that include freezing wages and cutting benefits in a move aimed at helping the automaker remain competitive. The agreement is likely to be a model for contract negotiations with ailing General Motors and Chrysler.

Source: Los Angeles Times/AP

Drug Mergers: Killers for Research

Merck’s decision to acquire Schering-Plough for $41 billion will improve its bottom line over the next two to three years, as the merged company cuts staffers and streamlines its operating costs. But when big pharmaceutical companies merge, like Merck and Schering-Plough or Pfizer and Wyeth, R&D always seems to suffer.

Source: BusinessWeek

EADS Profit Tops Expectations But 2009 Could Be Tougher

European aerospace giant EADS reported sharply higher operating profits for 2008 as its Airbus unit climbed out of the red. But officials cautioned that slumping demand and the possible cancellation of its troubled A400M military transport could weigh on 2009 results.

Source: Reuters

Airlines Fret as Customers Flee

Airlines had hoped that declining fuel prices would make up for falling passenger numbers, but demand for air travel is sliding far faster than expected, raising the prospect of further capacity cuts to stave off losses.

Source: Wall Street Journal

China Reports Falling Prices

Statistics released Mar. 10 contained worrisome signs of deflationary pressure in China, with consumer prices falling 1.6% in February from the same month last year. Most economists still don’t expect China to suffer a broad decline in prices this year.

Source: New York Times

Obama’s New Tech Czar

Vivek Kundra says he’ll improve the federal government’s technology, but he faces an immense challenge. After all, the government is better known for technology fiascoes than successes.

Source: BusinessWeek

Conversation of the Day: Extreme Customer Service

Reader Chuck Gaffney writes: “Companies need to realize customer service keeps a company afloat even if their prices aren’t the lowest since people pay for quality.”

Read the story and tell us what you think

Hot Topic on the Business Exchange: Global Economy

The global economy has given businesses the ability to develop global partnerships and alliances, which are essential to their successes. Xudong Pan and others are sharing their insights.

Join the Exchange