Stocks Rise after Fed Minutes

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In economic news Tuesday, minutes to the Dec. 15-16 meeting of the Federal Open Market Committee indicate members saw "substantial" downside risk to the economy and expected the outlook would remain weak for a time, consistent with the indications from the policy statement. Some members also saw risk of "uncomfortably low" inflation levels. Members also acknowledged the fact that the funds rate was also likely to remain low given the reliance on the expanded balance sheet to help liquefy the system.

U.S. factory orders fell 4.6% in November after tumbling 6.0% in October (revised from -5.8%). This is a fourth consecutive decline in the index. Orders were down 12.2% year-over-year vs. a better than 5% decline in October. Durable orders were revised down to -1.5% from -1.0% previously. Excluding transportation, orders declined 4.2%. Nondefense capital goods excluding aircraft rebounded 3.9% after a 6.7% decline in October (revised from -5.0%). Shipments declined 5.3% following a 3.6% decline in October (revised from -3.2%). Inventories declined 0.3%. The inventory-shipments ratio widened to 1.41 vs. 1.33.

The U.S. ISM services composite index jumped to 40.6 in December after falling 7.1 points to a record low at 37.3 in November. The index was at 53.2 a year ago. The business activity index improved to 39.6 after dropping almost 11 points to 33.0 in November, and was at 54.4 in December 2007. The employment index rebounded to 34.7 from 31.3. New orders rose to 39.9 from 35.4. Prices paid were steady at 36.0 from 36.6. Imports declined to 32.5 from 40.0, though export orders rose to 39.5 from 34.5. The manufacturing and non-manufacturing composite index climbed to 39.6 vs. 37.2.

The U.S. pending home sales index declined 4.0% to 82.3 in November from a revised 85.7 in October (was 88.9). On a year-over-year basis, sales are down 9.6% compared to a -3.9% pace in October, though that compares to a better than 20% rate of decline a year ago and still double digit declines as June. The data were lower across all four regions covered.

Among other stocks in the news Tuesday, LDK Solar (LDK) said it sees fourth-quarter revenue of $425 million-$435 million, wafer shipments between 245-255 MW, and gross margin between 10%-13% -- worse than previous guidance of $555 million-$565 million in revenue, 260-279 MW wafer shipments, and 18%-21% gross margin. LDK now sees 2009 revenue of $2.3 billion-$2.5 billion, wafer shipments of 1.57 GW-1.67 GW, and gross margin of 22%-27%.

Imation Corp. (IMN) sees lower-than-expected fourth-quarter revenue of $530 million-$540 million. The company said it could report a fourth-quarter operating loss of up to $7 million before restructuring and other charges. Imation also reports that it is finalizing its impairment testing on intangible assets including goodwill and it is likely that substantial impairments will be identified and recorded in the fourth quarter.

Oppenheimer reportedly upgraded Apple Inc. (AAPL) to outperform.

Mosaic Co. (MOS) posted $2.15 vs. $0.89 second-quarter EPS on a 37% sales rise. Current-quarter results included a writedown of 41 cents and a gain on sale of $1.03. Mosaic's gross margin narrowed. The company expects to reduce phosphate and potash production significantly during the rest of fiscal 2009. It expects results to be weak at least through the third quarter of fiscal 2009. It also expects operating cash flow to be negative at least through the third quarter as a result of the weak near-term outlook.

Logitech Intl. (LOGI) announced that it has withdrawn its fiscal 2009 growth targets for sales and operating income due to the deepening global recession. The company plans to update investors on business conditions and performance during its briefing on third-quarter results on Jan. 20, 2009. In addition to ongoing actions aimed at reducing operating expenses, Logitech plans to reduce its salaried workforce globally by approximately 15%; the associated restructuring charge will be announced with third-quarter results and booked in the fourth quarter.