Wall Street ends almost flat as Bernanke warns on "cliff"

NEW YORK (Reuters) - Stocks ended nearly flat on Wednesday, giving up most of the day's gains after Fed Chairman Ben Bernanke reiterated that monetary policy won't be enough to offset damage from the "fiscal cliff."

His comments followed the Federal Reserve's announcement of a new stimulus plan, which briefly pushed the S&P 500 to a seven-week high.

The plan, the latest attempt to boost the country's struggling economy, will replace a more modest program set to expire with a fresh round of Treasury purchases that will increase its balance sheet. The program is known as "quantitative easing" or QE.

In comments after the announcement, Bernanke said he hopes that markets won't have to tank to get a fiscal cliff deal.

"Initially the addition of QE was certainly favorable. I think, though, in the press conference, what came out is that there still seems to be a level of uncertainty with regard to the exit strategy (and) the efficacy of the current policy," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Bernanke "reiterated the fact that monetary policy has its hands tied as far as addressing the seriousness of going over the fiscal cliff," Hellwig added.

The S&P financial sector index <.gspf>, which had been up more than 1 percent after the Fed's announcement, ended up just 0.5 percent.

Wal-Mart Stores Inc's stock was the biggest drag on the Dow, falling 2.8 percent to $68.94 following the Indian government's announcement of an inquiry into the company's lobbying practices.

The Dow Jones industrial average <.dji> slipped 2.99 points, or 0.02 percent, to 13,245.45 at the close. The Standard & Poor's 500 Index <.spx> inched up just 0.64 of a point, or 0.04 percent, to 1,428.48. But the Nasdaq Composite Index <.ixic> shed 8.49 points, or 0.28 percent, to end at 3,013.81.

Though the S&P 500 ended up just slightly, it was the sixth day of gains for the index - its longest winning streak since August.

The central bank committed to monthly purchases of $45 billion in Treasuries on top of the $40 billion per month in mortgage-backed bonds it started buying in September. It also said it will keep its near-zero interest-rate program in place until the U.S. unemployment rate falls to 6.5 percent from its current 7.7 percent.

"The actions by the Fed were more aggressive than investors anticipated," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

"The asset-purchasing program is probably larger and more comprehensive than some might have thought."

Negotiations over plans to avoid the fiscal cliff intensified in Washington, but U.S. House of Representatives Speaker John Boehner said on Wednesday that "serious differences" remain with President Barack Obama in their talks. If no agreement is reached, steep tax hikes and budget cuts will fall into place early next year.

Shares of Aetna , the third-largest U.S. health insurer, gained 3.2 percent to $45.91, a day after the company gave a higher forecast for profit and revenue growth in 2013.

Volume was roughly 6.58 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.52 billion.

Decliners slightly outnumbered advancers on the NYSE by about 16 to 15, and on the Nasdaq, by about 3 to 2.

(Reporting by Caroline Valetkevitch; Additional reporting by Leah Schnurr Editing by Jan Paschal)

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Mandela Is Suffering From Lung Infection

Alexander Joe/Agence France-Presse — Getty Images

In Soweto, an area of Johannesburg, a resident walked past images of Nelson Mandela, the 94-year-old former president of South Africa and hero of the antiapartheid movement, who remained hospitalized on Tuesday.

JOHANNESBURG — Former President Nelson Mandela, who has been hospitalized since Saturday, is suffering from a recurrence of a lung infection and is responding to treatment, the office of South Africa’s current president, Jacob Zuma, announced on Tuesday.

It was the first indication of Mr. Mandela’s medical condition since he was flown to Pretoria and taken to a hospital for unspecified tests over the weekend. It was his second hospitalization this year; in February he s checked into a hospital for tests to address a chronic stomach complaint, the government said at the time. He was released after minor diagnostic surgery, officials said.

Mr. Mandela, who is 94 and increasingly frail, was said by Mr. Zuma’s office to be “receiving appropriate treatment and he is responding to the treatment.”

The current stay in the hospital is the longest in recent memory, raising fears that Mr. Mandela’s condition is grave. Government officials have been upbeat about his prognosis while offering few details about his condition. Given his age, any infection is by its nature serious, medical experts say.

“I’m not sure we should press the panic button every single time a man of his age has the sniffles,” Mark Sonderup, vice chairman at the South African Medical Association, told The Mail and Guardian, a weekly newspaper, this week. “But unfortunately, we have to accept that simple health matters for a person of that age can turn very serious, very quickly.”

Mr. Mandela, South Africa’s first black president, has suffered from respiratory ailments for years, in part owing to the 27 years he spent in prison, most of it on Robben Island, working in a bleak quarry. He was diagnosed with tuberculosis in 1988 and had fluid drained from his lungs.

Mr. Mandela retired from public life some years ago, and was last seen publicly at the celebrations for the World Cup soccer tournament, which South Africa hosted in 2010, although he receives frequent visits from old friends and visiting dignitaries.

In January 2011, he was hospitalized for an acute respiratory infection, and the news of that illness set off a panic about his health.

When Secretary of State Hillary Rodham Clinton visited South Africa in August, she stopped by his home in the rural village of Qunu to see him. In a photograph of the two of them, Mr. Mandela beamed his trademark grin, but looked frail seated in an armchair and dressed in a gray cardigan.

Mr. Mandela led the African National Congress to a resounding victory in the first fully democratic elections in South Africa’s history in 1994, after successfully negotiating a peaceful transition from white rule. Despite harsh treatments at the hands of the apartheid government, Mr. Mandela advocated forgiveness and reconciliation, making him an icon of peacemaking the world over. After a single term as president, Mr. Mandela retired from politics in 1999.

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Megan Fox 'Screamed for an Epidural' During Delivery

Mom & Babies
Celebrity Baby Blog

12/11/2012 at 05:00 PM ET

John Shearer/Invision/AP

When it came to welcoming her first child, Megan Fox was prepared for the delivery to be a labor of love.

But one contraction later, and the actress’s dreams of being drug-free went out the window.

“It hurts so bad. It was so intense,” Fox, 26, told Access Hollywood during a press junket for her new movie, This Is 40.

“And I thought I was gonna be really tough and make it, I was going to labor to eight centimeters … but the first contraction I got was horrific!”

And with the pain level shooting sky-high from the start, Fox wasn’t shy about voicing her demands for medication to husband Brian Austin Green.

“I was screaming for an epidural when [Brian] was driving me to the hospital because my water broke on its own and immediately — it was level orange pain alert,” she recalls.

But, despite the unbearable pain, the first-time mom wanted to feel (and look!) her best for her baby boy’s big arrival.

“I was trying to blow dry my hair before I went to the hospital because I didn’t want to go to the hospital with wet hair,” she explains with a laugh.

Fortunately, all the pain — and primping! — paid off in a big way when the couple welcomed now 10-week-old Noah Shannon.

“It’s exhausting, but it’s amazing and you can’t — until you have kids — imagine how much you could possibly love a human being,” she shares of her “super cute” son.

“It’s really intense and really overwhelming and amazing.”

– Anya Leon

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APNewsBreak: DA investigating Texas cancer agency

AUSTIN, Texas (AP) — The Texas prosecutor responsible for investigating public corruption among state officials said Tuesday that he has opened an investigation into the state's troubled $3 billion cancer-fighting agency.

Gregg Cox, director of the Travis County district attorney's public integrity unit, told The Associated Press that an investigation has begun into the Cancer Prevention and Research Institute of Texas. The agency also is under investigation by the Texas attorney general's office after an $11 million grant to a private company did not receive the proper review.

Cox said his unit, which prosecutes crimes related to the operation of state government, is beginning its investigation not knowing "what, if any, crime occurred" at CPRIT.

His announcement came on the same day that CPRIT said its executive director had submitted his resignation letter and amid escalating scrutiny over the management of the nation's second-biggest pot of cancer research dollars.

CPRIT has not been able to focus on fighting the disease due to "wasted efforts expended in low value activities" during the past tumultuous eight months, Executive Director Bill Gimson wrote in a resignation letter dated Monday. Gimson offered to stay on until January, and the agency's board must still approve his request to step down.

Gimson has led the state agency since it launched in 2009. But he fell under mounting criticism over the recent disclosure that an $11 million award to a private company was never reviewed. It was the second time this year that a lucrative taxpayer-funded grant instigated backlash and raised questions about oversight.

"Unfortunately, I have also been placed in a situation where I feel I can no longer be effective," Gimson wrote.

The Texas attorney general's office has said it is looking into CPRIT's $11 million grant to Dallas-based Peloton Therapeutics. An internal audit performed by the agency revealed that Peloton's proposal was approved for funding in 2010 without being reviewed by an outside panel.

Gimson said last week that Peloton's funding was the result of an honest mistake that happened when the agency was still young and in the process of installing checks and balances. Agency emails surrounding the Peloton grant are no longer available, Gimson said, and state investigators said they will work to find them.

Only the National Institutes of Health doles out more cancer research dollars than CPRIT, which has awarded more than $700 million so far. The agency's former chief science officer, Nobel laureate Alfred Gilman, resigned earlier this year over a separate $20 million award that Gilman claimed received a thin review. That led some of the nation's top scientists to accuse the agency of charting a politically-driven path.

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Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber

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Big tech boosts S&P 500 to best close since election

NEW YORK (Reuters) - Stocks rose on Tuesday, led by gains in technology companies, helping the S&P 500 end at its highest level since Election Day.

A 2.2 percent gain to $541.39 in Apple's stock lifted the Nasdaq, as the largest U.S. company by market value rebounded from a week in which investors took profits before a possible tax rise next year. Prior to Tuesday's trading, Apple shares had lost 25 percent from an all-time intraday high hit in September.

Stocks pared some gains by late afternoon as more news on the "fiscal cliff" negotiations emerged. U.S. Senate Majority Leader Harry Reid said it will be difficult to reach agreement resolving the cliff tax hikes and spending cuts before Christmas.

"There's been a real explosion in anxiety over this thing. Because markets have become the way they are, you've got people just stepping back," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

"There's a tremendous absence of liquidity in the market," he said.

The S&P 500 had lost 5.3 percent in the seven sessions following Election Day as investors refocused on the threat posed to the economy by the fiscal cliff, a series of automatic spending cuts and tax increases. Markets have mostly recovered those losses, but volume has been thin, suggesting investors are not betting aggressively due to the uncertainty.

The Dow Jones industrial average <.dji> was up 78.56 points, or 0.60 percent, at 13,248.44. The Standard & Poor's 500 Index <.spx> was up 9.29 points, or 0.65 percent, at 1,427.84. The Nasdaq Composite Index <.ixic> was up 35.34 points, or 1.18 percent, at 3,022.30.

Volume was roughly 6.43 billion shares traded on the NYSE, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of roughly 6.5 billion.

Other major tech stocks also rose. Texas Instruments gained 4 percent to $31.01 after bumping up its profit target late Monday. That helped other chipmakers rally, with the PHLX Semiconductor index <.sox> up 1.9 percent. Microsoft rose 1.4 percent to $27.32.

The lack of demonstrable progress in the fiscal cliff negotiations has kept investors from making aggressive bets in recent weeks.

Republican House Speaker John Boehner called on President Barack Obama to propose a counter-offer on Tuesday.

Retailers like luggage maker Tumi Holding Inc and Michael Kors Holding gained on Tuesday after a positive report from Goldman Sachs Equity Research. Tumi was up 4.7 percent to $21.92 and Michael Kors gained 2.4 percent, reaching $50.92.

By contrast, discount retailers Dollar General and Family Dollar declined. Dollar General, whose shares fell 7.8 percent to $42.94, said it sees margins under pressure in 2013. [ID:nL1E8NB0QB] Family Dollar shares dropped 8.4 percent to $64.68.

SPX Corp shares fell 9.1 percent to $62.07 and the stock was the biggest percentage decliner on the New York Stock Exchange after sources said the company is in exclusive talks to buy rival Gardner Denver , in a merger that could create an industrial machinery conglomerate with a market value over $7 billion.

The U.S. Treasury is selling its remaining stake in insurer American International Group Inc . AIG's shares were up 5.7 percent at $35.26.

The Fed began a two-day policy-setting meeting on Tuesday. The central bank is expected to announce a new round of Treasury bond purchases when the meeting ends on Wednesday to replace its "Operation Twist" stimulus, which expires at the end of the year.

Advancers outnumbered decliners on the NYSE by about 2 to 1, and on the Nasdaq by nearly 9 to 4.

(Additional reporting by Gabriel Debenedetti; Editing by Kenneth Barry and Nick Zieminski)

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Moscow Journal: Book Gives Russians Close-Up of American Minutiae

MOSCOW — After 20 years of opining on weighty bilateral issues like NATO expansion and ballistic missile defense, the political analyst Nikolai V. Zlobin recently found himself trying to explain, for an uncomprehending Russian readership, the American phenomenon of the teenage baby sitter.

In Russia, children are raised by their grandmothers, or, if their grandmothers are not available, by women of the same generation in a similar state of unremitting vigilance against the hazards — like weather — that arise in everyday life. An average Russian mother would no sooner entrust her children’s upbringing to a local teenager than to a pack of wild dogs.

But of course much in everyday American life sounds bizarre to Russians, as Mr. Zlobin documents meticulously in his 400-page book, “America — What a Life!”

It seems strange, 20 years after the fall of the Iron Curtain, that ordinary Russians would still be hungry for details about how ordinary Americans eat and pay mortgages. But to Mr. Zlobin’s surprise, his book — published this year and marketed as a guide to Russians considering a move abroad — is already in its fifth print run, and his publisher has commissioned a second volume.

With the neutrality of a field anthropologist dispatched to suburbia, Mr. Zlobin scrutinizes the American practice of interrogating complete strangers about the details of their pregnancies; their weird habit of leaving their curtains open at night, when a Russian would immediately seal himself off from the prying eyes of his neighbors. Why Americans do not lie, for the most part. Why they cannot drink hard liquor. Why they love laws but disdain their leaders.

“The secret is that everyone wants to know what America is without its ideological blanket,” said Mr. Zlobin, who has lived in the United States on and off for 20 years and serves, at times, as an informal consultant to the Kremlin. “Originally I thought you had to watch the important issues, but it turns out what matters are the very basic ones.”

He is not the first Russian to engage in this exercise. In 1935, Ilya Ilf and Yevgeny Petrov, Soviet satirists, embarked on a road trip across the United States. Their book, “One-Story America,” described its residents’ earnestness (“Americans never say anything they do not mean”) their provinciality (“curiosity is almost absent”) and the ubiquity of advertising, which, they wrote, “followed us all over America, convincing us, begging us, persuading us, and demanding of us that we chew ‘Wrigley’s,’ the flavored, incomparable, first-class gum.”

That book, published less than two decades after the Bolshevik Revolution, was a touch subversive because it did not focus on the class struggle, then the Kremlin’s central talking point about the United States.

Mr. Zlobin is writing at a moment when state-controlled television casts the United States as a global bully, releasing waves of turbulence on the world and covertly undermining President Vladimir V. Putin. Mr. Zlobin does not make much effort to advance that thesis, instead suggesting, in his soft way, that Russian leaders would benefit from understanding what Americans are like.

“I often get appeals for help in Washington — ‘Get to know so and so,’ they tell me, naming some public figure, ‘We need to solve this problem,’ ” he writes. “It is difficult to explain that in the United States, in most cases, problems are not solved this way.”

Mr. Zlobin, who has lived in St. Louis, Chapel Hill, N.C., and Washington, finds his answers in middle-class neighborhoods that most Europeans never see. Readers have peppered him with questions about his chapter about life on a cul-de-sac. Most Russians grew up in dense housing blocks, where children ran wild in closed central courtyards. Cul-de-sac translates in Russian as tupik — a word that evokes vulnerability and danger, a dead end with no escape.

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New leaks suggest Microsoft Office for iOS could launch soon

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Tom Cruise: I'm Spending Christmas with My Kids

By Phil Boucher

12/10/2012 at 05:15 PM EST

Tom Cruise at the London premiere of Jack Reacher Dec. 10

Dave M. Benett/WireImage

It's shaping up to be a very merry Christmas for Tom Cruise.

Looking upbeat and winter-warm in a navy sweater and jeans at the London premiere of his new crime thriller Jack Reacher on Monday, the actor, 50, spoke to reporters for the first time since his split from Katie Holmes.

"We have got lots of very special things planned [for the holidays]," said Cruise. He added that he plans to spend Christmas with his kids Bella, 20, Connor, 17, and Suri, 6. "We are all going to be together. I am looking forward to it."

Based in London since August while he shoots the sci-fi action film All You Need Is Kill, Cruise says he feels right at home across the pond.

"I love it here," he tells PEOPLE. "I have made so many films here and I have worked with so many of the actors here. It is a wonderful place to live."

Make that live and work. "I am shooting a film over here … seven days a week. But I feel great," he added. "It doesn't take up all my time, but I have a very busy schedule and I like it that way."

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Surprise: New insurance fee in health overhaul law

WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.

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Wall Street gets small lift from technology and McDonald's

NEW YORK (Reuters) - Stocks edged higher on Monday as technology shares bounced back after recent weakness and McDonald's posted strong monthly sales.

Technology stocks were led by Hewlett-Packard Co , which climbed 2.6 percent to $14.16 on rumors that activist investor Carl Icahn is building a stake in the PC maker. The stock is down 44.5 percent for the year and ranks as the Dow's worst performer. The S&P technology index <.gspt> was up 0.3 percent.

Tech also was supported by Cisco Systems , which gained 2.4 percent to $19.79 after the company presented its midterm growth strategy on Friday.

McDonald's Corp gave the Dow a jolt, gaining 1.1 percent to $89.41, as its November sales were stronger than expected and showed a bounce back from a decline in October.

There was little news Monday about the negotiations over the "fiscal cliff," a series of automatic tax hikes and spending cuts that could hurt economic growth next year. Concerns that lawmakers will not broker a deal have kept a lid on optimism in the equity market.

"There is a general sense that if a deal is struck, that we could have a further advance in the market at the end of this year as well as the first part of next year," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

A breakout to the upside on a cliff deal could take the S&P 500 back up to 1,474, just off the 2012 high for the index, said Elliot Spar, Stifel Nicolaus option market strategist in Shrewsbury, New Jersey.

The benchmark S&P 500 index has yet to see a move greater than 0.5 percent in either direction on any day in December, and hasn't moved more than 1 percent either way in any session since November 23. However, the market has regained most of the losses incurred post-election as investors refocused on the fiscal cliff.

U.S. President Barack Obama met with Republican House Speaker John Boehner on Sunday to negotiate a budget deal. A Boehner aide said Monday that talks are continuing.

The Dow Jones industrial average <.dji> rose 14.75 points, or 0.11 percent, to 13,169.88 at the close. The Standard & Poor's 500 Index <.spx> inched up just 0.48 of a point, or 0.03 percent, to 1,418.55. The Nasdaq Composite Index <.ixic> advanced 8.92 points, or 0.30 percent, to close at 2,986.96.

News out of Italy kept sentiment in check as Prime Minister Mario Monti said he would resign after the approval of the 2013 budget. The move added to uncertainty about progress being made to tackle the euro zone's debt problem and drove Italy's borrowing costs higher.

U.S.-listed shares of Nexen jumped 13.8 percent to $26.77 and the stock was the second-most actively traded on the New York Stock Exchange. On Friday, Canada approved a $15.1 billion bid by CNOOC Ltd for energy company Nexen.

The S&P materials index <.gspm> gained 0.7 percent and led the S&P 500's sector index gains as shares of mining companies rose in sync with copper and gold prices. Shares of Freeport-McMoRan gained 1.1 percent to $32.04.

Volume was roughly 5.3 billion shares traded on the NYSE, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of roughly 6.5 billion.

Advancers outnumbered decliners on the NYSE by a ratio of about 17 to 13, while on the Nasdaq, seven stocks rose for every five that fell.

(Reporting by Caroline Valetkevitch; Additional reporting by Doris Frankel in Chicago and Gabriel Debenedetti in New York; Editing by Jan Paschal)

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