If S&P cuts rating, broad fallout likely
Standard & Poor's Ratings Services is considering slashing its rating on more than $500 billion of investments tied to bad mortgage loans, the ratings agency said Wednesday. The massive downgrade would threaten a broad swath of the world's finance industry, S&P said, ranging from Wall Street's trading desks to regional banks to local credit unions. Ratings from agencies such as S&P play a vital role in how much investments are worth. Many funds can buy only investments carrying strong ratings, and some people blame the agencies for granting top-notch credit scores to risky investments during the housing boom.
Yahoo stock down 8.5% for 4-year low
Yahoo Inc.'s sagging stock drooped to a four-year low Wednesday as impatient investors expressed their exasperation with a turnaround strategy that seems to be progressing at the stuttering speed of a dial-up Internet connection. The Sunnyvale-based company's inability to snap out of its financial stupor after more than a year of trying is raising questions about whether Yahoo's comeback attempt has become an exercise in futility. Yahoo shares fell as low as $18.58 Wednesday before bargain hunters stepped in to help the stock finish at $19.05, down $1.76, or 8.5 percent. Yahoo shares hadn't traded below $18.60, on a split-adjusted basis, since October 2003. Some analysts say they believe Yahoo should consider bringing in a new leader and dump co-founder Jerry Yang. Yahoo's woes also may create pressure to mull a possible sale to a deep-pocketed suitor such as Microsoft Corp.
Ingredient cost hike hurts Kraft, Kellogg
Soaring prices for the ingredients that go into cheese and cereal ate into profits at food manufacturers Kraft Foods Inc. and Kellogg Co., both of which posted lower fourth-quarter earnings Wednesday. Kraft, the country's biggest food and beverage maker, said its profit fell 6 percent as price hikes failed to fend off across-the-
board increases in commodities costs, which rose 40 percent for dairy products alone. Meanwhile, Kellogg, the No. 1 U.S. cereal maker, saw its earnings dip 3.3 percent, partly because of higher energy and materials costs and a record-setting investment in advertising.
There's a silver lining to the current housing crisis: Plummeting prices are providing housing opportunities for groups that help low-income and disabled people find homes.