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Stock futures pointed to a modestly higher open Friday on better-than-expected housing data.

Nasdaq futures climbed 2 points vs. fair value, S&P 500 futures gained 4 points and Dow futures rose 33 points.

In economic news, the housing sector showed some signs of life. Housing starts in April rose 8.2% to an annualized rate of 1.032 million units, rebounding from a 17-year low in March. That was much better than the forecast for 940,000 units. Building permits climbed 4.9% to an annualized rate of 978,000, well above forecasts for 912,000 units.

Crude oil swelled above $127 a barrel on talks of increased Chinese demand.

The University of Michigan consumer sentiment index is due out at 10 a.m. EDT.

At noon EDT, Treasury Secretary Hank Paulson is slated to speak on the current housing and credit conditions.

Big early gainers include China Finance Online (), which surged 13% in the pre-open after it raised its Q1 outlook. The Chinese financial data firm sees sales in a range of $10.5 million to $10.8 million vs. views for $10.4 million. Net income is pegged at $4.5 million to $5 million compared to previous guidance of $3.7 million to $4 million.

BMC Software () gained 5% in the pre-market after it reported strong earnings and gave a rosy outlook. Late Thursday, the business software maker delivered fiscal Q4 profit of 63 cents a share, excluding items. That was up 57% from a year ago and 12 cents above views. Sales rose 11% to $466.9 million, also above views. BMC guided fiscal 2009 profit in a range of $2.10 to $2.20 a share vs. analysts estimates of $2.07.

Yahoo () signed a multi-year advertising deal with U.K.’s WPP Group. Yahoo also is close to penning an advertising pact with Google ().

Meanwhile, Yahoo Chairman Roy Bostock responded to a proposed proxy fight from billionaire stakeholder Carl Icahn, who has lobbied for a new board of directors after Yahoo spurned a buyout offer from Microsoft (). Bostock said Icahn’s position “reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal.” Shares of Yahoo edged lower in the pre-market.

But the bank said its profits for the first three months of this year were ahead of the same time last year.

Chief executive Michael Geoghegan warned: ‘It seems likely that the deterioration in the US housing market will extend into 2009. It is also clear that US economic growth has slowed and there is an increased likelihood of a recession this year.’

He said that profits had increased in every emerging-market country in which HSBC operates, counterbalancing the writedowns in investment banking which were largely concentrated in the US and UK.

Geoghegan said: ‘Our results last year and the trading statement today show that the diverse flows of business is the right way to run a bank. We feel comfortable and so do our regulators that this is the right way to run the business.’

But North American profits ‘declined significantly’ largely because of toxicloan writedowns and a charge of $3.2bn against consumers’ bad loans. That was much higher than the $1.6bn charge in the first quarter of 2007 but lower than the $4.6bn in the final quarter of last year.

The scale of the problem remains enormous with one in 20 of HSBC’s mortgages in the US now two months or more behind on payments. At the end of 2007, the so-called delinquency ratio was 4.8%. Credit-card bad debts are also on the rise in the States.

However, the level of bad debts in HSBC’s personal finance business in the UK is actually down on a year ago. Pretax profits rose in Britain but much of this is because the bank, like its rivals, has stopped paying out to customers claiming unfair overdraft charges until the case between the banks and the Office of Fair Trading is finally resolved. Strong areas were savings and so called packaged accounts.

In investment banking, Geoghegan said pre-tax profits were down on a year ago but better than the third and final quarters of 2007. He added that there had been higher trading in the first quarter as institutions rebalanced their portfolios as a result of the credit crunch which, he added, could mean dealing volumes will be more subdued for the rest of the year.

The bank said it was still pursuing the purchase of Korea Exchange Bank, which has been held up by regulators. It expects to complete the sale of its French business in July, with a profit of $1.9bn. The shares rose 16p to 882p.

Other stories:
Investigation into 70m HSBC fraud
BoCom doubles with HSBC help
HSBC faces new Korea buy delay
Bankers say subprime hit was overdone
Germany is in shock as subprime gets worse
2.8bn writedowns by German banks
BoE and FSA battle it out over banks
Banks urged to disclose risks
Greenspan: The credit crunch is easing
Crunch has pushed UK economy to the brink
Is it time to buy bank shares?

Judge sides with Red Cross in trademark dispute case

A decision by Johnson & Johnson, the giant health-care conglomerate, to sue the American Red Cross last year for commercializing the Red Cross symbol may be turning into a bit of a disaster for the company.

This week the company lost the second round in its trademark dispute against the disaster relief agency when U.S. District Judge Jed Rakoff in Manhattan threw out most of the case.

In a decision late Wednesday, Rakoff said the congressional charter for the Red Cross gave it the right to use the symbol - a Greek red cross on a white background - even for business purposes.

The company and the Red Cross had amicably shared use of the symbol for more than a century through an agreement signed in 1895. But the Red Cross angered Johnson & Johnson beginning in 2004 by licensing the symbol to other companies for use on commercial items sold in stores as part of the organization’s fundraising.

In August, the company took the dispute to court. But in his second ruling dismissing part of the case - the first one was in November - Rakoff said that charitable reasons for Red Cross’ business ventures make them all the more reasonable.

New York Times Mortgage rates edge down again

Rates on 30-year mortgages edged down this week to their lowest point in a month, a spot of welcome news to would-be home buyers.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.01 percent for the week. That was down from last week’s 6.05 percent and was the lowest since mid-April, when rates averaged 5.88 percent.

Other rates also fell. Five-year adjustable-rate mortgages fell to 5.57 percent, from 5.67 percent last week. One-year ARMs fell to 5.18 percent, from 5.29 percent.

However, rates on 15-year fixed-rate mortgages held steady at 5.6 percent.

Associated Press Bernanke says banks must prepare better

Commercial banks and other financial institutions need to beef up their ability to detect and protect themselves against risks like the credit and mortgage debacles, Federal Reserve Chairman Ben Bernanke said Thursday.

The three crises - housing, credit and financial - have exposed weaknesses in financial firms’ risk-management practices. Banks and other financial players have racked up multibillion-dollar losses when investments in complex mortgage-backed securities soured with the collapse of the housing market. Credit problems in housing quickly spread to other areas, intensifying the turmoil.

Banks need to better identify and measure risk, value their assets and liabilities, and prepare for liquidity disruptions, when access to cash or the ability to smoothly buy and sell can be impaired, Bernanke said in a speech to a Federal Reserve banking conference in Chicago.

Regulators also need to bolster their oversight, Bernanke said.

“It is clear that supervisors must redouble their efforts to help organizations improve their risk-management practices,” he said. “We have focused on the institutions in most need of improvement, but we will continue to remind the stronger institutions of the need to remain vigilant, particularly in light of the ongoing fragility of market conditions.”

Associated Press Drinkers like light (on the wallet) beer

Cash-strapped drinkers are starting to trade down to economy beers, the chief executive of Miller Brewing Co. said Thursday.

The Milwaukee brewer saw some shift between higher-priced, premium beers and economy beers such as Miller High Life and Milwaukee’s Best starting in January, Tom Long said.

“We think it’s primarily driven by decline of disposable income and pocket money that American consumers are feeling right now,” he said.

Long said the volume of beers sold remains stable, but the company expects to sell more lower-priced beers this year if gas prices continue to rise.

Associated Press

For the past few years, Waste Management () has been shedding unprofitable customers.

While that’s slowed sales growth a bit, it’s also improved margins.

Pretax margin in 2007 was 12.7%, the best in at least nine years.

The dumping of low-margin business carries a short-term price. In the first quarter, divestitures decreased revenue about $61 million, according to company officials.

At a recent conference call, Chief Executive David Steiner said the divestiture cycle was over. The focus now will shift to acquisitions.

A solid strategy, reasonable earnings growth, excellent earnings stability and a slightly above-market dividend put Waste Management on the income investor’s radar.

The three-year earnings growth rate is 15%. The dividend yield is 2.9%. The EPS Stability Rating is 1, the strongest possible.

Operating cash flow is impressive about 127% above annual EPS, far above the desired 20% cushion.

Annual earnings were up for a fourth straight year in 2007, and that was despite significant challenges last year.

The head winds include high fuel prices, a sluggish economy and the unpredictable winter weather in the Midwest and East.

Weather in the Midwest trimmed a penny off Q1 earnings, according to management, and fuel costs were up 39% on a year-ago basis.

On the flip side, higher recyclable commodity prices helped earnings.

Another helpful factor is Waste Management’s business model.

If the company focused solely on the Sun Belt, earnings would be better in boom times. But the firm’s nationwide footprint leads to a more stable performance. Business in the Midwest and East doesn’t reach the peaks and dips characteristic of the West, the company says.

Indexes faltered to a mixed close Wednesday as slipping crude oil prices and a possibly final interest-rate cut failed to buttress buyers.

The NYSE composite closed 0.2% higher, based on early figures, led by energy stocks.

But the Nasdaq notched a 0.6% loss. The S&P 500 slipped 0.4% while the Dow ended down a fraction.

Preliminary figures showed volume rose across the board, marking the Nasdaq’s second distribution day in recent weeks. It was also a distribution day for the S&P 500. The Dow’s loss was too small to be considered institutional selling.

The Nasdaq slipped despite a 3% jump by Google () as other tech stocks tumbled.

Research In Motion () took a pounding, losing 4.66 to 121.63. The smartphone maker appears to be adding another handle to its base.

On the upside, communications chipmaker NetLogic Microsystems () gapped up for a 3.93 gain to 32.79. The company handily topped Q1 consensus. The 14% jump left shares just below a possible buy point at 33.

On the foreign front, Brazil’s Bovespa index rose to a record high, blasting ahead 6.3% after Standard & Poor’s announced it was raising the country’s foreign bond rating. The move gives Brazil’s bonds investment-grade ratings, on par with India, Morocco and Romania, and may help attract additional foreign capital.

Brazilian home builder Gafisa ()jumped 5.89 to 43.55. Companhia Brasileira () added 3.94 to 45.49. Unibanco Holding () spiked up 15.28 to 145.41. Banco Itau Holding () gained 2.28 to 28.05. Banco Bradesco () rose 1.58 to 22.58.

3:15 p.m. Update: Stocks Retreat After Fed Announcement

By VINCENT MAO

The major stock indexes hovered near session highs in late trade Wednesday. Equities extended gains just after the Fed gave the market another rate cut, but they’ve pulled back some.

At 2:51 p.m. EDT, the Dow and Nasdaq were up 1% each. The S&P 500 gained 0.6% and Nasdaq 0.5%.

Volume was tracking higher on both exchanges.

Techne () climbed 2.43 to a near eight-year high of 74.22 in heavy trading. The biotech is following through after clearing a 71.52 buy point from a base-on-base pattern Tuesday.

Cummins () powered up 4.75 to 62.24 in heavy trade. Earlier today, the engine maker topped views with a 37% jump in Q1 earnings. That was its best performance in several quarters. Cummins is building a potential cup base.

On the downside, Cash America International () dropped 4.25 to 40.90 in busy trading. But it bounced from a session low of 38.30. Jefferies & Co. cut the pawnshop operator to hold from buy, citing valuation.

2:30 p.m. Update: Fed Cuts Rates As Expected

By ED CARSON

The Federal Reserve cut the fed funds rate by 25 basis points to 2%, as expected, citing weak U.S. economic activity and “stressed” financial markets. But it also cited rising commodity prices and inflation expectations, making the inflation outlook unclear.

The Fed said it expects sharp rate cuts in recent months would support growth, but stood ready to act as needed.

The vote was 8-2, with the dissenters likely favoring no move. Many analysts expect that this would be the last Fed cut of the latest cycle of rate reductions.

Stocks, which were rallying just ahead of the Fed’s action, moved up and down after the news. At 11:24 a.m., the Dow was up 0.9%, while the Nasdaq and S&P 500 rose 0.5%.

1:15 p.m. Update: Indexes Back Off Ahead Of Fed

By VINCENT MAO AND ALAN R. ELLIOTT

Stocks pulled back from session highs by midday Wednesday, ahead of the central bank’s decision on interest rates.

At 12:44 p.m. EDT, the Dow led with a 0.7% gain. A 13% jump in shares of General Motors () on an earnings report boosted the index. The Nasdaq and NYSE composites were up 0.5% each, the S&P 500 0.3%.

The Fed’s interest rate announcement is due at about 2:15 p.m. EDT. A quarter-point cut to 2% is expected.

May crude futures fell an additional $1.88 a barrel, slipping to $113.75. A 3.9-million-barrel increase in weekly inventories was nearly triple the consensus forecast and the 13th increase in the past 16 weeks. Gasoline inventories fell for a seventh straight week.

Crude pegged a record high Monday after the shutdown of some production and a major pipeline outage in the North Sea, along with various production interruptions in Nigeria. Oil dropped nearly 3% on Tuesday after the restart of the North Sea pipeline. It is now 5% off Monday’s high.

CyberSource () climbed 1.99, or 12%, to 18.29 in fast trade. It cleared a 17.66 buy point of a double-bottom base. Volume was tracking more than three times average. It’s in buying range until 18.54. After Tuesday’s close, the provider of online payment services posted a Q1 profit, excluding items, of 16 cents per share. That was 2 cents above views and double year-ago levels. Revenue surged 141% to $53.4 million, also above views.

NetLogic Microsystems () gapped up and rallied 3.40, or 12%, to 32.26. Late Tuesday, the chipmaker reported a 58% jump in first-quarter profit and a 46% rise in revenue. Both were ahead of views. The stock’s Accumulation/Distribution Rating has improved to B from a worst-possible E last month.

Open Text () gapped up and gained 1.67 to 35.65 in fast trade. This morning, the business software maker won two upgrades after posting better-than-expected earnings and sales late Tuesday. Research Capital upgraded the business software firm to buy from accumulate. And GMP Securities lifted shares to buy from hold. Both brokers raised their price targets on the stock.

On the downside, Bois d’Arc () gapped down and tumbled 1.95, or 8%, to 24.03 in huge trade. The oil and gas producer dropped despite news that it would be acquired by Stone Energy () in a deal valued at $1.8 billion. Stone shares tumbled 9%.

11:15 a.m. Update: Indexes Hold Ground In Mixed Volume

By ALAN R. ELLIOTT

Indexes clung to highs after an early jump spurred by earnings wins across a broad range of sectors.

The NYSE composite held a 0.7% gain, and the Nasdaq stuck with a 0.6% advance at 10:53 a.m. EDT. International issues led the NYSE’s upside, while biotechs scored solid gains for the Nasdaq. The S&P 500’s 0.4% rise lagged the Dow’s 0.7%. Citigroup () pulled both indexes lower.

Advancing stocks led decliners by better than 3-to-2 on both exchanges. Trading volume was lower on the NYSE, slightly higher on the Nasdaq.

Stocks were deeply mixed across Asia. The Shanghai composite bolted 4.8% as banks and insurers drove higher on solid Q1 earnings reports. Hong Kong’s Hang Seng index slipped 0.6% ahead of a holiday Thursday.

In Europe and the U.K., indexes recovered from early losses and had posted moderate gains in late trading.

The April Chicago Purchasing Managers’ Index, a broad gauge of manufacturing activity in the Midwest region, came in better than expected. The 48.3 reading was still below the crucial boom-bust 50 mark that would begin to indicate economic expansion. But it was the index’s third monthly gain after slipping to a six-year low in February.

Monolithic Power Systems () amped up for a 1.20 gain to 22.42. The semiconductor chip maker reported Tuesday it neatly topped Q1 views and said it planned to restate some prior tax figures to lower levels. The move broke shares above a 22.03 buy point from a handle in a six-month, double-bottom base. Cummins Diesel () powered ahead 5.38 to 62.87 after plowing over Q1 sales and earnings views.

Private college educator Strayer Education () jumped 16.18 to 196.07 on powerful volume. It, too, topped Q1 EPS views and upped Q2 guidance above consensus. The gap-up move launched the stock above the 196.01 buy point from a five-month cup-shaped base.

10:15 a.m. Stocks Rise On Mixed Volume

By VINCENT MAO

Stocks opened to the upside Wednesday and tacked on more gains ahead of this afternoon’s decision on interest rates.

At 9:54 a.m. EDT, the NYSE composite had gained 0.6% and the Dow 0.5%. The Nasdaq and S&P 500 each rose 0.4%.

Volume was tracking mixed, with NYSE higher and Nasdaq lower.

First Solar () gapped up and rose 13.37, or 7%, to 298.29. That puts the stock 5% past a 283.10 buy point from a cup base. Before the open, the maker of solar modules said Q1 earnings spiked to 57 cents a share, up from 7 cents a year earlier and a dime above views. Sales nearly tripled to $196.9 million, also above views.

Visa () added 1.10 to a new high of 81.98. On Tuesday, the credit card processor staged a huge reversal. Shares fell more than 6% early in the day but bounced back to close up 7%.

Fellow credit care firm MasterCard () extended Tuesday’s 13% pop, with Wednesday morning shares gaining 4.52 to 278.50. It’s now 25% past a 222.35 buy point.

On the downside, Rofin-Sinar Technologies () gapped down and slumped 8.27, or 18%, to 37.67 on huge trade. Before the open, the maker of laser cutting and welding tools posted fiscal Q2 earnings and sales below analysts’ expectations.

Chicago Bridge & Iron () gapped down and tumbled 6.20, or 13%, to 42.11 in heavy trading. The engineering and construction company reported Q1 profit shy of expectations.

9:15 a.m. Update: Stocks Poised For Higher Open

By VINCENT MAO

Stock futures pointed to a higher open Wednesday on better-than-expected GDP data.

Nasdaq futures climbed 6 points vs. fair value, S&P 500 futures gained 3 points and Dow futures rallied 37 points.

In economic news, the ADP Employment Survey predicted 10,000 new private-sector jobs in April.

The jobs report from the Labor Department will be out on Friday. A decrease of 80,000 jobs, both public and private, is seen.

The advanced reading of the first-quarter gross domestic product said the economy grew 0.6%, slightly above economists’ estimates for a 0.5% rise.

The employment cost index rose 0.7%, slightly below forecasts.

Just shortly after the open, the Chicago PMI index for April will be out. Forecasts call for a dip to 47.5.

The weekly energy inventories report is due out at 10:30 a.m. EDT.

Meanwhile, the Fed’s announcement on interest rates is due at 2:15 p.m. EDT. The central bank is widely expected to cut rates to 2% and then halt their string of cuts.

A couple of Dow components reported earnings.

General Motors () climbed 4% in the pre-market after reporting a smaller-than-expected first-quarter loss. The auto giant lost 62 cents a share, excluding items, down from a profit of 17 cents a share the prior year. Sales fell 2% to $42.7 billion, but that was above analysts’ estimates for $40.1 billion. During the quarter, the company faced a number of challenges, including the weak economy an labor strikes.

Procter & Gamble () climbed 3% in pre-open trading after it beat views. The consumer products supplier reported fiscal Q3 earnings of 82 cents a share, up 11% from a year before and a penny above estimates. Sales hit $20.46 billion, also above estimates. P&G raised the lower end of its full-year guidance to a range of $3.48 to $3.50 a share vs. views for $3.50.

Elsewhere, Citigroup () announced late Tuesday that it’s seeking to raise $3 billion through a stock offering to help boost its capital. A day later the company raised the offering to $4.5 billion. Citi has been hurt by huge write-downs tied to the subprime mortgage crisis. Shares fell 3% in the pre-market.

Garmin also fell 3% in pre-open trading after it delivered Q1 earnings and sales below views. The GPS device maker is trading near two-year lows.