11:30AM Altria Group released details on tax-free Kraft Foods spinoff.
Altria Group Inc. (MO: chart), food and tobacco company, released on Wednesday the long-awaited details for its planned spinoff of Kraft Foods Inc. (KFT: chart) It said that it will distribute the 89% of the company it owns to its shareholders on March 30. Each Altria shareholder will get 0.7% of a share of Kraft for each share of Altria they own as of March 16, and they will receive cash in lieu of fractional shares for amounts of less than one Kraft share with an exact distribution ratio to be determined later. Before the distribution, Altria will convert its Class B shares of Kraft, which carry 10 votes per share, into Class A shares, which carry one vote per share and it will not own any shares of Kraft following the spinoff. Right after the distribution of Kraft shares, Altria will adjust its dividend so that Altria''s shareholders keeping their Kraft shares will get the same amount as before the transaction. Shares of Altria were up 0.5%, while Kraft slipped 1.7%.


11:00AM U.S. stock averages traded mixed ahead of Fed Reserve’s decision.
The three major market averages were mixed in early trading hors, awaiting the Fed Reserve’s interest-rate decision. The Dow traded higher largely due to a significant advance by shares of Boeing (BA: chart). The aerospace giant was up 4.5% after the company reported Q4 earnings that came in well above analyst estimates. The company also raised its full year 2007 earnings guidance to between $4.55 and $4.75 per share.

The tech-heavy Nasdaq moved to the downside due to weakness among technology stocks amid disappointing quarterly results. Networking stocks posted considerable weakness, with Juniper Networks (JNPR: chart) helping to lead the sector lower after the company did not report earnings for the third straight quarter due to a stock-options investigation. The stock dropped 7%. Disk drive stocks also came under pressure, with share of SanDisk (SNDK: chart) down 8.1% after reporting a Q4 loss versus a year ago profit. In midmorning trading, the Dow Jones industrial average was up 12.98, or 0.10%, at 12,536.29. The Standard & Poor''s 500 index was down 1.89, or 0.13%, at 1,426.93 and the Nasdaq composite index was down 9.70, or 0.40%, at 2,438.94. Bonds rose moderately following the flurry of economic data, with the yield on the benchmark 10-year Treasury note falling to 4.87% from 4.88% late Tuesday.

Construction spending fell 0.4% in December.
The Department of Commerce released its report on construction spending in the month of December on Wednesday, showing that spending unexpectedly fell compared to an upwardly revised reading for the previous month. The report showed that construction spending fell 0.4 percent in December following a revised 0.1 percent increase in November. Economists had expected spending to come in unchanged compared to the 0.2 percent decrease that was originally reported for the previous month. The decrease in construction spending came as a drop in spending on private construction more than offset an increase in spending on public construction. The report showed that private construction fell 0.8 percent in December, as a 1.6 percent decrease in residential construction spending more than offset a 0.9 percent increase in non-residential construction spending. At the same time, spending on public construction rose 0.6 percent, benefiting from a 1.8 percent increase in education construction spending. Highway construction spending fell 1.1 percent.


9:45AM Market opened mixed. Boeing led the Dow higher.
U.S. stocks opened mixed on Wednesday, with blue-chip stocks led higher by Boeing Co. (BA: chart) The aerospace giant rose 4.5% after it said Q4 profit doubled on 26% revenue increase and boosted its outlook. SanDisk Corp. (SNDK: chart) weighed on the tech sector with a decline of 9% in early trading. The company said late Tuesday it swung to a Q4 loss from a year ago, hurt by acquisition-related charges. The company reported a net loss of $35 million, or 17 cents a share, compared with net income of $134 million, or 68 cents a share, in last year''s same quarter. It said its sales surged 55% on strong demand for its NAND flash-memory storage chips used in consumer electronics. However, SanDisk shares fell due to a soft sales forecast. It warned there is an oversupply of NAND flash in the market and steep price declines ahead.

Among other earnings-inspired gainers, Estee Lauder Cos. (EL: chart) said Q2 net income more than doubled to $208.4 million, or 99 cents a share, from $81.7 million, or 38 cents a share, a year earlier. The cosmetics company said net sales advanced 12% to $1.99 billion from $1.78 billion. Quarterly results beat estimates for earnings of 76 cents a share on net sales of $1.91 billion. Levitt Corp. (LEV: chart) surged 29% after the homebuilder said that preliminary Q4 sales figures from its home building subsidiary added up to $143.6 million. The company reported 426 homes delivered in Q2 and backlog at1,248 units with a sales value of $438.2 million. In the first hour of trading, the Dow Jones industrial average was up 14.34, or 0.11%, at 12,537.65. The Standard & Poor''s 500 index was down 1.84, or 0.13%, at 1,426.98 and the Nasdaq composite index was down 10.54, or 0.43%, at 2,438.10. Bonds were little changed ahead of the Fed''s comments on the economy and interest rates. The yield on the benchmark 10-year Treasury note was flat at 4.88% from late Tuesday.

Fourth-quarter GDP climbs 3.5%.
Wednesday morning, the Department of Commerce released its advance report on fourth quarter gross domestic product, showing that GDP grew at a much faster rate than most economists had been anticipating. The report showed that GDP grew at an annual rate of 3.5 percent in the fourth quarter compared to the 2.0 percent rate of growth that was seen in the third quarter. Economists had been expecting more modest growth of about 3.0 percent. The Commerce Department said that the GDP growth primarily reflected strong consumer spending, exports, and government spending. The report showed that consumer spending rose 4.4 percent in the fourth quarter following a 2.8 percent increase in the third quarter. At the same time, the GDP growth was partly offset by negative contributions from residential fixed investment and private inventory investment. Additionally, the Commerce Department said that the acceleration in the pace of GDP growth compared to the third quarter reflected a downturn in imports, which are a subtraction in the calculation of GDP.

However, the report also noted that motor vehicle output subtracted 1.17 percentage points from the fourth quarter GDP growth after contributing 0.76 percentage points to the third quarter growth. The closely watched reading on inflation showed that consumer prices, excluding food and energy prices, rose at an annual rate of 2.1 percent in the fourth quarter. This represents a slowdown from the 2.2 percent rate of growth that seen in the third quarter. Despite the slowdown in the pace of core consumer inflation, the stronger than expected GDP growth is likely to further decrease the likelihood that the Federal Reserve will lower interest rates in the near future. The Federal Reserve will announce its latest decision on interest rates later this afternoon, with most analysts expecting the Fed to leave interest rates unchanged once again. Traders will be looking for indications of the Fed''s outlook for the economy and interest rates.


9:30AM-2:30PM London The UK benchmark index dipped Wednesday on financials.
The FTSE 100 declined 23.3 points and was trading at 6,218.7 by mid-day on Wednesday.

Economic news

House prices in the UK increased during January at their slowest pace in eight months. The average price of a house was 173,225 pounds, up 0.3% on December, the smallest increase since last May and a much weaker increase than the 0.8% predicted by analysts.

Decliners

F&C Asset Management gave a warning it would have to readjust its dividend after a sharp decrease in assets under management. The group admitted that AUM had declined 20%, dragging F&C shares 17.2% lower. The news also hit Friends Provident, which is the controlling shareholder of lF&C with a 52% stake. Friends Provident lost 4.9% while Legal & General retreated 1.9% and Aviva lost 0.8%.Other financial stocks also dropped, as Royal & Sun Alliance fell 1.7% and Alliance & Leicester gave back 1.3%.

Tobacco stocks also declined as Morgan Stanley cut its rating on the European sector from attractive to in-line. Imperial Tobacco lost 1.2% and British American Tobacco was down 0.8%.

Advancers

Vodafone gained 1.7% as the mobile phone company posted better-than-expected key performance indicators for Q3 as it acquired more than 200 customers. B&Q owner Kingfisher rose 2% after JP Morgan lifted its recommendation on the stock from neutral to overweight.