U.S. MARKET AVERAGES

Fed raised interest rate by 25 basis points, OPEC meet to decide oil output and batch of economic reports fail to excite market.

Market opened in a defensive posture and stocks in general lacked direction. Traders awaited decisions from OPEC and Fed. OPEC meeting of oil ministers decided to leave oil output unchanged and scheduled the next meeting on March 8th.

Fed raised its target for the key interest rate by 25 basis points to 4.5%. The fourteenth rate hike in 19 months was accompanied by a change in language. For the last two years market had got used to the word ‘measured’ pace of rate hike. The word ‘measured’ was removed to give new the Fed Chairman leeway in deciding the future course of interest rate.

Tech stocks declined for the day led by steady erosion in tech stocks. Material stocks, casinos and brokerage stocks gained during the session.

After the close, Google stock dropped as low as 19%. Google reported revenue of $1.92 billion and earnings of $372.2 million or $1.22 per share or $1.54 per share before stock donation missing the estimate of $1.76 per share. The company blamed shortfall on higher tax rate of 42% vs. 30% estimate. The company guided 30% tax rate for the year 2006.


MOVERS AND SHAKERS

Waddell & Reed Financial (WDR: chart) reported Q4 net income decline of $19.9 million, or 24 cents a share, down from $25.7 million, or 31 cents a year ago, missing estimates of 30 cents a share on revenue of $163 million. Revenue rose 11.1%, reaching $163.1 million from $146.9 million, paced by growth in investment-management fees. The stock dropped 6%.

Altria Corp (MO: chart) reported Q4 earnings from continuing operations of $2.29 billion, or $1.09 a share, up from a year-ago equivalent profit of $1.99 billion, or 96 cents a share on 9.4% revenue growth, missing estimates for a profit of $1.17 a share. For fiscal 2006 the company sees earnings from continuing operations of $4.85 to $4.95, excluding expected restructuring charges. The stock fell 1.1%.

Napster (NAPS: chart) surged 44% following a report in the New York Post that Google is considering an alliance with the digital music company that could lead to an outright acquisition.

Sepracor Inc (SEPR: chart) swung to a Q4 profit of $37.2 million, or 32 cents a share, exceeding expectations of 5 cents a share. Revenue soared to $311 million from $131 million, on sales of Xopenex and Lunesta medications. For 2006 the company projected earnings of $1.50 a share on revenue of $1.275 billion. The stock rose 14.5%.

ECONOMIC NEWS

The Conference Board released its report on consumer confidence in the month of January on Tuesday, showing that confidence improved more than economists had been expecting. The Consumer Confidence Index rose to its highest level in more than three years.

The report showed that the Consumer Confidence Index rose to 106.3 in January from an upwardly revised 103.8 in December. Economists had expected the index to increase to 105.0 compared to the 103.6 originally reported for December.

The Conference Board''s Present Situation Index rose to 128.4 in January from 120.7 in December, with those claiming conditions are good increasing to 25.8 percent from 24.4 percent.

The increase was partly due to continued improvement in the assessment of the labor market, with those saying jobs are plentiful rising to 26.9 percent in January from 23.3 in December. Those claiming jobs are hard to get decreased to 20.3 percent from 22.5 percent.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished mostly higher with only four bourses actively trading Tuesday as many regional markets were closed for an extended Lunar New Year holiday. The Nikkei continued its march upward with an advance of 0.6% to 16,649.82, lifted by expectations of strong earnings from key industrial stocks. South Korea’s Kospi climbed 1.1%, Thailand’s SET index gained 0.4%, while Australia’s All Ordinaries lost 0.3%.

European stocks traded in a tight range ahead of the Fed Reserve’s decision on U.S. interest rates. The telecommunications sector weighed on the sentiment with a profit warning from Cable & Wireless and management shake-up at France Telecom. The German DAX 30 added 0.25 %, the French CAC 40 gained 0.23 %, while London’s FTSE 100 fell 0.34%.

OIL, METALS, CURRENCIES