Investors face another Washington deadline

NEW YORK (Reuters) - Investors face another Washington-imposed deadline on government spending cuts next week, but it's not generating the same level of fear as two months ago when the "fiscal cliff" loomed large.

Investors in sectors most likely to be affected by the cuts, like defense, seem untroubled that the budget talks could send stocks tumbling.

Talks on the U.S. budget crisis began again this week leading up to the March 1 deadline for the so-called sequestration when $85 billion in automatic federal spending cuts are scheduled to take effect.

"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. The fight pits President Barack Obama and fellow Democrats against congressional Republicans.

Stocks rallied in early January after a compromise temporarily avoided the fiscal cliff, and the Standard & Poor's 500 index <.spx> has risen 6.3 percent since the start of the year.

But the benchmark index lost steam this week, posting its first week of losses since the start of the year. Minutes on Wednesday from the last Federal Reserve meeting, which suggested the central bank may slow or stop its stimulus policy sooner than expected, provided the catalyst.

National elections in Italy on Sunday and Monday could also add to investor concern. Most investors expect a government headed by Pier Luigi Bersani to win and continue with reforms to tackle Italy's debt problems. However, a resurgence by former leader Silvio Berlusconi has raised doubts.

"Europe has been in the last six months less of a topic for the stock market, but the problems haven't gone away. This may bring back investor attention to that," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

OPTIONS BULLS TARGET GAINS

The spending cuts, if they go ahead, could hit the defense industry particularly hard.

Yet in the options market, bulls were targeting gains in Lockheed Martin Corp , the Pentagon's biggest supplier.

Calls on the stock far outpaced puts, suggesting that many investors anticipate the stock to move higher. Overall options volume on the stock was 2.8 times the daily average with 17,000 calls and 3,360 puts traded, according to options analytics firm Trade Alert.

"The upside call buying in Lockheed solidifies the idea that option investors are not pricing in a lot of downside risk in most defense stocks from the likely impact of sequestration," said Jared Woodard, a founder of research and advisory firm condoroptions.com in Forest, Virginia.

The stock ended up 0.6 percent at $88.12 on Friday.

If lawmakers fail to reach an agreement on reducing the U.S. budget deficit in the next few days, a sequester would include significant cuts in defense spending. Companies such as General Dynamics Corp and Smith & Wesson Holding Corp could be affected.

General Dynamics Corp shares rose 1.2 percent to $67.32 and Smith & Wesson added 4.6 percent to $9.18 on Friday.

EYES ON GDP DATA, APPLE

The latest data on fourth-quarter U.S. gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.

U.S. GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.

Investors will be looking for any hints of changes in the Fed's policy of monetary easing when Fed Chairman Ben Bernake speaks before congressional committees on Tuesday and Wednesday.

Shares of Apple will be watched closely next week when the company's annual stockholders' meeting is held.

On Friday, a U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with the iPhone maker, blocking the company from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

(Additional reporting by Doris Frankel; Editing by Kenneth Barry)

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Palestinians Threaten to Boycott Sponsors of Jerusalem Marathon

JERUSALEM — A lawyer representing Palestinian government agencies sent letters this week to an American sneaker company and an international hotel chain threatening a boycott and legal action if they did not withdraw their sponsorship of the Jerusalem marathon, which the Palestinians say violates international law.

The letters to New Balance, a footwear company based in Boston, and the InterContinental Hotel Group, which includes the Crowne Plaza hotel in Jerusalem, say that the marathon, scheduled for March 1, is a “serious breach” of international law because it runs through East Jerusalem, territory that Israel captured during the 1967 war and later annexed. The Palestinians, and much of the world, consider East Jerusalem occupied territory, but the Israelis see it as part of their capital city.

“As the marathon neither caters to the needs of Palestinian civilians nor serves any genuine military purpose, the marathon constitutes an illegal activity in occupied East Jerusalem under international humanitarian law,” read the letters, sent on behalf of the Palestinian Olympic Committee, Athletics Federation, and Higher Council of Youth and Sport. Citing United Nations resolutions, the Fourth Geneva Convention, and an International Court of Justice ruling, the letters warn: “If your company does not immediately withdraw sponsorship of this illegal activity, my clients will be forced to pursue this matter legally.”

The letters do not specifically mention the United Nations General Assembly vote on Nov. 29 that upgraded Palestine to a nonmember observer state, but a senior Palestinian official said the companies could be targets if Palestinians leaders decide to use the new status to pursue claims in international courts. Another possibility is action by the Arab League, whose 22 member states have called for a boycott of Adidas last year over its sponsorship of the Jerusalem marathon.

The mayor of Jerusalem, Nir Barkat, has described the marathon, in its third year, as an effort to make his bitterly divided and contested city “normal.” But normalcy is a challenge in a city that both Israelis and Palestinians see as their capital, a place that Jews, Muslims and Christians worldwide all revere as holy, a sprawling 48 square miles where 500,000 Israelis and 300,000 Palestinians live mostly in separate neighborhoods. Virtually none of those Palestinians vote in municipal elections, for fear of “normalization,” and many Palestinians in recent years have refused to attend meetings or hold official events in parts of Jerusalem for the same reason.

This week, Senator Marco Rubio, Republican of Florida, made headlines during a visit here for an offhand reference to Jerusalem as Israel’s capital, which Washington generally avoids. American consular officials joke that part of their job is to make sure the mail is addressed simply to “Jerusalem,” not “Jerusalem, Israel.”

Asked about the letters to New Balance and Crowne Plaza, a spokesman for Mr. Barkat said on Friday that the Palestinians were “trying to drag the marathon into a political cause.”

“This is not politics, this is sport, this is culture,” said the spokesman, Barak Cohen. “This is a major international event in a major international city,” he added, noting that 2,000 of the more than 18,000 registered runners were from 52 countries. “Arab residents and Jewish residents are welcome to participate and celebrate together,” he added.

A spokeswoman for New Balance, whose logo is at the top of the marathon’s Web site next to the slogan, “Let’s Make Excellent Happen,” did not respond to inquiries on Friday.

A spokeswoman for the InterContinental Hotel Group said the company was unaware of the marathon sponsorship, which she said was by the Jerusalem Crowne Plaza, a franchisee. She said the hotel’s manager could not be reached for comment because of the Jewish Sabbath.

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Diane Lane Signed Divorce Papers from Josh Brolin on Valentine's Day

By Ken Lee

02/22/2013 at 03:00 PM EST

Diane Lane and Josh Brolin

Justin Lubin/NBC/AP

There were likely no flowers or candy exchanged on Feb. 14 between Josh Brolin and soon-to-be ex-wife Diane Lane.

Lane signed her divorce documents on Valentine's Day, documents filed in Los Angeles Superior Court reveal. Lane also cited Feb. 13 as the date of their official separation, although a source tells PEOPLE it was earlier than that.

"They've been separated for several months. This was a hard decision for both of them to make," says a source close to the couple of their split. "The relationship just ran its course."

The pair, who married in a 2004 ceremony at Brolin's central California ranch, were first introduced by the actor's stepmother, Barbra Streisand, at a party in 2002.

Brolin, 45, was recently arrested and held for public intoxication just before midnight on New Year's Eve 2013, but he was released without charge.

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FDA approves new targeted breast cancer drug

WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.

The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.

Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.

"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."

Cobleigh helped conduct the key studies of the drug at the Chicago facility.

The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.

The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.

Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.

FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.

Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.

FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer

Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.

Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.

Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.

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HP lifts Wall Street, S&P on pace for first weekly loss of year

NEW YORK (Reuters) - Stocks rose on Friday, rebounding off two days of losses as Dow component Hewlett-Packard surged on strong results, but the S&P 500 was on track to end a seven-week-long streak of gains.

The S&P shed 1.9 percent over the previous two sessions, its worst two-day drop since early November, putting the index on pace for its first weekly decline of the year. The retreat was triggered when the Federal Reserve's meeting minutes for January suggested stimulus measures may be halted sooner than thought.

Still, the index is up nearly 6 percent for the year and held the 1,500 support level despite the recent declines, a sign of a positive bias in the market.

"The market is addicted to Fed stimulus and gets withdrawal shakes every time that's threatened, but now we're resuming our course and remain much more attractively valued than other asset classes," said Rex Macey, chief investment officer at Wilmington Trust in Atlanta, Georgia.

Hewlett-Packard Co jumped 9.6 percent to $18.74 as the top boost on both the Dow and S&P 500 after the PC maker's quarterly revenue and forecasts beat expectations. The company cut costs under Chief Executive Meg Whitman's turnaround plan. The S&P technology sector <.splrct> was up 0.8 percent.

The Dow Jones industrial average <.dji> was up 69.41 points, or 0.50 percent, at 13,950.03. The Standard & Poor's 500 Index <.spx> was up 7.74 points, or 0.52 percent, at 1,510.16. The Nasdaq Composite Index <.ixic> was up 18.26 points, or 0.58 percent, at 3,149.75.

For the week, the Dow is off 0.2 percent in its third straight week of slight losses, the S&P is off 0.6 percent and the Nasdaq is off 1.3 percent.

Also buoying tech stocks were gains in semiconductor companies after Marvell Technology Group Ltd forecast results this quarter that were largely above analysts' expectations. Marvell gained market share in the hard-disk drive and flash-storage businesses. The stock rose 2.5 percent to $9.71.

In addition, Texas Instruments Inc raised its dividend by a third and boosted its stock buyback program, lifting shares 5.1 percent to $34.16 while the PHLX semiconductor index <.sox> gained 1.8 percent.

"Dividends growing are another way the market's level is justified, if not especially attractive at these levels," said Macey, who manages about $20 billion in assets.

On the downside, Abercrombie & Fitch dropped 7.6 percent to $45.34 after the clothing retailer reported a drop in fourth-quarter comparable sales, even as its latest quarterly earnings topped estimates.

Insurer American International Group Inc posted fourth-quarter results that beat analysts' expectations. Shares advanced 3 percent to $38.43.

According to Thomson Reuters data through Friday morning, of 439 companies in the S&P 500 that have reported results, 70 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

(Editing by Kenneth Barry)

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The Lede: Assad Denies Starting War in New Interview

Last Updated, Thursday, 3:48 p.m. The Syrian president, Bashar al-Assad, denied in an interview broadcast last week on German television that he was responsible for starting the bloody conflict tearing his country apart.

The interview, featured in a new documentary on the conflict in Syria by the filmmaker Hubert Seipel, was conducted in English but later overdubbed in German for broadcast on the network ARD. Mr. Seipel, whose previous film, “I, Putin,” was also a portrait of a strongman, provided The Lede with clips from the documentary in which Mr. Assad’s remarks can be heard in the original English.

The filmmaker said recently that he wanted to speak directly to Mr. Assad because “misinformation and psychological warfare make up a large part of the Syrian civil war.” He explained in an e-mail to The Lede that he was frustrated by watching Syria’s war unfold in YouTube clips selectively edited by the two sides. So, he said, “my intention was just to let Assad speak about his point of view, so that our viewers can make their own judgment in what kind of a separate world he lives.”

Below is a transcript of Mr. Assad’s remarks (in occasionally idiosyncratic English).

On Chemical Weapons: “Have you heard that any country used chemical weapon to fight terrorism? I haven’t heard about it. This is W.M.D weapon of mass destruction. How can I use it to fight groups, small groups of terrorists spreading everywhere, especially in the cities? You fight them in the suburbs. You just mentioned that you hear the shelling in the suburbs, you don’t hear it in the desert, or in far area from the cities. So this is not realistic and not logical. I think they use it as pretext maybe to have more pressure or to have an aggression against Syria.”

On Foreign Fighters: “You cannot talk about good situation while you have assassination and killings of innocent people by terrorists coming from abroad, and some of them are Syrian, to be frank and clear about the situation. But the most important thing is about do they have incubator in the society or not. This where it could be very bad or worse or where you don’t have no hope.”

‘We Didn’t Launch the War’: “We didn’t launch the war and we didn’t choose which kind of war because we didn’t choose it anyway. You have terrorists coming with very sophisticated armaments, nearly all kinds of armaments that they can carry with them and started killing people, destroying infrastructure, destroying public places, everything. How do you defend them? You defend them according to the aggressions that you have, according to the tactics that they use. So they use heavy weaponries. You have to retaliate in the same way.“

On Reforms: “Well the criteria that you used to talk about the speed of reform, nobody has criteria. When you drive your car you know that this is the law here, 100 kilometer, let’s say, per hour. Well about the reform, does anyone has criteria or certain meter? So it’s subjective.”

On Turkey’s Missile Defense: “This is part of the missile shield that they started a year ago in Turkey, but the Turkish didn’t want to say that this is a part of it because many Turks refuse that Turkey is part of this program. The second aspect of it that Erdogan has been trying hard to rally the Turks and to muster support to his policy against Syria, something that he failed. So he distributed the Patriot on our border just to give the impression that Turkey is in danger because Syria may think of attacking Turkey, which is not realistic.”

On Peace Talks: “We started right away discussing the conflict in Syria and I concentrated mainly on the violence. If you want to succeed (I mean I was talking to Kofi Annan at the time.) If you want to succeed, you have to focus on the violence part of your initiative. If you don’t stop the violence, if you don’t stop the terrorists coming to Syria through different countries, mainly Turkey and Qatar, if you don’t stop the money coming inside Syria in order to stoke the fire – the whole initiative will fail. So that was the core of our discussion in the first meeting.”

On His Future: “If it’s about me as president, the decision should be by the Syrian people. If the Syrian people doesn’t want you as president what would you do here? How can you succeed? It should be through national dialogue, and whatever this national dialogue decide, we are going to adopt as a government, of course including me.”

On the Houla Massacre: “The people who were killed in the massacres are state supporters loyal to the government, so how could a militia, loyal to the government, killing people, loyal to the government? This is contradiction, unrealistic. Actually militia of the terrorists coming to that city or to that village and committed the massacre, and they took the photos and put it on YouTube and on the TVs and they said this is the government, which was not realistic. Actually it was committed by the gangs, by the terrorists.”

The full film, with German narration, also includes interviews in English with Kofi Annan, the former United Nations envoy, and Sergey Lavrov, Russia’s foreign minister. After the documentary was broadcast, the Russian foreign ministry posted video and a transcript of Mr. Lavrov’s complete conversation with Mr. Seipel online.

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Diem Brown Blogs: Farewell for Now

By Diem Brown

02/21/2013 at 04:00 PM EST

In her PEOPLE.com blog, Diem Brown, the Real World/Road Rules Challenge contestant recently diagnosed with ovarian cancer for the second time, opens up about her desire for a child and the ups and downs of cancer and fertility procedures.

First and foremost, I feel so blessed to have been able to share my crazy journey and hear your personal experiences on this PEOPLE.com blog.

Although I won't be posting a blog as often going forward, I am so excited to be able to keep writing and posting blogs here when big things happen in my life and/or when I hear or see something that I think y'all would love to start a conversation about. Please Tweet me at @DiemBrown if you ever have any suggestions or think of a topic that you would like to throw out there!

For instance, I am so curious about Eastern medicine as an addition to the Western medicine regime, so after I give it a real go I would love to share what I learn from it.

I also have I say I am beyond excited about Robin Roberts' return to Good Morning America! She is a true example of a lioness heart. ... She was able to envision her goal of returning to GMA even through all the hardships she endured. Robin had a goal and she invited the world to watch her as she set out to conquer her battle while keeping her goal in mind.

Watching Robin say "Good morning, America," made me instantly smile as you could feel the elated emotion shine from her eyes as she spoke.

We need these sorts of stories to be shared and we need to see that there are real life happy endings. The world is full of hardships and when you are stuck in that dark place you yearn to grab onto any sort of light that can help you see there is hope.

Hope is one of the strongest emotions and hope can overcome fear and despair ... if hope is given enough fuel. So thank you, Robin Roberts, for fueling that hope flame for so many of us fighting our own battles. You have shown that goals can be reached with time by never letting the word quit seep into your mindset.

Congratulations Robin and we are all look forward to continue hearing you say, "Good morning, America," every day.

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Flu shot did poor job against worst bug in seniors

ATLANTA (AP) — For those 65 and older, this season's flu shot is only 9 percent effective against the most common and dangerous flu bug, according to a startling new government report.

Flu vaccine tends to protect younger people better than older ones and never works as well as other kinds of vaccines. But experts say the preliminary results for seniors are disappointing and highlight the need for a better vaccine.

For all age groups, the vaccine's effectiveness is moderate at 56 percent, which is nearly as well as other flu seasons, the Centers for Disease Control and Prevention said Thursday.

For those 65 and older, it is 27 percent effective against the three strains in the vaccine, the lowest in about a decade but not far below from what's expected. But the vaccine did a particularly poor job of protecting older people against the harshest flu strain, which is causing most of the illnesses this year. CDC officials say it's not clear why.

Vaccinations are now recommended for anyone over 6 months, and health officials stress that some vaccine protection is better than none at all. While it's likely that older people who were vaccinated are still getting sick, many of them may be getting less severe symptoms.

"Year in and year out, the vaccine is the best protection we have," said CDC flu expert Dr. Joseph Bresee.

To be sure, the preliminary data for seniors is less than definitive. It is based on fewer than 300 people scattered among five states.

But it will no doubt surprise many people that the effectiveness is that low, said Michael Osterholm, a University of Minnesota infectious disease expert who has tried to draw attention to the need for a more effective flu vaccine.

Among infectious diseases, flu is considered one of the nation's leading killers. On average, about 24,000 Americans die each flu season, according to the CDC.

This flu season started in early December, a month earlier than usual, and peaked by the end of year. Older people are most vulnerable to flu and its complications, and the nation has seen some of the highest hospitalization rates for people 65 and older in a decade.

Flu viruses tend to mutate more quickly than others, and it's not unusual for multiple strains to be spreading at the same time. A new vaccine is formulated each year targeting the three strains expected to be the major threats. But that involves guesswork.

Because of these challenges, scientists tend to set a lower bar for flu vaccine. While childhood vaccines against diseases like measles are expected to be 90 or 95 percent effective, a flu vaccine that's 60 to 70 percent effective in the U.S. is considered pretty good.

By that standard, this year's vaccine is OK. The 56 percent effectiveness figure means people have a 56 percent lower chance of winding up at the doctor for treatment of flu symptoms.

For seniors, a flu vaccine is considered pretty good if it's in the 30 to 40 percent range, said Dr. Arnold Monto, a University of Michigan flu expert.

Older people have weaker immune systems that don't respond as well to flu shots. That's why a high-dose version was recently made available for those 65 and older. The new study was too small to show whether that made a difference this year.

The CDC estimates are based on about 2,700 people who got sick in December and January. The researchers traced back to see who had gotten flu shots and who hadn't. An earlier study put the vaccine's overall effectiveness slightly higher, at 62 percent.

The CDC's Bresee said there's a danger in providing preliminary results because it may result in people doubting — or skipping — flu shots. But the data was released to warn older people who got shots that they may still get sick and shouldn't ignore any serious flu-like symptoms, he said.

The new data highlights an evolution in how experts are evaluating flu vaccine effectiveness. For years, it was believed that if the viruses in the vaccine matched the ones spreading around the country, then the vaccine would be effective. This year's shot was a good match to the bugs going around this winter, including the harsher H3N2 that tends to make people sicker.

But the season proved to be a moderately severe one, with many illnesses occurring in people who'd been vaccinated.

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Online:

CDC report: http://www.cdc.gov/mmwr

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Wall Street drops on growth concerns, fear index jumps

NEW YORK (Reuters) - U.S. stocks fell for a second day on Thursday and gauge of investor concern hit its highest in two months after reports cast doubt over the health of the U.S. and euro-zone economies.

The second day of sharp declines in equity markets put the S&P 500 on course for its worst two-day loss since November.

The CBOE Volatility Index <.vix> or VIX, a measure of investor fear, jumped 6.7 percent to 15.67.

Initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to minus 12.5, the lowest in eight months.

In Europe, business activity indexes dealt a blow to hopes that the euro zone might emerge from recession soon, showing the downturn across the region's businesses unexpectedly grew worse this month.

"The PMI numbers out of Europe were really a blow to the market," said Jack De Gan, chief investment officer at Harbor Advisory in Portsmouth, New Hampshire.

"The market was expecting signs that recovery is still there, but the numbers just highlighted that the euro-zone problem is still persistent."

The abrupt reversal in markets, which started on Wednesday after minutes from the Federal Reserve's January meeting suggested stimulus measures may end earlier than thought, looks set to halt a seven-week winning streak for stocks that had lifted indexes close to all-time highs.

The Dow Jones industrial average <.dji> dropped 53.87 points, or 0.39 percent, to 13,873.67. The Standard & Poor's 500 Index <.spx> fell 10.30 points, or 0.68 percent, to 1,501.65. The Nasdaq Composite Index <.ixic> lost 35.08 points, or 1.11 percent, to 3,129.33.

The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 has fallen 2 percent over the period, but is still up 5.2 percent so far this year.

"The upside momentum in markets appears to be coming to an end as we consolidate recent gains," said Adam Sarhan, chief executive at Sarhan Capital in New York. "If the S&P breaks under its 50-day moving average, something more serious could be in store."

The S&P 500 would need to fall 1.9 percent to reach that level of 1,473.62.

Wal-Mart Stores Inc shares gained 2.1 percent to $70.66 and helped curb the Dow's decline after the world's largest retailer reported earnings that beat expectations, though early February sales were sluggish.

Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, are expected to depress economic growth.

Semiconductor stocks ranked among the weakest of the day, pressuring the Nasdaq as the Philadelphia Semiconductor Index <.sox> fell 2.3 percent. Intel Corp fell 2.9 percent to $20.13 while Advanced Micro Devices lost 6.7 percent to $2.53 as the S&P 500's biggest percentage decliner.

The semiconductor sector has performed well so far in 2013, rising 8.4 percent.

In other company news, shares of supermarket operator Safeway Inc jumped 12.3 percent to $22 after the company reported earnings that beat expectations.

In contrast, shares of VeriFone Systems Inc tumbled nearly 40 percent to $19.28 after the credit-card swipe machine maker forecast first- and second-quarter profits well below expectations.

Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Berry Petroleum Co jumped 17.2 percent to $45.23 after oil and gas producer Linn Energy LLC said it would buy the company in an all-stock deal valued at $4.3 billion, including debt. Linn Energy shares advanced 1.9 percent to $37.36.

(Editing by Jan Paschal)

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Russian Mother of Adopted Boy Who Died in U.S. Wants His Brother Back

MOSCOW — The Russian mother of two young boys who were adopted by a Texas couple requested on Wednesday that the younger child be returned to her, after his brother died under unclear circumstances in a case that has given new impetus to a long-running controversy over foreign adoptions.

The older boy, Max Shatto, 3, died in a West Texas hospital in late January. His birth mother, Yulia A. Kuzmina, pleaded with President Vladimir V. Putin in a letter on Wednesday to restore her parental rights concerning the younger boy, Kirill, 2.

Russian social services officers took the children away from Ms. Kuzmina in 2011, when Kirill was an infant, saying that she was unfit to raise them because of alcohol addiction. The American couple, Alan and Laura Shatto of Gardendale, Tex., adopted the two boys from a Russian orphanage late last year. Texas officials have received complaints that Max was physically abused and are investigating his death.

“I am the birth mother of Maksim Kuzmin, murdered in the United States by his adoptive family, the Shattos,” Ms. Kuzmina wrote, referring to Max by his pre-adoptive Russian name. “These people have my second son. I accept my guilt before the children, have found work and have the ability to provide for the child. Help me please, don’t allow the death of my second child, Kirill.”

The case has revived an aggressive campaign in Russia to curb adoptions by foreigners, and particularly by American families. The country banned adoptions of Russian orphans by Americans in late December. Opponents criticized the move, saying Russian authorities were using children for political leverage during a period of tense relations with the United States.

Russian investigators say Ms. Shatto beat Max to death, and count him as one of 20 Russian children who were adopted by American families and then died over the past 20 years. On Wednesday, Russia’s chief investigator said he had opened 11 criminal cases in Russian courts against American parents who were acquitted by American courts in connection with such deaths.

In an interview on Russian state television Wednesday, Ms. Kuzmina said she was returning home from a store with sweets for the children in 2011 when she learned that social services had taken Maksim and Kirill away.

“I am guilty for everything that has happened,” she said through tears during the interview. “Now I want to take him back.”

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