US stock rallied Monday following a positive fourth quarter earnings report from computer services giant IBM - a Dow component - and the prospect of rate cuts.
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The Dow Jones Industrial Average closed up 171.85 points, or 1.4%, at 12778.15.
IBM on Monday announced fourth-quarter 2007 diluted earnings of $2.80 per share from continuing operations, an increase of 24 percent, compared with diluted earnings of $2.26 per share in the fourth quarter of 2006. The company also reported fourth-quarter revenue of $28.9 billion, an increase of 10 percent as reported, including 6 points of currency benefit, compared with the fourth quarter of 2006.
IBM's share price rose 5.40%.
The US dollar fell following last week's signal by Fed Chairman Ben Bernanke favoring "substantive," which is seen by traders that the Fed's rate-setting Federal Open Market Committee, which is due to meet on Jan 30/31 will cut the federal funds rate to 3.75%. The euro moved close to the record November 2007 level versus the greenback above $1.49.
The Wall Street Journal says today that Citigroup Inc./Citi is expected to announce a sizable dividend cut, cash infusion of at least $10 billion and write-down of as much as $20 billion in mortgage-related investments as part of its fourth-quarter earnings report, people familiar with the plans said.
Vikram Pandit, Citigroup's chief executive, also is expected to unveil a cost-cutting plan that is likely to include substantial job cuts. The moves are part of his push to shore up the company's finances, including replenishing its depleted capital.
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