Futures for the leading stock indexes are flat this morning, ahead of what may be a quieter day than usual because of the impact of the storm about to hit the Northeast.
One of the big premarket risers is video game maker Activision Blizzard (ATVI), up about 10% after it reported earnings that handily beat Wall Street estimates. Also rising are shares of AOL�(AOL), up 6% after it reported itsbest quarterly revenue growth in eight years thanks to strong sales.
Shares of Moody’s (MCO) are off slightly after the ratings agency’s strong fourth-quarter earnings were offset by a Reuters report that it may follow McGraw-Hill (MHP) in being sued by the Justice Department and US states:
The Justice Department and multiple states are discussing also suing Moody’s�for defrauding investors, according to people familiar with the matter, but any such move will likely wait until a similar lawsuit against rival Standard and Poor’s is tested in the courts.
Inquiries into Moody’s are in the early stages, largely because state and federal authorities have dedicated more resources to the S&P lawsuit, said the sources, who were not authorized to speak publicly about enforcement discussions.
In a similar vein is this Bloomberg story:
The Justice Department decision to sue Standard & Poor�s has investors asking why Moody�s Investors Service and Fitch Ratings weren�t targeted for awarding the same top grades to troubled mortgage bonds and other debt securities.
Moody’s quarterly results showed a 66% rise in profit, and its full-year earnings outlook was well above consensus estimates.
The Wall Street Journal today reports on how Goldman Sachs (GS) is having to change one of its most lucrative units to comply with new regulations:
The looming “Volcker rule” is expected to sharply reduce the bank’s investment in its own funds. That is forcing Goldman to make major changes in a $50 billion business that has reaped big profits for the bank and its employees and clients.
Goldman likely will have to shrink the size of its own investment in its funds to just 3% from as much as 37% once the rule is finalized later this summer. The rule, part of the Dodd-Frank financial-overhaul law and named after former Federal Reserve Chairman Paul Volcker, aims to restrict banks from making big bets with their own money.
Goldman expects new funds it raises will be considerably smaller. The New York bank also will change the name of the business to avoid referencing its own name. GS Capital Partners and future funds may become “Broad Street,” referring to both the firm’s old headquarters and its first leveraged-buyout fund launched in 1986, according to people involved in the business.
Also in the Journal, Jack Nicas looks at what a merger between American Airlines parent AMR (AAMRQ) and US Airways (LCC) could mean:
The prospective deal could restore American, which has suffered billions of dollars of losses in recent years, to its former status as the world’s biggest carrier.
The new American would have hubs at seven of the nine busiest U.S. airports and boast a strong presence in Europe and Latin America. It would suddenly become a major player in Boston and Tampa, Fla., and at New York’s LaGuardia Airport and Reagan National Airport near Washington.
The merger would be good news for frequent fliers of both American and US Airways, offering them dozens of new destinations and a healthier, more stable airline industry. But the deal wouldn’t solve a crucial problem for the airline: a lack of service to Asia, the world’s fastest-growing air market.
The paper reported yesterday that a merger is expected to be finalized in the next week.
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