January 30, 2009 / 2:51 PM / in 11 years

STOCKS NEWS US-Citi: FDA regulation of tobacco co's won't matter

 Stocks on the move [HOT-RTRS]  Real-time Equity news [U E]  [RESF/US]
 U.S. stock market report [.N] 0935 ET 30Jan2009-Citi: FDA regulation of tobacco co's won't matter ------------------------------------------------------------------------------
 Citi on Friday said that if the Food and Drug Administration begins to regulate the tobacco industry, it would make little difference to shareholders, though it would be unhelpful for sentiment. "Europe has most of the regulations that are proposed already in place, and profitability and volume trends are remarkably similar to those seen in the U.S.," it wrote.
 Rep. Henry Waxman of California is expected to introduce a bill ensuring that the tobacco industry is regulated by the FDA, a bill Citi expects to pass.
 The firm said that the bill could lead to a ban on menthol, an action it said could hurt Lorillard LO.N, which makes more than 97 percent of its earnings before interest and taxes from its menthol-flavored Newports. For the company, "this is potentially a big issue and is certainly likely to create volatility. However, we don't believe that it is practical to ban menthol, which currently makes up about 29 percent of the U.S. cigarette market," it wrote.
 Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0928 ET 30Jan2009-Markets open higher after GDP report, earnings ------------------------------------------------------------------------------
 Markets opened moderately higher on Friday, after data showed that GDP data contracted by 3.8 percent in the fourth quarter. Though the contraction was not as bad as many had feared, it was still the sharpest drop since 1982. Also weighing on markets was a round of corporate results, including earnings from such Dow components as ExxonMobil (XOM.N), Chevron (CVX.N) and Procter & Gamble (PG.N).
 The Dow Jones industrial average .DJI rose 0.3 percent to 8,176.68 while the S&P 500 .SPX gained 0.5 percent to 849.25 and the Nasdaq .IXIC was up 0.8 percent to 1,519.97.
 Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0917 ET 30Jan2009-January same-store sales expected to fall 2.4 pct ------------------------------------------------------------------------------
 Same-store sales for retailers are expected to fall 2.4 percent in January, as the recession weighs on consumer spending, according to Thomson Reuters Proprietary Research data. The total average estimate improved slightly from last week, when a drop of 2.5 percent was expected. In January 2008, same-store sales rose 0.4 percent.
 Excluding Wal-Mart (WMT.N), the world's largest retailer, total same-store sales are expected to slide 5.7 percent, compared with growth of 0.3 percent in the year-earlier period.
 The Thomson Reuters report read that the consumer confidence index, which fell to a new low in January, "reinforces the fact that consumers are worried about their job situation. Consumers realize that the unemployment rate has been on the rise and if they believe it will stay on that path it is likely they will continue to hold back on spending."
 All sectors Thomson Reuters covers, including discount, department stores, apparel and drug retail, are expected to see their comparable sales fall from the prior year.
 Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0909 ET 30Jan2009-Merrill bearish on media co's in the near term ------------------------------------------------------------------------------
 Merrill Lynch on Friday said it was cautious on media and entertainment stocks, seeing few positive near-term catalysts for the industry. "Advertising is likely to contract materially in 2009," the firm wrote, adding that home video revenue would be under pressure and that companies would have to cut back on return to shareholders.
 "Historically, media stocks begin to outperform one to two quarters before the end of a recession, which suggests investors should remain cautious until at least mid-2009 and perhaps beyond," it wrote, adding that it was skeptical about a potential recovery in results in the second half of the year.
 The firm said it was only recommending two entertainment companies: DreamWorks Animation DWA.N and Discovery (DISCA.O).
 Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 

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