The weeks top news USA

The week's top news and analysis, Oct. 31-Nov. 4


To those American workers who feel they're doing the work of three, who find
they're too busy to spend their allotted vacation days and who rarely see
sunlight that's not filtered through the tempered glass of a high-rise office
building, the week's big economic news was hardly shocking.
The U.S. economy is barely adding jobs? "No kidding," they might say.
American workers have grown more productive, leading to lower labor costs? "Tell
us something we don't know."
With the latest Fed rate hike and the tail end of earnings season also vying
for investor attention, the main U.S. stock indexes posted solid weekly gains.
The Nasdaq Composite , in fact, had its best week in more than a year, rising
3.8%. The S&P 500 and the blue-chip Dow 30 , meanwhile, advanced 1.8% and 1.2%,
respectively.
Stay tuned to MarketWatch this weekend. "MarketWatch Weekend," our weekly
television show, features an interview in which best-selling author Robert
Kiyosaki tells entrepreneurs how to chase dreams but keep them rooted in
reality. Plus money lessons for kids and more.
Our online weekend feature asks whether the GOP has it in it to get tough
with Big Oil.
Tim Rostan, managing editor
Getting busier
Productivity in the U.S. workplace accelerated in the third quarter, rising
at a 4.1% annual rate, according to the Labor Department. Unit labor costs -- a
key measure of inflationary pressures stemming from compensation -- declined by
an annualized 0.5%, the most significant move lower in well over a year.
Dozen not enough for Fed
The Federal Open Market Committee voted unanimously to raise the benchmark
federal-funds target rate by a quarter-percentage point to 4%, putting rates at
their highest level since June 2001. It was the 12th straight meeting at which
the U.S. central bankers opted to boost lending rates. They went on to signal
that further hikes can be expected.
Changing Time
It was almost like a new era for Time Warner. Not only did investors take
heart from its latest quarterly results, but they found cause for hope in the
media giant's outlook and share-buyback plan. Shareholders also learned that the
Steve Case era had well and truly drawn to a close; the America Online founder
announced he was leaving the Time Warner board he formerly headed.
Trick or trillions
Wall Street managed to scare up a blitz of Halloween mergers that helped
push the year's total for M&A activity past the $2 trillion mark -- the highest
level since 2000.
Deutsche Telekom restructuring
The week began with investors wondering aloud whether Deutsche Telekom AG ,
Europe's largest phone company, would seek to outdo Spanish telecommunications
leader Telefonica's $30 billion-plus bid for U.K.-based O2. By midweek, the
market was absorbing news of a massive scale-back at the German company. DT said
Wednesday it would cut 32,000 jobs over three years in hopes of offsetting a
slide in fixed-line revenue.
Dell warns on sales
Dell shares fell more than 8% as investors disliked the No. 1
personal-computer company's reduced third-quarter sales outlook and its less
encouraging profit picture.
Jersey jury's Vioxx verdict favors Merck
Merck won a closely watched liability case filed in New Jersey by a man who
suffered a heart attack after taking its recalled Vioxx drug. Its stock rallied
in response.
Dollar rally shows resilience
The dollar's resilience in the face of a disappointing October U.S. payrolls
tally spooked investors left holding a stalled euro; their reaction sent
Europe's shared currency tumbling to a 1 1/2-year low Friday. The U.S. currency
has also been trading at multiyear highs against Japan's yen and multimonth
bests against the Australian and New Zealand currencies.
An October surprise for retail
U.S. retailers registered a better-than-expected October, lifting hopes for
the upcoming, and crucial, holiday shopping season. "This is great stuff," said
industry analyst Richard Hastings, sifting through the months' same-store-sales
numbers. "It shows again that you can't bet against the consumer."
J&J's Guidant buy is on the rocks
U.S. regulators have now given their go-ahead, but Johnson & Johnson said
that it's been holding talks with heart-implant maker Guidant over restructuring
of the terms of their pending merger, adding that it might pull the plug on the
deal altogether.

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