Wall Street ends sour week with 5th straight decline

NEW YORK (Reuters) - Stocks fell for a fifth straight day on Friday, dropping 1 percent and marking the S&P 500's longest losing streak in three months as the federal government edged closer to the "fiscal cliff" with no solution in sight.

President Barack Obama and top congressional leaders met at the White House to work on a solution for the draconian debt-reduction measures set to take effect beginning next week. Stocks, which have been influenced by little else than the flood of fiscal cliff headlines from Washington in recent days, extended losses going into the close with the Dow Jones industrial average and the S&P 500 each losing 1 percent, after reports that Obama would not offer a new plan to Republicans. The Dow closed below 13,000 for the first time since December 4.

"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, managing partner at Direct Access Partners LLC in New York. "He's going to force the House to come to him with something different. I think that's a surprise. The entire market is disappointed in a lack of leadership in Washington."

In a sign of investor anxiety, the CBOE Volatility Index <.vix>, known as the VIX, jumped 16.69 percent to 22.72, closing at its highest level since June. Wall Street's favorite fear barometer has risen for five straight weeks, surging more than 40 percent over that time.

The Dow Jones industrial average <.dji> dropped 158.20 points, or 1.21 percent, to 12,938.11 at the close. The Standard & Poor's 500 Index <.spx> lost 15.67 points, or 1.11 percent, to 1,402.43. The Nasdaq Composite Index <.ixic> fell 25.59 points, or 0.86 percent, to end at 2,960.31.

For the week, the Dow fell 1.9 percent. The S&P 500 also lost 1.9 percent for the week, marking its worst weekly performance since mid-November. The Nasdaq finished the week down 2 percent. In contrast, the VIX jumped 22 percent for the week.

Pessimism continued after the market closed, with stock futures indicating even steeper losses. S&P 500 futures dropped 26.7 points, or 1.9 percent, eclipsing the decline seen in the regular session.

All 10 S&P 500 sectors fell during Friday's regular trading, with most posting declines of 1 percent, but energy and material shares were among the weakest of the day, with both groups closely tied to the pace of growth.

An S&P energy sector index <.gspe> slid 1.8 percent, with Exxon Mobil down 2 percent at $85.10, and Chevron Corp off 1.9 percent at $106.45. The S&P material sector index <.gspm> fell 1.3 percent, with U.S. Steel Corp down 2.6 percent at $23.03.

Decliners outnumbered advancers by a ratio of slightly more than 2 to 1 on the New York Stock Exchange, while on the Nasdaq, two stocks fell for every one that rose.

"We've been whipsawing around on low volume and rumors that come out on the cliff," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia, who helps oversee $7 billion in assets.

With time running short, lawmakers may opt to allow the higher taxes and across-the-board federal spending cuts to go into effect and attempt to pass a retroactive fix soon after the new year. Standard & Poor's said an impasse on the cliff wouldn't affect the sovereign credit rating of the United States.

"We're not as concerned with January 1 as the market seems to be," said Richard Weiss, senior money manager at American Century Investments, in Mountain View, California. "Things will be resolved, just maybe not on a good timetable, and any deal can easily be retroactive."

Trading volume was light throughout the holiday-shortened week, with just 4.46 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT on Friday, below the daily average so far this year of about 6.48 billion shares. On Monday, the U.S. stock market closed early for Christmas Eve, and the market was shut on Tuesday for Christmas. Many senior traders were absent this week for the holidays.

Highlighting Wall Street's sensitivity to developments in Washington, stocks tumbled more than 1 percent on Thursday after Senate Majority Leader Harry Reid warned that a deal was unlikely before the deadline. But late in the day, stocks nearly bounced back when the House said it would hold an unusual Sunday session to work on a fiscal solution.

Positive economic data failed to alter the market's mood.

The National Association of Realtors said contracts to buy previously owned U.S. homes rose in November to their highest level in 2-1/2 years, while a report from the Institute for Supply Management-Chicago showed business activity in the U.S. Midwest expanded in December.

"Economic reports have been very favorable, and once Congress comes to a resolution, the market should resume an upward trend, based on the data," said Weiss, who helps oversee about $125 billion in assets. "All else being equal, we see any further decline as a buying opportunity."

Barnes & Noble Inc rose 4.3 percent to $14.97 after the top U.S. bookstore chain said British publisher Pearson Plc had agreed to make a strategic investment in its Nook Media subsidiary. But Barnes & Noble also said its Nook business will not meet its previous projection for fiscal year 2013.

Shares of magicJack VocalTec Ltd jumped 10.3 percent to $17.95 after the company gave a strong fourth-quarter outlook and named Gerald Vento president and chief executive, effective January 1.

The U.S.-listed shares of Canadian drugmaker Aeterna Zentaris Inc surged 13.8 percent to $2.47 after the company said it had reached an agreement with the U.S. Food and Drug Administration on a special protocol assessment by the FDA for a Phase 3 registration trial in endometrial cancer with AEZS-108 treatment.

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)

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Victim of Gang Rape in India Dies at Hospital in Singapore

NEW DELHI — A young woman who had been in critical condition since she was raped two weeks ago by a group of men who lured her onto a bus here died early Saturday, an official at the hospital in Singapore that was caring for her said.

The woman, a 23-year-old physiotherapy student whose rape on Dec. 16 had served as a reminder of the dangerous conditions women face in India, died “peacefully,” according to a statement by Dr. Kelvin Loh, the chief executive of Mount Elizabeth Hospital in Singapore.

The woman, whose intestines were removed because of injuries caused by a metal rod used during the rape, has not been identified. She was flown to Singapore on Wednesday night after undergoing three operations at a local hospital.

“The patient had remained in an extremely critical condition,” the statement said, adding, “She was courageous in fighting for her life for so long against the odds but the trauma to her body was too severe for her to overcome.”

The police have arrested six people in connection with the attack, Indian officials said.

Revulsion and anger over the rape have galvanized India, where women regularly face sexual harassment and assault, and where neither the police nor the judicial system is seen as adequately protecting them. Angry protesters thronged central Delhi after the attack was made public and assembled in other major cities, demanding better protection from the police and better treatment over all for women. Some protesters and politicians have called for the death penalty for rapists.

Top officials now say that further change is needed.

“The emergence of women in public spaces, which is an absolutely essential part of social emancipation, is accompanied by growing threats to their safety and security,” Prime Minister Manmohan Singh said in a speech on Thursday. “We must reflect on this problem, which occurs in all states and regions of our country, and which requires greater attention.”

Activists and lawyers in India have long said that the police are insensitive when dealing with crimes against women. The result, they say, is that many women do not report cases of sexual violence.

India, which has more than 1.3 billion people, recorded 24,000 cases of rape last year, a figure that has increased by 25 percent in the past six years. On Thursday, Delhi government officials said they would register the names and photographs of convicted rapists on the Delhi police Web site, the beginning of a national registry for rapists.

Meanwhile, the family of an 18-year-old woman in the northern Indian state of Punjab who committed suicide on Wednesday after being raped last month by two men blamed the police for her death on Friday.

Relatives of the woman say she killed herself because the police delayed registering the case or arresting the rapists.

If the police “had done their job, she would be alive today,” the woman’s sister, Charanjit Kaur, 28, said in a phone interview. “They didn’t listen to us; they didn’t act.”

On Friday, the Punjab high court intervened, asking the police to explain their delay. Three police officers have been suspended in the case, according to news media reports. Punjab police officials did not respond to phone calls seeking comment.

Ms. Kaur said her sister was abducted by two men from a place of worship near the small town of Badshahpur on Nov. 13 and was drugged and raped repeatedly.

When the woman reported the episode at the local police station a few days later, she was asked to describe it in graphic detail and was “humiliated,” her sister said.

Over the next few days, Ms. Kaur said, her mother and sister were repeatedly called to the police station and forced to sit there all day.

But the case was not registered for two weeks, as police officials and village elders tried to broker a deal between the men accused of the rape and the victim. In some parts of India, women are commonly married to men who have raped them.

Ms. Kaur said the police told her family that, because they were poor, they would not be able to fight the matter in court. “They kept putting pressure on my family to take money or marry the accused or just somehow settle the matter,” she said.

After no agreement was reached, the police registered the case, but they did not make any arrests.

The victim was stalked and harassed by the men accused of the rape, who threatened to kill her and her family if she refused to drop the complaint, her suicide note said.

“They have ruined my life,” the note read, according to Ms. Kaur. The note names two men and a woman who allegedly helped the other two men as they kidnapped her. Those two men have now been arrested, the police said Friday.

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China tightens Internet controls, legalizes post deletion

BEIJING (Reuters) – China unveiled tighter Internet controls on Friday, legalizing the deletion of posts or pages which are deemed to contain “illegal” information and requiring service providers to hand over such information to the authorities for punishment.

The rules signal that the new leadership headed by Communist Party chief Xi Jinping will continue muzzling the often scathing, raucous online chatter in a country where the Internet offers a rare opportunity for debate.

The new regulations, announced by the official Xinhua news agency, also require Internet users to register with their real names when signing up with network providers, though, in reality, this already happens.

Chinese authorities and Internet companies such as Sina Corp have long since closely monitored and censored what people say online, but the government has now put measures such as deleting posts into law.

“Service providers are required to instantly stop the transmission of illegal information once it is spotted and take relevant measures, including removing the information and saving records, before reporting to supervisory authorities,” the rules state.

The restrictions follow a series of corruption scandals amongst lower-level officials exposed by Internet users, something the government has said it is trying to encourage.

Li Fei, deputy head of parliament’s legislative affairs committee, said the new rules did not mean people needed to worry about being unable to report corruption online. But he added a warning too.

“When people exercise their rights, including the right to use the Internet, they must do so in accordance with the law and constitution, and not harm the legal rights of the state, society … or other citizens,” he told a news conference.

Chinese Internet users already cope with extensive censorship measures, especially over politically sensitive topics like human rights and elite politics, and popular foreign sites Facebook, Twitter and Google-owned YouTube are blocked.

Earlier this year, the government began forcing users of Sina’s wildly successful Weibo microblogging platform to register their real names.

The new rules were quickly condemned by some Weibo users.

“So now they are getting Weibo to help in keeping records and reporting it to authorities. Is this the freedom of expression we are promised in the constitution?” complained one user.

“We should resolutely oppose such a covert means to interfere with Internet freedom,” wrote another.

The government says tighter monitoring of the Internet is needed to prevent people making malicious and anonymous accusations online, disseminating pornography and spreading panic with unfounded rumors, pointing out that many other countries already have such rules.

Despite periodic calls for political reform, the party has shown no sign of loosening its grip on power and brooks no dissent to its authority.

(Reporting by Ben Blanchard and Sally Huang; Editing by Nick Macfie)

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Gen. Norman Schwarzkopf, Commander in Persian Gulf War, Dies at 78

By Mike Fleeman

12/27/2012 at 08:10 PM EST

H. Norman Schwarzkopf, the Army general who commanded coalition forces in the Persian Gulf War against Saddam Hussein, died Thursday in Tampa, Fla., at age 78.

The cause of death was not immediately known. His death was confirmed to the Associated Press by a source.

Known as "Stormin' Norman" for his volcanic temper, the decorated Vietnam War combat soldier became a familiar face from his many press conferences during Operation Desert Storm in 1991.

Under his leadership during the presidency of George H.W. Bush, coalition forces drove Hussein's troops out of Kuwait, which Iraq had invaded, with relatively few coalition casualties, but the Iraqi leader remained in power.

Hussein would ultimately be left for Bush's presidential son, George W. Bush, to contend with.

After the Gulf War, Schwarzkopf became a television military analyst and went into a quiet retirement in Florida to write his memoirs.

The elder Bush, now hospitalized in intensive care, said in a statement that Schwarzkopf was a "true American patriot and one of the great military leaders of his generation."

"More than that, he was a good and decent man – and a dear friend," says Bush. "Barbara and I send our condolences to his wife Brenda and his wonderful family."

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Kenya hospital imprisons new mothers with no money

NAIROBI, Kenya (AP) — The director of the Pumwani Maternity Hospital, located in a hardscrabble neighborhood of downtown Nairobi, freely acknowledges what he's accused of: detaining mothers who can't pay their bills. Lazarus Omondi says it's the only way he can keep his medical center running.

Two mothers who live in a mud-wall and tin-roof slum a short walk from the maternity hospital, which is affiliated with the Nairobi City Council, told The Associated Press that Pumwani wouldn't let them leave after delivering their babies. The bills the mothers couldn't afford were $60 and $160. Guards would beat mothers with sticks who tried to leave without paying, one of the women said.

Now, a New York-based group has filed a lawsuit on the women's behalf in hopes of forcing Pumwani to stop the practice, a practice Omondi is candid about.

"We hold you and squeeze you until we get what we can get. We must be self-sufficient," Omondi said in an interview in his hospital office. "The hospital must get money to pay electricity, to pay water. We must pay our doctors and our workers."

"They stay there until they pay. They must pay," he said of the 350 mothers who give birth each week on average. "If you don't pay the hospital will collapse."

The Center for Reproductive Rights, which filed the suit this month in the High Court of Kenya, says detaining women for not paying is illegal. Pumwani is associated with the Nairobi City Council, one reason it might be able to get away with such practices, and the patients are among Nairobi's poorest with hardly anyone to stand up for them.

Maimouna Awuor was an impoverished mother of four when she was to give birth to her fifth in October 2010. Like many who live in Nairobi's slums, Awuor performs odd jobs in the hopes of earning enough money to feed her kids that day. Awuor, who is named in the lawsuit, says she had saved $12 and hoped to go to a lower-cost clinic but was turned away and sent to Pumwani. After giving birth, she couldn't pay the $60 bill, and was held with what she believes was about 60 other women and their infants.

"We were sleeping three to a bed, sometimes four," she said. "They abuse you, they call you names," she said of the hospital staff.

She said saw some women tried to flee but they were beaten by the guards and turned back. While her husband worked at a faraway refugee camp, Awuor's 9-year-old daughter took care of her siblings. A friend helped feed them, she said, while the children stayed in the family's 50-square-foot shack, where rent is $18 a month. She says she was released after 20 days after Nairobi's mayor paid her bill. Politicians in Kenya in general are expected to give out money and get a budget to do so.

A second mother named in the lawsuit, Margaret Anyoso, says she was locked up in Pumwani for six days in 2010 because she could not pay her $160 bill. Her pregnancy was complicated by a punctured bladder and heavy bleeding.

"I did not see my child until the sixth day after the surgery. The hospital staff were keeping her away from me and it was only when I caused a scene that they brought her to me," said Anyoso, a vegetable seller and a single mother with five children who makes $5 on a good day.

Anyoso said she didn't have clothes for her child so she wrapped her in a blood-stained blouse. She was released after relatives paid the bill.

One woman says she was detained for nine months and was released only after going on a hunger strike. The Center for Reproductive Rights says other hospitals also detain non-paying patients.

Judy Okal, the acting Africa director for the Center for Reproductive Rights, said her group filed the lawsuit so all Kenyan women, regardless of socio-economic status, are able to receive health care without fear of imprisonment. The hospital, the attorney general, the City Council of Nairobi and two government ministries are named in the suit.

___

Associated Press reporter Tom Odula contributed to this report.

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Wall Street rebounds on House session, but off for 4th day

NEW YORK (Reuters) - Stocks fell for a fourth day on Thursday, but recovered most of their losses after the House of Representatives, in the barest sign of progress, said it would come back to work on avoiding the "fiscal cliff" this weekend.

It was a jittery session for stocks, with shares falling more than 1 percent after Senate Majority Harry Reid warned a deal was unlikely before the deadline, only to rebound merely on the news that the House would reconvene Sunday, a day before the December 31 "cliff" deadline.

"There's no conviction in the move or the overall market, based on the across-the-board reduction we've seen in volume ... but there will be continued weakness until there's sustained positive direction coming from our leaders," said Joseph Cangemi, managing director at ConvergEx Group, in New York.

The market has been prone to quick reactions to headlines and those moves have sometimes seemed more dramatic because of reduced trading volume. About 5.18 billion shares changed hands on the New York Stock Exchange, the Nasdaq and the NYSE MKT, well below the daily average so far this year of about 6.48 billion shares.

Investors are looking for any hint that lawmakers will avert the $600 billion in tax hikes and spending cuts that will start to take effect next week and could push the U.S. economy into recession.

"Markets turned around in a heartbeat, as the House session is the first announcement of anything getting done," said Randy Bateman, chief investment officer of Huntington Asset Management, in Columbus, Ohio, which oversees $14.5 billion in assets. "I'm not convinced it will result in a deal, but you could get enough concessions by both parties to at least avoid the immediacy of going over the cliff."

In a sign of the anxiety, the CBOE Volatility Index <.vix>, or VIX, rose above 20 for the first time since July, suggesting rising worries, but ended up finishing the day down 0.4 percent as the stock market rebounded.

Stocks in the materials and the financial sectors, which are more vulnerable to the economy's performance, bore the brunt of the selling before recovering. Shares of Bank of America fell 0.6 percent to $11.47 while Freeport-McMoRan Copper & Gold fell 0.7 percent to $33.68.

Some of 2012's biggest gainers bucked the broader trend and rallied, a sign of year-end "window dressing." Expedia Inc was the S&P 500's top percentage gainer, climbing 4.1 percent to $60.30. The price of the online travel agency's stock has doubled this year.

The Dow Jones industrial average <.dji> slipped 18.28 points, or 0.14 percent, to 13,096.31 at the close. The Standard & Poor's 500 Index <.spx> declined 1.73 points, or 0.12 percent, to end at 1,418.10. The Nasdaq Composite Index <.ixic> dropped 4.25 points, or 0.14 percent, to close at 2,985.91.

Marvell Technology Group fell 3.5 percent to $7.14 after it said it would seek to overturn a jury's finding of patent infringement. The stock had fallen more than 10 percent in the previous session after a jury found the company infringed on patents held by Carnegie Mellon University and ordered the chipmaker to pay $1.17 billion in damages.

The four-day decline marked the S&P 500's longest losing streak in three months. The index has lost 1.8 percent over the period as investors grapple with the possibility that a deal may not be reached until next year.

President Barack Obama arrived back in Washington from Hawaii to restart stalled negotiations with Congress. House Speaker John Boehner and other Republican leaders were to hold a conference call with Republican lawmakers. The expectation was that lawmakers would be told to get back to Washington quickly if the Senate passed a bill.

Treasury Secretary Timothy Geithner announced the first of a series of measures that should push back the date when the U.S. government will hit its legal borrowing authority - a limit known as the debt ceiling - by about two months.

Economic data seemed to confirm worries about the impact of the fiscal cliff on the economy.

The Conference Board, an industry group, said its index of consumer confidence in December fell to 65.1 as the budget crisis dented growing optimism about the economy. The gauge fell more than expected from 71.5 in November.

However, the job market continues to mend. Initial claims for unemployment benefits dropped 12,000 to a seasonally adjusted 350,000 last week and the four-week moving average fell to the lowest since March 2008.

Decliners outnumbered advancers on the New York Stock Exchange by a ratio of about 8 to 7, while on the Nasdaq, about 14 stocks fell for every 11 that rose.

(Editing by Jan Paschal)

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Military Analysis: Battle for Aleppo Shows Weaknesses of Both Sides

Tyler Hicks/The New York Times

A rebel in Aleppo, which has highlighted the rebels’ inability to organize a coherent campaign and the government’s missteps. More Photos »

ALEPPO, Syria — The sniper walked through the rubble near this city’s front lines. He was searching for another spot from where he might catch a Syrian soldier in his rifle scope’s cross hairs.

Speaking in French-accented English, he said he was not Syrian, but a roaming jihadist who had journeyed here to help the Sunni uprising against President Bashar al-Assad’s secular, Alawite rule.

“I am a Muslim,” he said. “When you see on TV many of your brothers and sisters being killed you have to go help them. This is an obligation in Islam.”

The presence of this foreign antigovernment fighter, who claimed to be from Paris and gave his name as Abu Abdullah, pointed to recurring questions of the battle for Syria’s largest city: How much longer will the fighting last, and what will its effects be?

Now in its sixth month, the battle for Aleppo has become the contest for Syria in a microcosm, exposing the weakness of both sides, while highlighting anew the perils and costs of the country’s bitter civil war.

It has underlined the rebels’ difficulties in organizing a coherent campaign; their paucity of infantry weapons heavier than machine guns; and some of their fighters’ participation in the same human rights abuses for which they condemn the government, including the summary killing of prisoners.

It has also left rebels vulnerable to allegations of corruption, including the theft of much needed food and other aid.

Simultaneously, the fighting has exposed the government’s seemingly fatal miscalculations. For all of its statements to the contrary, and no matter its effort to mass soldiers and firepower here, Mr. Assad’s government has mustered neither the popular support nor the military might to stop the rebels’ slow momentum, much less to defeat them.

These days rumors circulate of Mr. Assad’s dilemma — will he flee Damascus, Syria’s capital, or die behind the palace gate? — while it is rebels who speak with confidence.

“Now we are making very good progress,” said Col. Abdul Jabbar al-Okaidi, a former Syrian military officer who is now one of the senior rebel commanders in the Aleppo region. “Almost all of the military bases and regime forces in Aleppo have been surrounded.”

As winter descends, intensifying the humanitarian crisis for Aleppo’s civilians, the battle’s direction has decisively shifted.

The Syrian Army units here have been largely cut off from the capital. For weeks they have been yielding ground, contracting under the pressures of persistent rebel attacks from almost every direction and the related difficulties of resupply.

The military’s tactic of collective punishment — manifested through seemingly indiscriminate airstrikes and artillery barrages on residential neighborhoods — has earned it only anger and disgust.

One opposition activist noted the army’s practice of firing a few artillery rounds into neighborhoods, waiting five or ten minutes for civilians to gather to help the wounded, and then firing again — resembling NATO’s practice of repeat airstrikes in its campaign in 2011 to unseat Col. Muammar el-Qaddafi of Libya. “Sometimes we wait and don’t go out after the first shells, because we know other shells are coming,” said the activist, Mumtaz Mohammad. “There are a lot of victims who were killed because of this policy.”

Once able to roam freely in its armored columns, the army begins the winter confined mostly to the city’s south and west. It also retains tenuous control of the airport in the southeast, although rebels have pushed close to its fences and claim to have positioned many antiaircraft weapons there.

Syrian Air Force support, almost continuous in the city over the summer, has dwindled. The sound of Russian-made helicopters, once constant, is now unusual.

Passing attack jets often dispense bright strings of decoy flares — a sign that pilots fear the rebels’ portable, heat-seeking missiles, used to shoot down at least one aircraft late in the fall.

But these accumulating rebel successes have not come without setbacks, costs and questions about Syria’s future. The army, while weak, is still potent and difficult to dislodge where it has concentrated forces in Aleppo, just as it has done in most of Syria’s cities.

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Analysis: For tech investors, it’s hard to know when to bolt

(Reuters) – When Hewlett-Packard Co agreed to buy British software company Autonomy in August last year for $ 11.1 billion, two well-known investors made diametrically different bets on how the big deal would play out.

To short seller Jim Chanos, who had been raising red flags on Autonomy for years and had started shorting shares of HP in 2011, the deal was another nail in the coffin of the Silicon Valley tech giant, according to a source familiar with his thinking.

But to activist investor Ralph Whitworth, co-founder of Relational Investors LLC, it was time to commit to HP and the turnaround story the company was trying to sell to Wall Street. His fund bought more than 17.5 million HP shares after the deal was announced, and Whitworth received a seat on the company’s board. This year, Relational roughly doubled its stake in HP.

In the wake of HP’s decision to take an $ 8.8 billion write-down on the deal because of alleged accounting irregularities at Autonomy, it appears Chanos – whose call to short Enron before the energy company collapsed in a corporate scandal may be his most famous trade – was more astute.

HP’s shares are down 36 percent since Relational, which declined to comment, built its stake in the third quarter of 2011.

BARRIERS TO ENTRY

Relational’s big move into HP is a reminder that even smart investors can get things wrong in the fast-evolving technology sector, where once hot global names like Research in Motion and Yahoo can quickly become yesterday’s news.

It is a world where a company may effectively erect barriers to entry in a market only to have them torn down by a rival with a new whizz-bang product – just as Apple‘s iPhone broke the dominance that Research in Motion’s BlackBerry had enjoyed.

One warning sign that a tech company may be on the verge of losing its edge is when it makes acquisitions outside of its main area of expertise to move into new product lines. Savvy tech investors also say be wary of companies that experience a succession of management changes, or when a successful core business starts looking tired.

The pace of change in the technology sector is much faster than in other industries, said Kaushik Roy, an analyst at Hercules Technology Growth Capital. “It attracts new talent and capital, many startups are formed, which can be extremely disruptive to incumbents,” Roy said. “In other words, yesterday’s winners can rapidly become today’s losers and vice versa.”

In the case of HP, the company not only has had four CEOs since 1999, it has been striving to find another niche to dominate as demand for one of its core products – computer printers – wanes and as its PC business stumbles.

Or consider online search pioneer Yahoo, which has gone through six chief executives and is struggling to keep pace with Google.

Josh Spencer, a portfolio manager at T. Rowe Price, said frequent turnover in the executive suite at Yahoo was a warning sign to him. Spencer said he does not own Yahoo shares and has not in the recent past.

RED FLAGS

While a company may view an acquisition as a fresh start – that is what HP was trying to say about Autonomy – some investors see it as a warning the core business is struggling.

Spencer noted that the technology industry’s most successful companies – Apple and Samsung – generally have not made acquisitions and instead developed new products internally.

For Margaret Patel, managing director at Wells Capital Management, one of the first red flags she saw at HP was when former CEO Carly Fiorina bought Compaq for roughly $ 25 billion in 2002.

“I felt then that the acquisition was too large and expensive, and personal computers were not their core strength,” said Patel, who has since avoided investing in HP.

Of course, timing can be everything even if an investor is eventually proven right. Patel missed out on a 137 percent gain in HP’s stock price from the time of the Compaq deal up until the end of 2010.

PREMIUM VALUATIONS

A few money managers see a flashing yellow light in the big sell-off of Apple shares in the past few months.

Apple, the most valuable U.S. company, has shed nearly 30 percent of its value in the last three months.

Since the death of co-founder Steve Jobs – the driving force behind Apple’s iPod, iPhone and iPad – DoubleLine co-founder Jeffrey Gundlach has been recommending that investors short the company’s shares because “the product innovator isn’t there anymore.”

Gundlach said he began shorting Apple’s stock at around $ 610 and maintains that it could drop to $ 425. He declined to comment on Tim Cook, who succeeded Jobs over a year ago and is seen by many as less visionary and innovative than Jobs.

Christian Bertelsen, chief investment officer at Global Financial Private Capital, with assets under management of $ 1.7 billion, said his firm began paring back its exposure to Apple this fall because he felt the expectations for the company’s new iPhone5 had gotten overheated.

He said his firm dramatically took down its exposure to Apple shares when the stock hit $ 670 a share. “For us, the light bulb went off this fall,” he said. Mind you, Apple’s shares still remain up about 25 percent for the whole year.

And then there’s Research in Motion. Once a leader in smartphones, it’s now in danger of becoming irrelevant.

“They saw the move towards all touch-screen phones and didn’t move with it,” said Stuart Jeffrey, an analyst at Nomura Securities who noted how the BlackBerry 10 touch-screen phone will debut on January 30, 2013, six years after Apple released its first iPhone in 2007.

Robert Stimpson, a portfolio manager at Oak Associates Funds whose fund does not own any shares of Research in Motion, said the company’s BlackBerry phones are on a downward slope and it will be tough for the company to regain its lost luster.

“The end of the road is a long, lonely journey,” Stimpson said of Research in Motion. “I think they will fight the good fight for many years, probably unsuccessfully.”

(Reporting by Nicola Leske and Sam Forgione in New York; Editing by Paritosh Bansal, Tiffany Wu, Jennifer Ablan and Matthew Goldstein; Editing by Steve Orlofsky)

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Channing Tatum Cradles Wife Jenna Dewan-Tatum's Baby Bump

By Marla Lehner

12/26/2012 at 06:40 PM EST

Channing Tatum is already being sweet with his baby.

PEOPLE's Sexiest Man Alive, who announced earlier this month that he and his wife are expecting their first child, posted an adorable picture of himself cradling Jenna Dewan-Tatum's growing baby bump on Christmas Day.

"Merry Christmas," the Magic Mike hunk wrote on his WhoSay page where he shared the photo of the couple, both 32, smiling and dressed in matching baseball caps.

On Christmas Eve, Dewan-Tatum Tweeted a holiday message to her followers, saying, "Merry Christmas and happy holidays to you all!! Hope you are having fun with loved ones! Xox."

Discussing starting a family, "I'm ready; I think she’s ready," Tatum told PEOPLE recently. "The first number that pops into my head is three, but I just want one to be healthy and then we'll see where we go after that."

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Wall Street drops in thin session, led by retailers

NEW YORK (Reuters) - Stocks fell for a third straight day on Wednesday, dragged lower by retail stocks after a report showed consumers spent less in the holiday shopping season than last year.

Trading was light, with volume at a mere 4.01 billion shares traded on the New York Stock Exchange, the Nasdaq and NYSE MKT, well below the daily average so far this year of about 6.48 billion shares. The day's volume was the lightest full day of trading so far in 2012. Many senior traders were still on vacation during this holiday-shortened week and major European markets were closed for the day.

Many investors said concerns about the "fiscal cliff" kept shoppers away from stores, suggesting markets may struggle to gain any ground until that issue is resolved. The CBOE Volatility Index <.vix> or VIX, Wall Street's favorite barometer of investor anxiety, rose 4.46 percent, closing above 19 for the first time since November 7.

A number of 2012's strongest performers advanced, a sign that portfolio managers may be engaging in "window dressing," a practice where market participants buy securities with big gains to improve the appearance of their holdings before presenting the results to clients. Bank of America Corp , which has more than doubled in 2012, added 2.6 percent to $11.54 on Wednesday.

Holiday-related sales rose 0.7 percent from October 28 through December 24, compared with a 2 percent increase last year, according to data from MasterCard Advisors SpendingPulse. The Morgan Stanley retail index <.mvr> skidded 1.8 percent while the SPDR S&P Retail Trust slipped 1.7 percent.

"With the 'fiscal cliff' hanging over our heads, it was hard to convince people to shop, and now it's hard to convince investors that there's any reason to buy going into year-end," said Rick Fier, director of trading at Conifer Securities in New York, which has about $12 billion in assets under administration.

President Barack Obama is due back in Washington early Thursday for a final effort to negotiate a deal with Congress to bridge a series of tax increases and government spending cuts set to begin next week, the so-called "fiscal cliff" many economists worry could push the U.S. economy into recession if it takes effect.

Coach Inc fell 5.9 percent to $54.13 as the S&P 500's biggest decliner, followed by Amazon.com , down 3.9 percent at $248.63, and Abercrombie & Fitch , off 3.5 percent at $45.44. Ralph Lauren Corp , Limited Brands and Gap Inc also ranked among the S&P 500's biggest decliners.

The Dow Jones industrial average <.dji> slipped 24.49 points, or 0.19 percent, to 13,114.59 at the close. The Standard & Poor's 500 Index <.spx> shed 6.83 points, or 0.48 percent, to 1,419.83. The Nasdaq Composite Index <.ixic> dropped 22.44 points, or 0.74 percent, to 2,990.16.

J.C. Penney Co was a notable exception to the weakness in retail stocks, surging 4.4 percent to $20.75 as the S&P 500's biggest gainer. It was followed closely by Bank of America and Genworth Financial , which each gained nearly 3 percent for the day.

"People want to show they own names like these, making them prime 'window dressing' candidates," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

"Bank of America keeps going up even though it's overbought and you'd expect a pullback at these levels. No one wanted it when it was under $10 a share, but they want it now."

The S&P 500 has fallen 1.5 percent over the past three sessions, the worst three-day decline since mid-November. The Dow Jones Transportation Average <.djt>, viewed as a proxy for business activity, fell 0.6 percent.

A Republican plan that failed to gain traction last week triggered the S&P 500's recent drop, highlighting the market's sensitivity to headlines centered on the budget talks.

During the last five trading days of the year and the first two of next year, it's possible for a "Santa rally" to occur. Since 1928, the S&P 500 has averaged a gain of 1.8 percent during that period and risen 79 percent of the time, according to data from PrinceRidge.

"While it's unlikely there could be a budget deal at any time, no one wants to get in front of that trade," said Conifer's Fier. "Investors can easily make up for any gains when there's more action in 2013."

Data showed U.S. single-family home prices rose in October, reinforcing the view that the domestic real estate market is improving, as the S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.7 percent in October on a seasonally adjusted basis.

Decliners outnumbered advancers on the New York Stock Exchange by a ratio of about 2 to 1, while on the Nasdaq, more than five stocks fell for every three that rose.

(Editing by Jan Paschal)

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