With record highs in sight, stocks face roadblocks

NEW YORK (Reuters) - If Wall Street needs to climb a wall of worry, it will have plenty of opportunity next week.

Major U.S. stock indexes will make another attempt at reaching all-time records, but the fitful pace that has dominated trading is likely to continue. Next Friday's unemployment report and the hefty spending cuts that look like they about to take effect will be at the forefront.

The importance of whether equities can reach and sustain those highs is more than Wall Street's usual fixation on numbers with psychological significance. Breaking through to uncharted territory is seen as a test of investors' faith in the rally.

"It's very significant," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"The thinking is, there's just not enough there for an extended bull run," he said. "If we do break through (record highs), then maybe the charts and price action are telling us there's something better ahead."

Flare-ups in the euro zone's sovereign debt crisis and next Friday's report on the U.S. labor market could jostle the market, though U.S. job indicators have generally been trending in a positive direction.

Small- and mid-cap stocks hit lifetime highs in February. Now the Dow Jones industrial average <.dji> and the S&P 500 <.spx> are racing each other to the top. The Dow, made up of 30 stocks, is about 75 points - less than 1 percent - away from its record close of 14,164.53, which it hit on October 9, 2007. The broader S&P is still 3 percent away from its closing high of 1,565.15, also reached on October 9, 2007.

The advantage may be in the Dow's court. So far in 2013, it has gained 7.5 percent, beating the S&P 500 by about 1 percent.

THE RALLY AND THE REALITY CHECK

The Dow's relative strength owes much to its unique make-up and calculation, as well as to investors' recent preference for buying value stocks likely to generate steady reliable gains, rather than growth stocks.

But the more defensive stance illustrates how stock buyers are getting concerned about this year's rally. While investors don't want to miss out on gains, they're picking up companies that are less likely to decline as much as high-flying names - if a market correction comes.

The Russell Value Index <.rav> is up 7.6 percent for the year so far, outpacing the Russell Growth Index's <.rag> 5.7 percent rise. Within the realm of the S&P 500, the consumer staples sector led the market in February, gaining 3.1 percent.

There is some concern that growth-oriented names are being eclipsed by defensive bets, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.

"This isn't a be-all and end-all sell signal by any means, but we would feel much more comfortable if some of the more aggressive areas, like technology and small caps, would start to gain some leadership here," Detrick said.

Signs that investors are becoming concerned about the rally's pace is evident in the options market, where the ratio of put activity to call activity has recently shifted in favor of puts, which represent expectations for a stock to fall.

"We are seeing some put hedging in the financials, building up for the past month," said Henry Schwartz, president of options analytics firm Trade Alert in New York.

The put-to-call ratio representing an aggregate of about 562 financial stocks is 1:1, when normally, calls should be outnumbering puts.

Investors have no shortage of reasons to crave the relative safety of blue chips and defensive stocks. Although markets have mostly looked past uncertainty over Washington's plans to cut the deficit, fiscal policy negotiations still pose a risk to equities.

The $85 billion in spending cuts set to begin on Friday is expected to slow economic growth this year if policymakers do not reach a new deal. Markets so far have held firm despite the wrangling in Washington, but tangible economic effects could pinch stock prices going forward.

The International Monetary Fund warned that full implementation of the cuts would probably take at least 0.5 percentage point off U.S. growth this year.

EASY MONEY AND TEPID HIRING

Investors will also take in a round of economic data at a time when concerns are percolating that the market is being pushed up less by fundamentals and more by loose monetary policy around the world.

The main economic event will be Friday's non-farm payrolls report for February. The U.S. economy is expected to have added 160,000 jobs last month, only a tad higher than in January, in a sign the labor market is healing at a slow pace. The U.S. unemployment rate is forecast to hold steady at 7.9 percent.

While lackluster data has been a catalyst in the past for stock market gains as investors bet it would ensure continued stimulus from the Federal Reserve, that sentiment may be wearing thin.

Markets stumbled last week following worries that the Fed might wind down its quantitative easing program sooner than expected.

"It shows the underpinning of the market is being driven at this point by monetary policy," Hellwig said.

With investors questioning what is behind the rally, it will make a run to record highs even more significant, Hellwig added.

"There's smart people that are in the bull camp and the bear camp and the muddle-through camp," Hellwig said. "The fact that you can statistically, using historical evidence, make a case for going higher, lower, or staying the same makes this number very important this time around."

(Wall St Week Ahead runs every Friday. Comments or questions on this column can be emailed to: leah.schnurr(at)thomsonreuters.com)

(Reporting by Leah Schnurr; Additional reporting by Doris Frankel in Chicago; Editing by Jan Paschal)

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India Ink: Image of the Day: March 1

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Bonnie Franklin Dies at 69

Breaking News

By Stephen M. Silverman

03/01/2013 at 01:35 PM EST

One Day at a Time star Bonnie Franklin, who announced last September that she was suffering from pancreatic cancer, died of complications of the disease on Friday, her family told the Los Angeles Times. She was 69.

Franklin died at her Los Angeles home, and is survived by her mother, Claire Franklin, and stepchildren Jed Minoff and Julie Minoff, said the paper.

On the long-running CBS series, which was developed by Norman Lear and on the air from 1975-1984, Franklin starred as divorced mom Ann Romano, alongside Mackenzie Phillips and Valerie Bertinelli, who played her teenage daughters.

Franklin and Bertinelli reunited on the small screen in 2011 when the Franklin played the mother of Bertinelli's character's boyfriend on Hot in Cleveland.

When Franklin's disease was first revealed, Phillips Tweeted, "Sending out love and sweet prayers to my 'mom.' The incomparable Bonnie Franklin."

A California native, Franklin was born in the beach city of Santa Monica but moved to Beverly Hills as a teen. Her father was a Russian-born investment banker, and her mother was born in Romania – and they remained her most ardent fans. She attended Smith College in Massachusetts and then transferred to UCLA.

Acting since childhood, Franklin first appeared on TV at the age of 3 (reciting Shakespeare) and in movies – including Alfred Hitchcock's The Wrong Man, starring Henry Fonda. In 1970 she sang the title song in the Tony-winning Lauren Bacall Broadway musical Applause. Franklin played a sunny chorus gypsy, and stopped the show twice.

From 1967 to 1970 she was married to the playwright Ronald Sossi, and then from 1980 until his death in 2009, to producer Marvin Minoff. Speaking to The New York Times about their marriage in 1980, Franklin said that she had promised Minoff that their years together would be many things, "but I promised him they weren't going to be boring."

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WHO: Slight cancer risk after Japan nuke accident

LONDON (AP) — Two years after Japan's nuclear plant disaster, an international team of experts said Thursday that residents of areas hit by the highest doses of radiation face an increased cancer risk so small it probably won't be detectable.

In fact, experts calculated that increase at about 1 extra percentage point added to a Japanese infant's lifetime cancer risk.

"The additional risk is quite small and will probably be hidden by the noise of other (cancer) risks like people's lifestyle choices and statistical fluctuations," said Richard Wakeford of the University of Manchester, one of the authors of the report. "It's more important not to start smoking than having been in Fukushima."

The report was issued by the World Health Organization, which asked scientists to study the health effects of the disaster in Fukushima, a rural farming region.

On March 11, 2011, an earthquake and tsunami knocked out the Fukushima plant's power and cooling systems, causing meltdowns in three reactors and spewing radiation into the surrounding air, soil and water. The most exposed populations were directly under the plumes of radiation in the most affected communities in Fukushima, which is about 150 miles (240 kilometers) north of Tokyo.

In the report, the highest increases in risk are for people exposed as babies to radiation in the most heavily affected areas. Normally in Japan, the lifetime risk of developing cancer of an organ is about 41 percent for men and 29 percent for women. The new report said that for infants in the most heavily exposed areas, the radiation from Fukushima would add about 1 percentage point to those numbers.

Experts had been particularly worried about a spike in thyroid cancer, since radioactive iodine released in nuclear accidents is absorbed by the thyroid, especially in children. After the Chernobyl disaster, about 6,000 children exposed to radiation later developed thyroid cancer because many drank contaminated milk after the accident.

In Japan, dairy radiation levels were closely monitored, but children are not big milk drinkers there.

The WHO report estimated that women exposed as infants to the most radiation after the Fukushima accident would have a 70 percent higher chance of getting thyroid cancer in their lifetimes. But thyroid cancer is extremely rare and one of the most treatable cancers when caught early. A woman's normal lifetime risk of developing it is about 0.75 percent. That number would rise by 0.5 under the calculated increase for women who got the highest radiation doses as infants.

Wakeford said the increase may be so small it will probably not be observable.

For people beyond the most directly affected areas of Fukushima, Wakeford said the projected cancer risk from the radiation dropped dramatically. "The risks to everyone else were just infinitesimal."

David Brenner of Columbia University in New York, an expert on radiation-induced cancers, said that although the risk to individuals is tiny outside the most contaminated areas, some cancers might still result, at least in theory. But they'd be too rare to be detectable in overall cancer rates, he said.

Brenner said the numerical risk estimates in the WHO report were not surprising. He also said they should be considered imprecise because of the difficulty in determining risk from low doses of radiation. He was not connected with the WHO report.

Some experts said it was surprising that any increase in cancer was even predicted.

"On the basis of the radiation doses people have received, there is no reason to think there would be an increase in cancer in the next 50 years," said Wade Allison, an emeritus professor of physics at Oxford University, who also had no role in developing the new report. "The very small increase in cancers means that it's even less than the risk of crossing the road," he said.

WHO acknowledged in its report that it relied on some assumptions that may have resulted in an overestimate of the radiation dose in the general population.

Gerry Thomas, a professor of molecular pathology at Imperial College London, accused the United Nations health agency of hyping the cancer risk.

"It's understandable that WHO wants to err on the side of caution, but telling the Japanese about a barely significant personal risk may not be helpful," she said.

Thomas said the WHO report used inflated estimates of radiation doses and didn't properly take into account Japan's quick evacuation of people from Fukushima.

"This will fuel fears in Japan that could be more dangerous than the physical effects of radiation," she said, noting that people living under stress have higher rates of heart problems, suicide and mental illness.

In Japan, Norio Kanno, the chief of Iitate village, in one of the regions hardest hit by the disaster, harshly criticized the WHO report on Japanese public television channel NHK, describing it as "totally hypothetical."

Many people who remain in Fukushima still fear long-term health risks from the radiation, and some refuse to let their children play outside or eat locally grown food.

Some restrictions have been lifted on a 12-mile (20-kilometer) zone around the nuclear plant. But large sections of land in the area remain off-limits. Many residents aren't expected to be able to return to their homes for years.

Kanno accused the report's authors of exaggerating the cancer risk and stoking fear among residents.

"I'm enraged," he said.

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Mari Yamaguchi in Tokyo and AP Science Writer Malcolm Ritter in New York contributed to this report.

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Online:

WHO report: http://bit.ly/YDCXcb

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India Ink: India’s Budget Targets Women

At a time when India’s commitment to women’s rights is under scrutiny, the government’s annual budget released Thursday proposed a number of measures for women, including increased spending to improve their safety and a bank only for women.

These provisions are part the Congress-led United Progressive Alliance government’s broader focus on “inclusive” growth, through collecting more taxes from the country’s super-rich and increasing social spending. Finance Minister Palaniappan Chidambaram on Thursday stressed the need to lift up groups that “will be left behind” unless they receive “special attention,” as he allocated greater funds for programs for women, lower castes and tribes and India’s rural poor.

On Thursday, Mr. Chidambaram set aside 971 billion rupees ($18 billion) for what is known as the “gender budget,” a concept introduced in the 2005–06 fiscal year, which reflects the total spending on programs likely to benefit women. This represents a more than 10 percent increase from last year.

The central government will contribute 10 billion rupees to a fund to provide better security and safety for women, called “Nirbhaya,” or “fearless,” the name used by the media to refer to a victim of a gang rape in Delhi in December, whose death prompted thousands to take to the streets to demand greater rights for women.

“Recent incidents have cast a long, dark shadow on our liberal and progressive credentials,” Mr. Chidambaram said Thursday. “As more women enter public spaces — for education or work or access to services or leisure — there are more reports of violence against them.”

Some women’s rights advocates welcomed the additional resources for safety. “I think it is extremely encouraging and high time that the government moves towards ensuring a focus and priority on women’s issues,” said Pinky Anand, a lawyer in the Supreme Court who has worked on rape and sexual assault laws.

More important than the amount is “the fact that the government has chosen to put these issues on top of the list of priorities,” she said.

Others criticized the government for not doing enough. Jayati Ghosh, a professor of economics at the Jawaharlal Nehru University, called the sum “peanuts,” dismissing it as a “grandstanding gesture” rather than a serious measure.

“Security of women is a basic responsibility of the state,” Ms. Ghosh said, rather than something that should be addressed with a special fund.

The All India Democratic Women’s Association said in a statement that the scope of the fund remained undefined, which showed that the government was “keen to make a hasty political move to garner the trust and confidence of the women protesters without taking any specific and concrete steps to implement the Justice Verma Committee recommendations.” The group was referring to a report released in January that recommended sweeping changes in India’s police and judicial system.

Mr. Chidambaram also proposed a new state bank for women, which would employ mostly women. The bank, which will start with a capital of 10 billion rupees, will lend to women, women’s self-help groups and women-owned business.

Again, women’s rights activists were divided. Ms. Ghosh called the idea of a women’s bank “almost offensive,” and said the government should give women better access to all banks instead. “It is this ghettoization I have a problem with,” she said.

Ranjana Kumari, the director of the Center for Social Research in Delhi, called the idea an act of “political symbolism.” “Nevertheless,” she said, “it is a good development because this is the first time that women are being formally engaged in the financial sector.”

The budget also allocated 2 billion rupees for programs to combat sexual discrimination, especially in the workplace. On Feb. 26, Parliament passed a bill that aims to prevent, prohibit and punish sexual harassment of women in the workplace, the first comprehensive law on such harassment.

The budget didn’t go far enough, said the All India Democratic Women’s Association, which criticized the government for not dedicating enough money to women’s issues and failing to come up with specific measures to address pressing issues like health care and employment for women.

On Feb. 8, several women’s organizations, including the All India Democratic Women’s Association and the All India Women’s Conference, submitted a report to the finance minister requesting he address certain concerns in the budget, including a rise in violence against women, which they said could be traced back to growing economic disparities.

“The lack of recognition of women’s contribution to the economy and its underestimation are issues that are central to the increasing discriminatory trends,” the report said.

Among their demands were increased spending for the effective implementation of laws protecting women, greater safety in public transport, improved sanitation, the rehabilitation of victims of violence and an allocation of resources for the creation of jobs for women.

The finance minister did not meet with women’s groups despite repeated requests, Ms. Kumari said, and the budget did not reflect their demands.

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Rob Kardashian Tweets His Way to Fitness

By Cara Lynn Shultz

02/28/2013 at 01:30 PM EST

Rob Kardashian in Feb. 2011 (left) and in Dec. 2012

Scott Kirkland/Getty, Seth Browarnik/Startraks

Breaking up is hard to do. And if you're in the public eye like Rob Kardashian, it's proven to be a weighty issue.

The reality star is looking to shed 50 lbs., reportedly gained after his breakup with singer Rita Ora. He's now hard at work to take off the weight, sharing his progress (and frustrations with his "fat boy" breakfasts!) with his fans on Twitter and Instagram.

See what his workout soundtrack includes, and check out his best pics of his healthy meals and workouts below.

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Wall Street drifts after two-day run, Dow record in sight

NEW YORK (Reuters) - U.S. stocks edged higher on Thursday with investors hard-pressed to lift indexes to multi-year highs despite strong economic data.

The U.S. economy ticked up in the fourth quarter, reversing an earlier estimate showing contraction, and a drop in new claims for unemployment benefits last week added to a string of data that suggests the economy improved early this year.

Still, the positive revision to GDP data was expected and the claims continue a trend that is baked into prices. The market lacks catalysts as it digests its recent move higher, according to Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey, where he helps oversee $120 billion in assets under management.

"That's why I think you're seeing a fairly listless trading environment today," Caron said.

The Dow was within striking distance of a record high after a more than 7 percent year-to-date run. The Dow transports index <.djt>, seen as a bet on future growth, is up almost 13 percent this year and hit a record intraday high Thursday before turning slightly negative.

The Dow Jones industrial average <.dji> rose 14.79 points or 0.11 percent, to 14,090.16, the S&P 500 <.spx> gained 3.12 points or 0.21 percent, to 1,519.11 and the Nasdaq Composite <.ixic> added 9.13 points or 0.29 percent, to 3,171.39.

The Dow's intraday record, set October 11, 2007, stands at 14,198.10.

The S&P 500 has gained more than 2 percent in the past three sessions.

Equity markets suffered steep losses earlier in the week on concerns over the impact of an Italian election on the European economy, but bounced back on strong data and recent comments by Federal Reserve Chairman Ben Bernanke that showed continued support for the Fed's economic stimulus policy.

J.C. Penney Co Inc slumped 17.9 percent to $17.38 after the department store reported a steep drop in sales on Wednesday. Groupon Inc also slumped on weak revenue, with the stock off 20 percent at $4.76.

Cablevision shares tumbled nearly 10 percent after the cable provider took a $100 million hit on costs related to Superstorm Sandy and posted deeper video customer losses than expected.

Mylan Inc shares were on track to close at their highest ever after the generic drugmaker posted a 25 percent rise in fourth-quarter profit and said it will buy a unit of India's Strides Arcolab Ltd. Shares were last up 3.8 percent at $29.66.

Investors were keeping an eye on the debate in Washington over U.S. government budget cuts that will take effect starting Friday if lawmakers fail to reach agreement on spending and taxes. President Barack Obama and Republican congressional leaders arranged last-ditch talks to prevent the cuts, but expectations were low that any deal would emerge.

With 93 percent of the S&P 500 companies having reported results so far, 69.5 percent have beaten profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6.2 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

(Reporting by Rodrigo Campos, additional reporting by Ryan Vlastelica; Editing by Nick Zieminski)

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IHT Rendezvous: Will Turkey Make Peace With the Kurds?

LONDON — There is growing optimism that a ceasefire in Turkey’s three-decade war with Kurdish guerrillas will be declared to coincide with the Kurdish New Year in three weeks.

Under a draft plan reported on Wednesday, the rebel Kurdistan Workers’ Party, or P.K.K., would lay down its arms on March 21 and withdraw its forces from Turkish territory by August.

The potential for a breakthrough in ending the conflict, which has claimed 40,000 lives since 1984, came when the government of Prime Minister Recep Tayyip Erdogan opened talks late last year with Abdullah Ocalan, the P.K.K.’s jailed leader.

Intelligence agents made a series of visits to the prison island of Imrali near Istanbul to negotiate with the former guerrilla chief, who was once Turkey’s most wanted man.

In their latest visit, last weekend, they accompanied a delegation of Kurdish legislators from the Peace and Democracy Party, or B.D.P.

Selahattin Demirtas, the B.D.P. co-chairman, said this week that there was already a de facto ceasefire. The P.K.K. was not carrying out armed action and the Turkish army was not conducting significant military operations against the rebels.

He quoted a letter from Mr. Ocalan in which he expressed the belief that the process would lead to an eventual resolution of the Kurdish issue. “Neither we nor the state can abandon that process,” he quoted the letter as saying.

The P.K.K. has abandoned its previous demands for independence but continues to seek equal rights for Kurds within the Turkish state.

Mr. Erdogan meanwhile dramatically underlined his own good intentions by telling his parliamentary colleagues he was prepared to drink poison if it meant achieving peace.

There are reports that the P.K.K. is preparing to release 16 Turkish prisoners, possibly as early as this weekend, as part of the peace moves.

Mr. Ocalan has sought the backing of P.K.K. exiles in Europe for the peace initiative, as well as that of guerrilla fighters based in the north of Iraq.

Duran Kalkan, a senior P.K.K. commander based in Iraq, said this week that he is open to the idea of a prisoner release. “However, nobody should expect us to make a unilateral move.”

In what appeared to be a positive response to the peace moves, he told the Kurdish Firatnews: “If everybody does what is required to do, I can say on behalf of the P.K.K. that the Kurdish armed movement will never pose an obstacle to the democratization of Turkey and the solution of the Kurdish question.”

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Kathy Bates Joins American Horror Story, Ron Livingston Joins Boardwalk Empire

By Andrea Billups

02/27/2013 at 01:45 PM EST

Kathy Bates and Ron Livingston

Retna; WireImage

Two familiar stars will join the casts of American Horror Story and Boardwalk Empire for the shows' new seasons.

Kathy Bates, who won an Oscar for her frightening role as Annie in the horror film Misery, will join season 3 of FX's American Horror Story alongside fellow Oscar-winner Jessica Lange, EW reports.

Bates, 64, won an Emmy Award in 2012 for her guest turn on Two and a Half Men. She also appeared on Harry's Law and The Office. Bates announced last September that she had undergone a double-mastectomy for breast cancer after surviving ovarian cancer nine years earlier.

While he charmed on Sex and the City and Band of Brothers, Ron Livingston is set to play a wealthy businessman who shakes things up on HBO's Boardwalk Empire, working on season 4 of the Prohibition-era drama alongside star Steve Buscemi.

Livingston, 45, an Iowa native whose TV anchor sister drew praise over a bullying flap last year, gained fame in the film Office Space. He had previously starred in HBO's political drama Game Change.

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Vt. lye victim gets new face at Boston hospital

BOSTON (AP) — A Vermont nurse disfigured in a 2007 lye attack has received a new face at a Boston hospital.

Carmen Blandin Tarleton's full facial transplant at Brigham & Women's Hospital included transplanting a female donor's facial skin to Tarleton's neck, nose and lips, along with facial muscles, arteries and nerves.

Hospital officials say the 44-year-old Thetford, Vt., woman suffered burns on more than 80 percent of her body after her estranged husband attacked her.

Tarleton's sister said Wednesday she showed "great appreciation" for the gift she's been given.

The donor's family believes their loved one's spirit lives on in Tarleton.

Tarleton has undergone more than 50 surgeries. The latest took 15 hours and included a team of more than 30 medical professionals.

Tarleton once worked as a transplant nurse.

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