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US stock market daily report (February 12, 2013, Tuesday)

President Barack Obama will deliver his State of the Union address Tuesday at 9:00pm ET and will likely take advantage of the newfound freedom to speak more forcefully on his second-term agenda items such as gun control, immigration overhaul and climate change just to name a few. "His sense of self-confidence is palpable since he was re-elected," said Michael Waldman, president of the Brennan Center for Justice at New York University School of Law, in an interview. "And the American people like that," said Waldman, who was a speechwriter in former President Bill Clinton's White House. "They want a happy warrior. They want to see their president in the fight with a smile." Apple Inc. (AAPL) CEO Tim Cook will be one of First Lady Michelle Obama's guests at the State of the Union address on Tuesday night, the White House confirmed Tuesday. Other business leaders, among the 23 guests in the First Lady's box, will be Peter Hudson, the co-founder and CEO of ITriage, now a unit of Aetna Inc. (AET) and Deb Carey, owner of the New Glarus Brewing Company, from a small town outside Madison, Wisc. will represent small business.

Chief counsel Ken Vittor for McGraw-Hill Co. (MHP) parent company of Standards and Poor's Corp., said the agency is open to settlement talks with the U.S. Justice Department which is seeking $5 billion in damages. Justice is alleging S&P gave deceptive ratings to mortgage securities between 2004 and 2007 that greatly underestimated the risk to investors, in order to collect fees from the firms that were pooling the risky home loans into securities. "If there is a reasonable settlement opportunity made available to us in any case, we are open to discus it," Vittor said. McGraw-Hill said on a conference call on Tuesday that it expects to respond formally to the lawsuit brought by the Department of Justice in the next 60-90 days. McGraw-Hill said in a statement accompanying its fourth-quarter results, "The company does not believe the Department of Justice can prove that this failure -- common to nearly everyone at the time -- was the product of intentional misconduct by anyone at S&P." Vittor said the suit provided specifics on only about $500 million of losses suffered by federally insured institutions, while seeking $5 billion in penalties. From the collateralized debt obligations (CDOs) named in the complaint, Vittor said in a conference call with analysts and investors that S&P earned less than $15 million. CDOs are bundles of debt securities based on assets such as mortgages and, leading up to the financial crisis, many mortgage-backed assets included in CDOs consisted of subprime loans that later soured.

The U.S. Treasury Department reported on Tuesday that the U.S. government ran a budget surplus of $3 billion during January, the first monthly surplus since September 2012. The surplus was driven by a 16% increase in revenues compared to January 2012. For the first four months of fiscal 2013, the U.S. ran a deficit of $290 billion, $59 billion less than the same period in fiscal 2012. The government's fiscal year runs from October to September.


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