Wall Street advances after stream of economic data

NEW YORK (Reuters) - Stock index rose on Friday after a batch of positive economic data points, but gains were checked with the benchmark S&P index at five-year highs as investors looked for strong catalysts to push the market further upward.

Data showed Chinese exports grew more than expected in January, while imports climbed 28.8 percent, highlighting robust domestic demand, while German data showed a 2012 surplus that was the nation's second highest in more than 60 years, an indication of the underlying strength of Europe's biggest economy.

Another positive sign was U.S. economic data which showed the trade deficit shrank in December to $38.5 billion, its narrowest in nearly three years, indicating the economy did much better in the fourth quarter than initially estimated.

But wholesale inventories unexpectedly fell 0.1 percent in December as auto dealers and agricultural suppliers drew down their stocks.

The S&P 500 <.spx> has risen for five straight weeks and is up 6.3 percent for the year. Its advance was helped by legislators in Washington averting a series of automatic spending cuts and tax hikes earlier in the year, as well as better-than-expected corporate earnings and data that pointed to modest economic improvement but no immediate change in the Federal Reserve's stimulus plans.

The index, hovering near five-year highs, has found it tougher to climb in recent days as investors await strong trading incentives to drive it further upward.

"We are going to have this churn and this consolidation, which actually isn't a bad thing - it's actually good the market isn't being so volatile and is actually consolidating because it is building a base," said Ken Polcari, Director of the NYSE floor division at O'Neil Securities in New York.

"If it builds a base, from there it is easier to make the argument that you move ahead."

The Dow Jones industrial average <.dji> gained 67.62 points, or 0.48 percent, to 14,011.67. The Standard & Poor's 500 Index <.spx> climbed 7.82 points, or 0.52 percent, to 1,517.21. The Nasdaq Composite Index <.ixic> rose 27.34 points, or 0.86 percent, to 3,192.47.

McDonald's Corp said January sales at established hamburger restaurants around the world fell 1.9 percent, a steeper decline than analysts expected. Still, shares edged up 0.5 percent to $94.11.

Healthcare stocks were among the best performers, with the Morgan Stanley healthcare payor index <.hmo> up 2.3 percent. Molina Healthcare Inc surged 12.1 percent to $32.36 as the biggest boost to the index after posting fourth-quarter earnings.

LinkedIn Corp jumped 19.3 percent to $148.02 after announcing blow-out quarterly profits and a bullish forecast for the year that exceeded Wall Street's already lofty expectations.

According to Thomson Reuters data through Friday morning, of 339 companies in the S&P 500 that have reported earnings, 69.9 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies grew 5.2 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

(Editing by Bernadette Baum)

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Way of the World: Theorizing About Taxing High Earners

NEW YORK — Academics can be dismissive of the concerns of the popular media. But when it comes to the growth of the superrich, the tabloids may have gotten it right.

The numbers tell the story. According to a study by John Van Reenen of the London School of Economics and Brian Bell of Oxford University, the share of national income earned by the top 1 percent in the United States surged to 18.3 percent in 2007, from 8 percent in 1979. In Britain, the trend was almost identical: The top 1 percent received 15.4 percent of the national income in 2007 compared with 5.9 percent in 1979. And these figures exclude capital gains.

“A lot of the action has been at the very top end of the distribution, the top 1 percent or the top 0.1 percent,” Mr. Van Reenen, director of the Center for Economic Performance at the L.S.E., told me. “It shows you that the media’s focus on the very rich and on bankers’ bonuses wasn’t misplaced.”

But while much of the shift in income distribution has been at the apex of the pyramid, that is not where most academic research on rising income inequality has been focused.

If anything, Mr. Van Reenen said, academics “have tended to focus on the bottom of the distribution, much more than the top.”

Mr. Van Reenen and some like-minded colleagues have been working to fill that gap. Their efforts made it to the economic major leagues in January, when Mr. Van Reenen convened a panel discussion on extreme wage inequality at the prestigious annual get-together of the American Economic Association.

One of the most striking findings will probably give comfort to the plutocrats: In contrast to previous generations, the superrich today tend to have earned their fortunes rather than inherited them.

Steven Kaplan of the University of Chicago and Joshua Rauh of Stanford University in California studied Forbes magazine’s annual list of the 400 richest Americans. They found that in 1982, just 40 percent of these plutocrats had built their own businesses. By 2011, the superrich had gotten much richer — the combined wealth of the Forbes 400 was $92 billion in 1982 and had surged to $1.53 trillion by 2011 — and many more of them had, as the meme of the 2012 U.S. presidential election campaign had it, built it themselves: 69 percent.

“This isn’t the Downton Abbey rentier class,” explained Mr. Van Reenen, who has found a similar trend in Britain. “These incomes come from the labor market. You can say it is a triumph of the human capitalists over the physical capitalists.”

Among economists who study the surge in pay at the top, it is pretty much a truth universally acknowledged that taxes should rise at the summit, too. “Economics would suggest that when you have big increases in inequality, the top tax rate should rise,” Mr. Van Reenen said. “That seems very right and very reasonable.”

The impact and the structure of higher taxes for the rich are a more complicated and controversial issue. Timothy Besley and Maitreesh Ghatak, both of the London School of Economics, make a robust case for higher taxes on bankers’ bonuses. Their work is theoretical, but beyond the campus green, what may be particularly interesting is the way they frame the wider debate.

“Little undermines the case for a market economy more than the perception that there is injustice in the rewards that it generates,” they argue in a recent paper. “The greatest clamor for reform should come from those who support the market system.”

“We have shown that some form of bonus taxation in the financial sector is optimal above and beyond standard progressive income taxation,” they conclude. “We have identified a form of taxation that we believe makes the market system both fairer and more efficient.”

This robustly pro-market rationale for higher taxes on bankers, who like to think of themselves as the very embodiment of capitalism, is eye-catching, particularly for anyone who spends much time in the United States, where higher taxes and more efficient markets are usually portrayed as being anathema to one another.

Emmanuel Saez, an economist at the University of California, Berkeley, who is one of the pioneering students of incomes at the very top, has offered an even more provocative suggestion. At the American Economic Association meeting, he argued that when tax rates at the top are low, “top earners extract more pay at the expense of the 99 percent.” Higher tax rates for the rich, he suggested, “reduce the pretax income gap without hurting economic growth.”

This is a truly radical idea: that higher taxes at the top can reduce pretax inequality and not weaken the economy as a whole.

Outside the seminar room, however, these elegant ideas may run into political opposition intensified by the trends within the 1 percent that these same economists have documented.

“It may have a political effect,” Mr. Van Reenen said of the shift from inherited fortunes to self-made ones. “You feel you’ve earned it. This does make people more strongly inclined to resist taxation.”

Chrystia Freeland is editor of Thomson Reuters Digital.

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Diem Brown Reacts to Cancer-Free News

In her PEOPLE.com blog, Diem Brown, the Real World/Road Rules Challenge contestant recently diagnosed with ovarian cancer for the second time, opens up about her desire for a child and the ups and downs of cancer and fertility procedures.

Getting the call that changes your life ... literally!

I have been in this intense limbo ever since Jan. 4 when my CT Scan showed signs of a mass in my liver, which meant that there was a possible cancer spread.

Being a "veteran" of this now, I understood the doctors' concern because if cancer had spread into my liver, it was more than likely transferred by a lymph node – meaning the cancer could also be in other parts of my body.

Having that much cancer spread seemingly all throughout your body is terrifying! I felt as if I was placed in some sort of cancer maze, where as soon as I was close to an exit, a wall would quickly slam down keeping me stuck inside.

As each day passed and I hadn't gotten an answer from my liver scan, I could feel the light get dimmer and my cancer maze felt never ending.

But then the call came – the call that made me feel like I had a map leading me out of my maze, doors started lifting up and I was finally let free.

The spot in my liver caused some major havoc in my world but who the H-E-double hockey sticks cares ... because with that call I came to find out that the MRI showed it wasn't cancerous! Ahhhhh thank God!!!!

That first breath you let out when you get good news feels almost stolen. Your entire body gets weak as if you were holding up this 100-lb. weight over your head and you've finally been told you could drop it. You feel free! Absolutely freaking free!

You are so used to getting the call that starts with "sorry to tell you this but I have some bad news..." that you then desperately scramble for ways to pump yourself back up to fight. However, this time my doctor's call was different and the call became my release button – my permission to breathe and to keep on breathing!

When you're battling cancer and you hear that your blood results haven't moved since day one of chemo and a scan shows the possibility of a spread, you start thinking, "Come on! Who upstairs doesn't want me down here? Um, God, we need to have a talk!" I'm just playing, but I find I can joke with God when I pray so he doesn't mind that line of questioning.

I've learned so much through all of this and it's so weird how much clarity you can have looking back. I remember back in April 2012 when I first acknowledged the cyst – I was talking to my girlfriends and flat out said, "I'm scared ... I don't wanna do this again. I can't do this again."

I wasn't trying to be dramatic as I honestly felt I didn't have it in me to go through it all again. In 2011, I had finally felt back to my pre-2005 cancer self and then boom, I find out I have to start the whole "cancer thing" all over again ... really?

Overwhelmed but Optimistic

Everything seemed overwhelming, everything seemed too much to take in. The road seemed like this never-ending trail of bad news of things I was scared to do or confront. Realizing your mortality, undergoing more surgeries, coping with the loss of fertility, menopause, and my dreaded relationship with chemo's side effects.

I saw all of the above as an overwhelming and life-altering mountain standing smack dab in front of me. Wishing that cancer mountain wasn't there wouldn't make it go away. I knew that the best way to climb any impossible looking mountain is with small steps not giant leaps. So I tried to NOT combine all of the tasks in my head but instead address the most pressing issues one at a time.

Fertility was my first concern and now I'm happier than I was BEFORE I even had cancer in 2005. I have 10 eggs in some freezer somewhere and no matter what happens in my future no one can take those away from me – they're all mine, dang it, and I will have me some babies!

My situation is not uncommon as we have all been there, standing before what seems an impossible overwhelming battle. We have all gotten to today by pressing forward through our own hardships.

I know some, if not most, of you have experienced getting to the top of your impossible mountain and felt that euphoric rush overcome your body. You can't help but smile with the goofiest grin in the world because you accomplished something you never wanted to do or ever wanted to do again ... but you didn't break. You beat it!

I love the quote, "The strongest steel has to go through the hottest fire." I repeated that quote to myself whenever the questions of "why me?" started to creep into my mindset.

You might not like the cards you have been dealt, but you are who you are because of them. You get a bad hand and it's your choice how you can play it, but I promise if you choose not to fold, you will come out better than you could ever possibly imagine.

The feeling I have right now, at this very moment ... of finally getting my good news is the BIGGEST high in the world and the best reward for all the turmoil of a bad hand.

I want to scream, "I am cancer free!" but second-time-around cancers are a trickier bird. I won't have that specific 100 percent clear moment because of the type of cancer I have. However, that doesn't mean I can't celebrate.

Celebrating My Remission

Would I like to have had some sort of marker or test that showed the chemo fought off everything? Of course! I remember the first time I had cancer, I loved seeing my CA125 blood test numbers go from 500 to 23 by the end of all my chemo treatments because it showed me the progress of it killing the cancer.

Would I like to have a CT scan of my ovary area that showed a change from before and after chemo? Of course! But, as a result of my four surgeries, there is so much scar tissue in that area that a clear ovary scan is impossible.

So although there is no actual test to give me that gives me the 100 percent cancer-free assurance that I had back in 2006, I feel I can celebrate remission just the same. I have done every treatment the doctor has ordered, done every test, every scan and with these clear liver results, I have faith that my treatment worked.

I'm confident in my "cancer-free version" even without a test that exactly proves so. I am celebrating this moment and am ecstatic to say I'm in remission! I may have a few treatments here and there but I'm done with the fear ... I beat the sucker once again!

I know other patients still in their fight can't wait to hear those four glorious words: "You are in remission." Those four lil' words make you feel like you got a new clean slate and are free to do whatever you want in life.

I think of y'all fighting and I promise I'm not just taking my good news liver results and peace out of the patient world. My goal in life has shifted and I want nothing more than to make the road of the patient and the caregiver less ominous. I want to help and I won't stop until I accomplish my goal.

I know how lucky I am and I do not take that for granted! I started a company for patients and their loved ones called MedGift back in 2006 while going through my first battle with ovarian cancer. Now in 2013, I have found things I want to do to make MedGift better and it's all because of the experiences I have had during this second cancer fight. I am on fire with a passion that has never been more intense. I can't wait for y'all to see what I'm up to!

This is my cancer-free version! I am not living in the fear of "What if they didn't get it all?" or "How do they know if there is no test I can do?"

Instead I'm looking out in front of me, clean liver scan in hand screaming, "I'm done! Hello, you beautiful remission you! Now let's go kick some booty because I'm free."

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New whooping cough strain in US raises questions

NEW YORK (AP) — Researchers have discovered the first U.S. cases of whooping cough caused by a germ that may be resistant to the vaccine.

Health officials are looking into whether cases like the dozen found in Philadelphia might be one reason the nation just had its worst year for whooping cough in six decades. The new bug was previously reported in Japan, France and Finland.

"It's quite intriguing. It's the first time we've seen this here," said Dr. Tom Clark of the Centers for Disease Control and Prevention.

The U.S. cases are detailed in a brief report from the CDC and other researchers in Thursday's New England Journal of Medicine.

Whooping cough is a highly contagious disease that can strike people of any age but is most dangerous to children. It was once common, but cases in the U.S. dropped after a vaccine was introduced in the 1940s.

An increase in illnesses in recent years has been partially blamed on a version of the vaccine used since the 1990s, which doesn't last as long. Last year, the CDC received reports of 41,880 cases, according to a preliminary count. That included 18 deaths.

The new study suggests that the new whooping cough strain may be why more people have been getting sick. Experts don't think it's more deadly, but the shots may not work as well against it.

In a small, soon-to-be published study, French researchers found the vaccine seemed to lower the risk of severe disease from the new strain in infants. But it didn't prevent illness completely, said Nicole Guiso of the Pasteur Institute, one of the researchers.

The new germ was first identified in France, where more extensive testing is routinely done for whooping cough. The strain now accounts for 14 percent of cases there, Guiso said.

In the United States, doctors usually rely on a rapid test to help make a diagnosis. The extra lab work isn't done often enough to give health officials a good idea how common the new type is here, experts said.

"We definitely need some more information about this before we can draw any conclusions," the CDC's Clark said.

The U.S. cases were found in the past two years in patients at St. Christopher's Hospital for Children in Philadelphia. One of the study's researchers works for a subsidiary of Johnson & Johnson, which makes a version of the old whooping cough vaccine that is sold in other countries.

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JournaL: http://www.nejm.org

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Wall Street extends losses as retail, housing stocks fall

LOS ANGELES (TheWrap.com) - "The Avengers," or at least most of the members of the world-saving crew, will assemble on the stage of this year's Academy Awards. Castmates Robert Downey Jr., Chris Evans, Samuel L. Jackson, Jeremy Renner and Mark Ruffalo will present an Oscar together, show producers Craig Zadan and Neil Meron announced Wednesday. Missing in action are Scarlett Johansson, who played Black Widow but is currently starring in a revival of "Cat on a Hot Tin Roof" on Broadway, and Chris Hemsworth, who plays Thor. ...

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IHT Rendezvous: The Best Asian Art? You Can Vote on It

HONG KONG — Heading into its 10th year, the Sovereign Asian Art Prize has grown far beyond its Hong Kong base to span the very edges of the continent, including former Soviet republics and the Middle East.

Its list of 30 finalists, announced last week, was light on the usual contemporary art superpowers — there was only one name from mainland China — and heavy on Muslim-majority states that may not get as much attention in the art world. Saudi Arabia, Kazakhstan, Oman and the Palestinian territories produced finalists for the first time.

Sovereign focuses on developing talents from developing nations. The $30,000 award goes to a mid-career artist — someone who may be acclaimed in his or her home country, but who has not made it big internationally. (Its sponsor, the Hong Kong-based Sovereign Group, also has an award in Africa).

The majority of the Asian finalists are in their 30s and working in photography, prints or mixed media. While politics is nothing new in contemporary Asian art — those ironic Chairman Mao heads have become a stereotype in Chinese painting — these works also offer views on faith, culture and sexuality. (You can vote for your favorite here.)

Saudi Arabia is represented by Shadia Alem, whose photographic work “Supreme Ka’ba of God” represents her birthplace, Mecca.

“Wedding Memory” by Hassan Meer of Oman depicts a bride and groom, her face partly veiled, his entirely covered.  The catalog notes describe the backdrop as the “room that accommodates the consummation of the marriage,”  though the black-and-white image shows the exterior of a home half-destroyed and marked by graffiti.

Raeda Saadeh, from the Palestinian territories, was born in Umm al-Fahm, an Arab city in the Haifa district of Israel. Her photograph “Penelope” depicts the mythical Greek figure calmly knitting and waiting on a pile of rubble and wire in East Jerusalem, where Israeli forces had destroyed homes.

Evgeny Boikov — representing Kyrgyzstan, but originally from Azerbaijan — depicts a protester who is said to represent the 2005 and 2010 uprisings in Kyrgyzstan, the former Soviet state. Mr. Boikov uses industrial-sized printers (the kind usually used for billboa rds) to print on small canvases. The result is the indigo imprint of a man bent over, though it’s not clear whether from pain, exertion or something else.

From neighboring Kazakhstan, Said Atabekov photographs a girl holding a korpeshe, a traditional textile used as bedding, made here in the likeness of an American flag.

Also using textiles, Risham Syed, who teaches art in her native Pakistan, used acrylic, lace and army coat buttons on a square of Pakistani printed cotton to  riff on Thomas Cole’s 19th-century painting “Indians Viewing the Landscape.”

Pakistan and Hong Kong had the best showings, with four finalists.

Faiza Butt printed a poem on a light box, in Urdu on one side and English on the other. It’s a pretty, almost floral-looking work at first glance. On a closer look, you can see that she has used debris, garbage and half-eaten food as decoration.

Muhammad Ali, 24, fashioned a sepia-toned homoerotic portrait of two scantily clad men, an image that might not be risqué in the West but which could be controversial in a country where homosexuality is illegal.

Waseem Ahmed’s “Fusion” is also sexually charged. A  female nude, rendered in the type of Mughal classical art, is overlaid with details from a Western painting of Adam and Eve, just their groins showing, covered by fig leaves.

When the Man Asian Literary Prize was announced last month,  it called into question two issues concerning arts prizes in Asia. First, where, exactly, does Asia begin and end? (The Man Asia included Orhan Pamuk on its short list, although Mr. Pamuk, the Turkish Nobel laureate, has written about his desire for Turkey to join the European Union). The second is whether Asia’s budding cultural scene still needs Western corporate support. The Man Group, the hedge fund management firm, has said it would no longer underwrite the literary prize. The Sovereign Art Prize has the Swiss bank Julius Bär behind it.

An exhibition of the finalists runs through Friday at Exchange Square in Hong Kong and will later travel to Seoul and Singapore. The winner will be announced, and the works will be auctioned by Christie’s, at the Four Seasons in Hong Kong on Feb. 21.

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Monopoly Drops Iron, Adds Cat Token to Classic Board Game

People Pets

By Amy Jamieson

02/06/2013 at 10:40 AM EST

The votes are in and the iron is out.

After an online vote, the iron token in Monopoly's classic board game has been replaced with a shiny shorthaired cat wearing an "M" on her collar. The feline was chosen by fans in a separate online vote and beat out a new guitar, helicopter, diamond ring and toy robot with 31 percent of the vote.

The sometimes-detested home appliance received the least amount of clicks in a save this token vote that began Jan. 9 and closed Feb. 5.

"Breaking News: The Iron has been eliminated from Monopoly and will be replaced by a new cat token," reads a message posted Wednesday on the game's official Facebook page.

The pretty kitty joins the standard battleship, racer, shoe, wheelbarrow, thimble, top hat and another fair-weather furry friend, the Scottie dog. It will be included in the new edition of the game, which hits stores in mid- to late 2013, Hasbro said.

"We know that cat lovers around the world will be happy to welcome the new cat token into the Monopoly game," said Eric Nyman, senior vice president and global brand leader for Hasbro Gaming. "While we're a bit sad to see the iron go, the cat token is a fantastic choice by the fans and we have no doubt it will become just as iconic as the original tokens."

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Critics seek to delay NYC sugary drinks size limit

NEW YORK (AP) — Opponents are pressing to delay enforcement of the city's novel plan to crack down on supersized, sugary drinks, saying businesses shouldn't have to spend millions of dollars to comply until a court rules on whether the measure is legal.

With the rule set to take effect March 12, beverage industry, restaurant and other business groups have asked a judge to put it on hold at least until there's a ruling on their lawsuit seeking to block it altogether. The measure would bar many eateries from selling high-sugar drinks in cups or containers bigger than 16 ounces.

"It would be a tremendous waste of expense, time, and effort for our members to incur all of the harm and costs associated with the ban if this court decides that the ban is illegal," Chong Sik Le, president of the New York Korean-American Grocers Association, said in court papers filed Friday.

City lawyers are fighting the lawsuit and oppose postponing the restriction, which the city Board of Health approved in September. They said Tuesday they expect to prevail.

"The obesity epidemic kills nearly 6,000 New Yorkers each year. We see no reason to delay the Board of Health's reasonable and legal actions to combat this major, growing problem," Mark Muschenheim, a city attorney, said in a statement.

Another city lawyer, Thomas Merrill, has said officials believe businesses have had enough time to get ready for the new rule. He has noted that the city doesn't plan to seek fines until June.

Mayor Michael Bloomberg and other city officials see the first-of-its-kind limit as a coup for public health. The city's obesity rate is rising, and studies have linked sugary drinks to weight gain, they note.

"This is the biggest step a city has taken to curb obesity," Bloomberg said when the measure passed.

Soda makers and other critics view the rule as an unwarranted intrusion into people's dietary choices and an unfair, uneven burden on business. The restriction won't apply at supermarkets and many convenience stores because the city doesn't regulate them.

While the dispute plays out in court, "the impacted businesses would like some more certainty on when and how they might need to adjust operations," American Beverage Industry spokesman Christopher Gindlesperger said Tuesday.

Those adjustments are expected to cost the association's members about $600,000 in labeling and other expenses for bottles, Vice President Mike Redman said in court papers. Reconfiguring "16-ounce" cups that are actually made slightly bigger, to leave room at the top, is expected to take cup manufacturers three months to a year and cost them anywhere from more than $100,000 to several millions of dollars, Foodservice Packaging Institute President Lynn Dyer said in court documents.

Movie theaters, meanwhile, are concerned because beverages account for more than 20 percent of their overall profits and about 98 percent of soda sales are in containers greater than 16 ounces, according to Robert Sunshine, executive director of the National Association of Theatre Owners of New York State.

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Follow Jennifer Peltz at http://twitter.com/jennpeltz

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Wall Street slips after Tuesday rally, results eyed

NEW YORK (Reuters) - U.S. stocks dipped on Wednesday as investors, awaiting fresh trading incentives, locked in profits after recent rallies took the S&P 500 to five-year highs.

Transportation stocks were among the worst performers weighed down by an 8.2 percent drop in CH Robinson Worldwide , which dropped 8.2 percent to $61.53 after reporting fourth-quarter earnings.

The Dow Jones Transportation index <.djt> shed 0.6 percent after closing at an all-time high on Tuesday. The index has surged more than 10 percent this year so far.

A 6-percent advance this year so far has lifted the benchmark S&P 500 index to its highest since December 2007, while the Dow <.dji> briefly climbed above 14,000 recently, making it a challenge for investors to continue pushing the equity market upward in the absence of strong catalysts.

"You knew a correction was coming; the question was whether they were going to tease you and get it close and then start selling it off or get (the Dow) up to 14,000 and then start to make a move to the sell side," said Gordon Charlop, managing director at Rosenblatt Securities in New York.

"We got a quick move and it's really just not healthy for markets to go one way, so the idea that a little bit of a correction is due isn't troublesome to me at all."

Walt Disney Co was among the bright spots, up 1.4 percent to $55.07 after the company topped estimates for quarterly adjusted earnings and gave an optimistic outlook for the next few quarters.

According to Thomson Reuters data through Wednesday morning, of 301 companies in the S&P 500 <.spx> that have reported earnings, 68.1 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters. In terms of revenue, 65.8 percent of companies have topped forecasts.

Looking ahead, fourth-quarter earnings for S&P 500 companies are now expected to grow 4.7 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

The Dow Jones industrial average <.dji> lost 35.52 points, or 0.25 percent, at 13,943.78. The Standard & Poor's 500 Index <.spx> slipped 3.17 points, or 0.21 percent, at 1,508.12. The Nasdaq Composite Index <.ixic> shed 4.34 points, or 0.14 percent, at 3,167.24.

The benchmark S&P index rose 1.04 percent Tuesday, its biggest percentage gain since a 2.5-percent advance on January 2, when legislators sidestepped a "fiscal cliff" of spending cuts and tax hikes that could have hurt a fragile U.S. economic recovery.

Ralph Lauren Corp climbed 7.4 percent to $177.13 as the best performer on the S&P 500 after reporting renewed momentum in its holiday-quarter sales and profits.

Time Warner Inc jumped 4.3 percent to $52.11 after reporting higher fourth-quarter profit that beat Wall Street estimates, as growth in its cable networks offset declines in its film, TV entertainment and publishing units.

Visa , the world's largest credit and debit card network, is expected to report earnings per share of $1.79 for its first quarter, up from $1.49 a year earlier. Smaller rival MasterCard recently reported better-than-expected results but said its revenue growth could slow in the first half of the year due to economic uncertainty.

(Editing by Bernadette Baum)

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Bulgaria Implicates Hezbollah in Deadly Israeli Bus Blast

Reuters

Bulgaria's Burgas airport on July 18 after an explosion on a bus carrying Israeli tourists outside the airport.

SOFIA, Bulgaria — The Bulgarian government said on Tuesday that two of the people behind a deadly bombing attack that targeted an Israeli tour bus six months ago were believed to be members of the military wing of the Lebanese militant group Hezbollah.

The announcement could force the European Union to reconsider whether to designate the group as a terrorist organization and crack down on its extensive fund-raising operations across the continent. That could have wide-reaching repercussions for Europe’s uneasy détente with the group, which is an influential force in Middle East politics, considers Israel an enemy and has extensive links with Iran.

Bulgaria’s interior minister, Tsvetan Tsvetanov, said at a news conference that the investigation into the bombing in Burgas in July 2012 found that a man with an Australian passport and a man with a Canadian passport were two of the three conspirators involved in the attack, which claimed the lives of five Israeli tourists and a Bulgarian bus driver.

Bulgarian investigators had “a well-founded assumption that they belonged to the military formation of Hezbollah,” Mr. Tsvetanov said.

Bulgarian officials have found themselves under pressure from Israel and the United States, which consider Hezbollah a terrorist organization, to blame it for the bus attack. But the Bulgarians also have been facing pressure from European allies like Germany and France, which regard Hezbollah as a legitimate political organization, to temper any finding on the sensitive issue.

Mr. Tsvetanov spoke to reporters here after briefing top government officials and security personnel about the state of the investigation.

“We have followed their entire activities in Australia and Canada so we have information about financing and their membership in Hezbollah,” he said.

Mr. Tsvetanov did not mention Iran, however, Hezbollah’s ally and chief backer.

Analysts said the bombing was just one chapter in a shadow war pitting Israel against Iran and Hezbollah. Israel is believed to be behind the killings of Iranian nuclear scientists. Operatives of the Iranian Quds Force, an elite international operations unit within Iran’s Islamic Revolutionary Guards Corps, were believed to be behind a series of plots against Israeli targets in Thailand, India and Georgia. Israeli officials said the Burgas attack bore the hallmarks of a Hezbollah operation.

The European calculation all along has been that whatever its activities in the Middle East, Hezbollah does not pose a threat on the Continent. Thousands of Hezbollah members and supporters operate in Europe essentially unrestricted, raising money that is funneled back to the group in Lebanon.

Changing the designation to a terrorist entity raises the prospect of unsettling questions for Europe — how to deal with those supporters, for example — and the sort of confrontation governments have sought to avoid.

“There’s the overall fear if we’re too noisy about this, Hezbollah might strike again, and it might not be Israeli tourists this time,” said Sylke Tempel, editor in chief of the German foreign affairs magazine Internationale Politik.

The significance of their determination has put pressure on Bulgarian officials, who would like to maintain strong ties with Israel and the United States, and European allies like France and Germany. Bulgarian officials had maintained a studied silence for more than six months since the attack.

“If you factor in the suspicion that there are political implications beyond Bulgaria’s borders, it’s completely understandable that they’ve been playing for time,” said Dimitar Bechev, head of the Sofia office of the European Council on Foreign Relations.

Mr. Tsvetanov spoke after the meeting of the president’s council for national security, which includes the prime minister, top cabinet members and military and security personnel.

Bulgarian officials are acutely aware of the consequences of their findings even though larger European Union members did not exert blatant pressure on them regarding the Hezbollah question. “It was not a campaign,” said Philipp Missfelder, a leading member of Chancellor Angela Merkel’s Christian Democrats and the foreign policy spokesman for the party in Parliament. “Some German officials dropped a few words.”

But Mr. Missfelder said that attitudes toward Hezbollah were gradually shifting. “It’s clear that they are steered from Iran and they are destabilizing the region,” Mr. Missfelder said. “The group that thinks Hezbollah is a stabilizing factor is getting smaller.”

Hezbollah’s dual nature as what Western intelligence agencies call a terrorist organization and a political party with significant social projects, including schools and health clinics, make it more difficult to dismiss. Hezbollah is a significant political actor in Lebanon, and many European officials are particularly wary of upsetting the status quo as the civil war drags on in Syria.

Jodi Rudoren contributed reporting from Jerusalem.

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