Stock investors still in sell-mode

NEW YORK (CNNMoney)

The Dow, S&P, and Nasdaq were all lower again on Monday. The cautious mood follows a 2.6% sell-off Friday in the Nasdaq, and 1% slides in the S&P and Dow.

But several momentum stocks rebounded on Monday. Netflix (NFLX), Facebook, (FB, Fortune 500) and cybersecurity stock FireEye (FEYE)were all higher.

Yahoo (YHOO, Fortune 500) didn't join the rally though. Despite reports that it may be looking to produce original content like Netflix, the stock is lower today.

Some of the "old tech" names, such as CNNMoney Tech 30 index members Microsoft (MSFT, Fortune 500), Intel (INTC, Fortune 500) and Cisco (CSCO, Fortune 500), were gaining.

And the bloodletting in biotech may be subsiding as well. The iShares Nasdaq Biotechnology ETF (IBB) rebounded following a 4% drop Friday..

Despite Friday's sell-off, the market has been hot lately. In fact, the Dow and the S&P both touched all-time highs Friday morning before dipping in the afternoon.

So it may be soon to say if investors are really rotating out of growth stocks and targeting value stocks.

Related: CNNMoney Tech 30

Earnings may help determine whether or not stocks continue to fall or not for the rest of the week and beyond. Alcoa (AA, Fortune 500) will report its fourth-quarter results on Tuesday, and big banks JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) will report their first-quarter earnings later in the week.

Overall, earnings for the companies in the S&P 500 are expected to be down 1.2% in the first quarter, according to estimates from FactSet.

For all the doom and gloom, stock experts surveyed by CNNMoney say the bull market still has room to run. Most expect the S&P 500 to gain 6.5% this year.

Related: Fear & Greed Index show investors are gripped by fear

Some drug makers were moving today. Shares of Mannkind (MNKD) were sharply lower. The Food and Drug Administration is extending its review of Mannkind's Afrezza inhaled insulin drug by at least three months. The stock shot up last week after a favorable review from a panel that advises the FDA.

Questcor Pharmaceuticals (QCOR) is soaring after Ireland's Mallinckrodt (MNK)said it would buy the autoimmune drug maker for $5.6 billion.

Related: Stock experts say the bull isn't dead yet

European markets and Asian markets were weaker, taking their cue from Wall Street on Friday. Germany's DAX was down about 1.5% during the morning while Japan's Nikkei ended 1.7% lower..

First Published: April 7, 2014: 9:55 AM ET

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$50 billion merger deal stirs global cement industry

Switzerland's Holcim and France's Lafarge have agreed to a deal that would create the world's biggest construction materials group.

LONDON (CNNMoney)

Switzerland's Holcim (HCMLF) is making an all-share offer for Lafarge (LFRGY) of France. The combined group will take the top spot globally in the markets for cement, concrete and aggregates, such as sand, gravel and crushed stone.

The two companies currently account for sales of 32 billion euros, and their combined market value is about 40 billion euros ($50 billion).

The deal, which the companies aim to close in the first half of 2015, is expected to face tough regulatory scrutiny given LafargeHolcim's potential to dominate in several major markets.

Both companies, along with six competitors, are already subject to an antitrust investigation by the European Commission dating back to 2008. Europe's competition watchdog confirmed last month that the probe was continuing.

Holcim and Lafarge said in a statement that they plan to sell businesses generating as much as 15% of operating profit in order to clear the way for approval and optimize their combined portfolio.

Related: Bad weather takes bite out of home construction

Some analysts say it may take longer than the companies expect to clear all the regulatory hurdles, not least because the biggest buyers of cement and concrete are often national governments investing in public infrastructure.

"As the regulator, they are in a unique position to ensure pricing remains fair and transparent, and in our view, will no doubt ensure that this is more than simply aspiration," wrote UBS analyst Gregor Kuglitsch in a research note.

Between them, the Swiss and French companies have about 30% of the market or more in the United States, Canada, Britain, France and many other smaller countries, according to UBS research.

Following their planned sales of business units, the new group will have production sites in 90 countries.

Related: Markets shrug off China stimulus

Holcim and Lafarge both saw sales and operating earnings fall last year, and hope the merger will allow them to shore up their position in Europe while taking advantage of faster growth in emerging markets.

"I am confident that this merger of equals provides a unique opportunity to rapidly create the most advanced platform in our industry with outstanding synergies," said Bruno Lafont, Lafarge CEO and CEO-designate of the new company.

The deal should generate annual savings worth about 1.4 billion euros by the end of year three, the companies said.

Shares of Holcim gained 1% and Lafarge stock rose 1.4% in a weaker European market.

First Published: April 7, 2014: 4:49 AM ET

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GM's tough call: How to pay recall victims

GM has hired Ken Feinberg to help weigh how to possibly compensate victims of its faulty ignition switch.

NEW YORK (CNNMoney)

The issue is that GM (GM, Fortune 500) isn't legally responsible for injuries or deaths that occurred before it its 2009 bankruptcy.

But it remains to be seen if the company will embrace that legal shield in cases stemming from the recall.

For GM, a lot is riding on the decision. The company has already said that at least 13 people died as a result of the defect. It also said that it failed to issue a recall despite being aware of the problem as early as 2004.

Last week, GM CEO Mary Barra said the company is considering whether to compensate victims, and how.

"As I see it, GM has both civic responsibilities and legal responsibilities," Barra said at a congressional hearing. "And we are thinking through exactly what those responsibilities are and how to balance them appropriately."

The company hired attorney Ken Feinberg, who is best known for determining how to compensate victims of tragedies including the Sept. 11 attacks, the BP oil spill and the Boston Marathon bombing.

Related: GM - Steps to a recall nightmare

The problem: If GM pays people with claims from prior to 2009, it opens itself up to thousands of unrelated lawsuits that the company shed as part of the bankruptcy process.

That's because the company that emerged from bankruptcy is technically a completely new corporation, taking only the good parts of GM -- its functioning plants, brands and cars with it.

The old GM, called Motors Liquidation, was left with the unproductive plants, weak brands and about 2,500 lawsuits seeking billions in damages.

The suits pertain to everything from wrongful deaths in car accidents to contract disputes and abandoned properties. They have all been either settled, dismissed or decided by a verdict. If the plaintiffs got anything, it was only pennies on the dollar compared to what they would have won without the bankruptcy.

And GM continues to use that legal shield in cases unrelated to the recall.

New York attorney Paul Callan thinks GM will be able to pay pre-2009 victims of the faulty ignition switch without opening itself up to all the other cases from before 2009.

But there are risks to this approach. Plaintiffs in cases that have been resolved could ask courts to reopen those cases -- and they just might succeed.

"That's the enormous danger GM faces going forward with this plan," he said.

Related: The 57-cent part at the center of GM's recall crisis

One thing that is fairly clear to legal experts is that the bankruptcy liability shield does not protect the company from criminal charges.

The Justice Department has already launched a criminal probe, and several lawmakers said they believe GM's actions in the recall constituted a criminal coverup. Even if no one goes to jail, criminal charges could prove costly. Toyota Motor (TM) recently agreed to pay $1.2 billion to settle criminal charges over its unintended acceleration recall of 2010.

"Bankruptcy is a civil procedure to deal with debt. It does not provide immunity from criminal charges," Callan said.

First Published: April 7, 2014: 7:03 AM ET

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Stocks: Starting the week in the red

Click on chart to track premarkets

NEW YORK (CNNMoney)

U.S. stock futures were clearly in the red, with the Nasdaq down 0.8% ahead of the open.

The good news: The Dow and S&P 500 both hit all-time highs last week in a broad-based rally.

The bad news: Stocks sold off Friday in a brutal finale for the week, with technology shares leading the way, as investors bailed out of companies that have been particularly hot. The Nasdaq plunged 2.6%, and the Dow and S&P 500 fell around 1%.

Related: Fear & Greed Index gripped by fear

There is little economic or corporate news on the docket Monday.

But big banks will start reporting their first-quarter earnings later in the week and financial stocks are one sector expected to turn in a weaker performance.

Earnings for the companies in the S&P 500 are expected to be down 1.2% in the first quarter, according to estimates from FactSet Research.

Even if earnings are less than stellar, stock experts surveyed by CNNMoney say the bull market still has room to run. Most expect the S&P 500 to gain 6.5% this year.

Related: Stock experts say the bull isn't dead yet

European markets and Asian markets were weaker, taking their cue from Friday's late sell-off on Wall Street. Japan's Nikkei ended 1.7% down, while Germany's DAX was trading 1.2% lower during the morning.

Related: CNNMoney's Tech30

Cement stocks provided one bright spot, with Lafarge (LFRGY) and Holcim (HCMLF)both managing solid gains after they agreed to a merger that would create the world's biggest construction materials group.

First Published: April 7, 2014: 5:44 AM ET

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Should people without kids pay higher taxes?

A column in Slate sparks debate about federal financial support for parents in a tax code that already offers many breaks for families with children.

NEW YORK (CNNMoney)

"The willingness of parents to bear and nurture children saves us from becoming an economically moribund nation of hateful curmudgeons. The least we can do is offer them a bigger tax break," writes Salam, who has no children himself.

And by "we" he specifically means any nonparent who makes more than the U.S. median income of roughly $51,000. They should bear a heavier tax burden, he argues.

Related: Singles make up majority of tax filers

The idea lit off some biting retorts along the lines of "Sure, I'll pay more, but then I want more say in how you raise your kids and how many more you're allowed to have."

But it also raises an interesting question: Just how many tax breaks do parents get?

The answer: About $171 billion a year's worth, according to a 2013 estimate from the Tax Policy Center.

And that's a measure of just the five biggest child-related breaks: The earned income tax credit, child tax credit, child and dependent care tax credit, the dependent exemption and the head of household filing status for single parents.

The Tax Policy Center further estimates that the average tax benefit for parents exceeds $3,400. A married couple with two kids could get benefits of nearly $7,700, while a single parent with two children might receive more than $8,100.

As a result of the code's many child-related tax provisions, about half of households with kids -- many of them lower income -- won't owe any federal income taxes in 2013. Some in that group will even get a check from the government.

That's not surprising since the tax code is intended to impose the lightest burden on those who are most strapped.

Related: 7 surprising 2014 tax facts

There's no question raising kids has become an expensive venture and parenting is the hardest job in the world.

So there may be good arguments for expanding today's federal tax breaks for parents. And there should be a debate over how to pay for that.

But Salam's proposal to more heavily tax a select group of people simply because they don't have kids disregards some important realities.

For starters, some people physically can't have children or have a tough time adopting. Others have made a conscious choice not to have children because they can't afford them or because they think they can contribute to society in other ways.

And the truth is everyone in society -- not just the childless -- benefits from parents' work raising the next generation.

Salam's proposal also seems to assume that every nonparent making more than $51,000 can afford a bigger tax burden.

But maybe they're helping to support an elderly parent or have their own big medical expenses.

Or maybe they're just trying to pay down their student loan debt and save for children of their own some day.

First Published: April 7, 2014: 10:18 AM ET

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Senate to vote to extend jobless benefits

The bill plans to extend federal jobless benefits for more than 2 million unemployed workers through May 31.

WASHINGTON (CNNMoney)

The bill, expected to pass Monday, would retroactively help the unemployed, who have been without benefits.

If the deal passes Congress, it would throw a financial lifeline to those who have been scrambling to get by since federal jobless benefits lapsed the week of December 28. The recession-era program took away a safety net for long-term unemployed Americans who have been unable to find new work.

However, its fate in the House is uncertain, especially since Speaker John Boehner has said he has concerns about the bill. Top Republicans have yet to say whether the chamber will consider the bill.

In the Senate, six Republicans signed on to the $9 billion measure last Friday, which ensures its passage.

Finally! I got a job

The Senate deal would fund federal jobless benefits through the end of May. It includes back payments of missed unemployment checks since December.

The long-term unemployed now total about 2.3 million, including those who have run out of state unemployment benefits in the past few months, according to the National Employment Law Project, an advocacy group.

Top Republicans want any deal for the jobless to include a revamp of the federal workforce training programs. Last month, Boehner called the bill "essentially unworkable," because state administrators complained it would be tough to carry it out in such a short period of time.

Related: Will Obama's pledge get the unemployed back to work?

If the bill were passed, it could take weeks to get programs up and running again, said Judith Conti, federal advocacy coordinator for the National Employment Law Project, an advocacy group for the unemployed in Washington. Still the group cheered the move.

"At long last we're within sight of one chamber working across party lines to provide this critical relief; there's already been too much delay, with too many families suffering unneeded hardship," said Christine Owens, NELP executive director of the National Employment Law Project in a statement.

Unemployment insurance benefits are generally administered by the states.

However, back in June 2008, when the jobless rate started ticking up from under 5% to 5.6%, President George W. Bush signed the federal benefits program to help those whose state benefits had run out.

The unemployment rate climbed to more than 10% at the height of the Great Recession in 2009, and the government extended or expanded the federal benefits 11 times since then, most recently in January 2013.

First Published: April 7, 2014: 10:50 AM ET

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Is Perfect Bacon Bowl the next Snuggie?

Thom Jensen holds the tinfoil prototype [left] of his Perfect Bacon Bowl, which has sold 2 million units since November.

NEW YORK (CNNMoney)

The Perfect Bacon Bowl resembles an upside-down plastic bowl. Wrap three strips of bacon around it, pop it in the oven, microwave or toaster oven and the bacon cooks in the shape of the container -- a "bacon bowl." Then you fill it with whatever you want -- scrambled eggs, dip, mac 'n cheese.

The Perfect Bacon Bowl debuted in November 2013 on As Seen on TV and almost immediately became a hit. Since then, more than two million boxes have been sold (they come two to a box and retail for $10.99).

Related: 7 hot startup ideas

Thom Jensen wasn't looking to create the next big thing. He just wanted to shake up breakfast for his kids.

"I was playing around trying to create a bacon turtle," he said of that fateful Saturday in early 2012. "I used an upside muffin pan but it wouldn't work."

Jensen eventually created a crude bowl from tinfoil. It worked like a charm. He wrapped bacon strips around it, cooked it in the oven and out popped his very first bacon bowl. "It was a big hit with the kids," he said.

Jensen is a research histologist in Salt Lake City and has always been a bit of an amateur inventor. Over the years, he has submitted 12 ideas -- including a curling iron and a motorbike blinker that turned off automatically -- to Edison Nation, a company that helps inventors develop, patent, license and market their inventions.

None of those made the cut. But in July 2012, Jensen paid the $20 fee and submitted his idea for the bacon bowl online with Edison Nation's division that partners with As Seen on TV.

This turned out to be his golden ticket.

Related: Solar power lamps for off the grid communities.

Edison Nation's As Seen on TV division receives over 5,000 submissions a year, but the bacon bowl immediately caught their attention, according to President Todd Stancombe.

"The tinfoil prototype was a long way from a product that we would market," he said, but they still chose it as one of 24 products to put into development.

Edison Nation spent a year (and between $100,000 to $200,000) developing and testing the product. In June 2013, the company felt confident about the Bacon Bowl and filmed its As Seen on TV commercial.

Initially, the Bacon Bowls were manufactured in Mississippi. But production moved to China in December after demand spiked. It was picked up by Wal-Mart (WMT, Fortune 500) and Target (TGT, Fortune 500) in February, which supercharged sales even further.

Scott Boilen, CEO of Allstar Products Group (an As Seen on TV company), said Bacon Bowl's rapid success is reminiscent of another As Seen on TV product that captured America's fancy.

"The exceptional sales right out of the gate remind us of how Snuggie began," he said.

The blanket with sleeves was ridiculed when it launched in 2008, but it's since sold 30 million units and spawned countless knock-offs.

Related: Buy local campaigns hit all-time high

Boilen said the Bacon Bowl is generating similar social media buzz.

"People seem to be obsessed with bacon, and they love taking pictures of their own Bacon Bowl creations," he said.

Jensen is proud of Bacon Bowl's popularity but he hasn't quit his day job, yet. He's hoping his royalty agreement with Edison Nation -- which gives him 7.5% of adjusted gross revenue -- will allow him to do that.

"I'll be getting a check once a year. When I see the first check in 2015, I hope I can retire," said Jensen.

In the meantime, Jensen has another invention in the works. But he's not giving away any hints.

First Published: April 7, 2014: 7:06 AM ET

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Chili's cancels fundraiser with National Autism Association

The restaurant chain Chili's canceled a fundraiser with the National Autism Association because of customer feedback.

NEW YORK (CNNMoney)

"While we remain committed to supporting the children and families affected by autism, we canceled Monday's Give Back Event based on the feedback we heard from our guests," wrote a spokeswoman for Chili's Grill & Bar Restaurant, a brand that is owned by Brinker International (EAT), in an email to CNNMoney.

The spokeswoman would not say whether the feedback had anything to do with the NAA's belief that autism is caused by vaccinations.

Many opponents of vaccinations base their beliefs on a 1998 study that was declared fraudulent by a leading British medical journal.

Related: Retracted autism study an 'elaborate fraud,' says British journal

"The intent of this fundraiser was not to express a view on this matter, but rather to support the families affected by autism," said the Chili's spokeswoman.

The Chili's Facebook site includes comments in support and in opposition to vaccinations.

The NAA was originally selected "based on the percentage of donations that would go directly to providing financial assistance to families and supporting programs that aid the development and safety of children with autism," according to the Chili's spokeswoman.

On its website, the NAA says that "Vaccinations can trigger or exacerbate autism in some, if not many, children, especially those who are genetically predisposed to immune, autoimmune or inflammatory conditions."

Related: The costs of autism to individual families

The NAA also mentions that unvaccinated children have also been diagnosed with autism, and the link between autism and vaccination is based on "parent reports."

"Though published mainstream science fails to acknowledge a causal link to any of these specific exposures, it's important that parental accounts be carefully considered," says the NAA.

NAA was not immediately available for comment.

First Published: April 7, 2014: 11:18 AM ET

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Your new heat source: data centers

An IBM computer center in Germany reduces its energy-consumption with a water-cooling system attached on top and helps heat the surrounding area.

NEW YORK (CNNMoney)

Data centers are large facilities filled with servers and other equipment. In the United States, data centers are responsible for more than 2% of the country's electricity usage, according to researchers at Villanova University. If the global cloud computing industry were considered to be a single country, it would be the fifth-largest in the world in terms of energy consumption, according to Ed Turkel of Hewlett-Packard's (HPQ, Fortune 500) Hyperscale Business Unit.

Nearly half of the energy data centers consume goes to cooling the equipment using fans and other methods. That's "just wasteful," said Jill Simmons, director of Seattle's Office of Sustainability and Environment.

That's why the city of Seattle is working on a project to make use of the heat data centers produce. The city plans to route heat from two local data centers to to help warm 10 million square feet of building space in the surrounding area. The project is still in the conceptual phase, but Simmons said the city hopes to have it in motion "within the next year."

Related: Russia fallout pushes Europe to develop shale gas

The plan is to take the water that cools the data center and pipe it out to buildings nearby. The system will also rely on water heated by energy from sewer lines and electrical substations.

The construction cost will be borne by private utility Corix, which will recover its investment through rates paid by customers over a 30-year period.

"Our hope is that the rates will be competitive with the rates of other utilities, and hopefully better over time," said Christie Baumel, energy policy advisor at Seattle's Office of Sustainability and Environment.

Seattle is following the lead of other cities around the world, including Munich and Vancouver, small portions of which also use heat from data centers.

The challenge in implementing these systems is that they're expensive to install, and need to be located near the facilities that will use the heat. Tech companies often choose remote areas with cheaper real estate and energy costs for their data centers, however.

Researchers from Microsoft (MSFT, Fortune 500) and the University of Virginia have proposed an ambitious solution: bringing cloud computing to your home.

The team envisions small servers they call "data furnaces" being installed directly at homes and office buildings. This solution, they say, would offer increased computing power to users along with a smaller carbon footprint. In addition, if the servers are connected to home or office furnace systems, they could serve as the primary heating source.

For now, the "data furnace" system is just a thought experiment, but it addresses a conundrum that will be increasingly pressing for tech companies as cloud infrastructure needs grow.

"Energy efficiency is not only important to reduce operational costs, but is also a matter of social responsibility for the entire IT industry," the researchers wrote.

First Published: April 7, 2014: 11:13 AM ET

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Stock experts say the bull isn't dead yet

Stocks had a bumpy first quarter, but most investment strategists surveyed by CNNMoney remain bullish.

NEW YORK (CNNMoney)

The 26 investment strategists surveyed in the past week by CNNMoney have an average year-end target for the S&P 500 of 1,968. That would work out to a 6.5% gain for the year and is slightly higher than what experts in our exclusive survey predicted back in January. Of course, this still pales in comparison to last year's gain of nearly 30% for the benchmark index.

But the bullish outlook is somewhat surprising considering the market's turbulence. The S&P 500 and Dow took a tumble in January, before clawing back to all-time highs last week.

Profits still improving: Most strategists expect the economy to regain momentum in the spring after cold weather put a damper on growth in the first quarter. That should bode well for corporate profits, and therefore stock prices.

"Companies remain well-positioned to convert modest revenue growth into solid earnings growth, just as they've done for several years," said Kate Warne, a market strategist with Edward Jones. She expects the S&P 500 to end at 1,985 this year.

Related: Transportation stocks: flying high

U.S. stocks could also rise as more investors pull money out of overseas markets, said Jack Rivkin, chief investment officer at Altergis.

"When you look around the world, the U.S. looks pretty attractive," he said.

Don't fight the Fed: The Federal Reserve's stimulus policies should help support the market as well. Most strategists don't expect the Fed to raise interest rates until the middle of 2015. The combination of low interest rates and improving economic data has helped fuel the latter stages of what is now a five-year old bull market.

Kristina Hooper, a market strategist at Allianz Global Markets, said she thinks that once the Fed does begin to raise rates later in 2015, it will do so slowly.

But with the Fed likely to pull back further on its bond buying program, most strategists feel that longer-term bond rates will creep higher as investors anticipate next year's rate hikes. On average, strategists expect the 10-year Treasury yield to end the year at 3.25%, up from about 2.7% currently.

Stocks too frothy? While most of the strategists we surveyed expect the market to move higher, there are some experts who think stocks may now be overvalued.

The market skeptics are concerned that earnings may fall short of expectations given tepid revenue growth and record high profit margins.

Related: Boom times for the barbarians

The S&P 500 is currently trading at "levels that would indicate low single digit returns in the coming years," said Jeff Weinger, an investment strategist at BMO Global Asset Management, who has a year-end target of 1,850 for the S&P 500.

Specifically, Weinger said "growth stocks" are overpriced, though he sees "compelling deals" in emerging markets.

Techs are hot, utilities are not: Strategists felt that the best performing sector of the market this year should be technology. That's because cash-rich companies should begin to increase their capital spending on technology as they upgrade outdated systems.

By contrast, the utilities sector is expected to be the worst performer. Utilities tend to benefit when investors are scared and drawn to the healthy dividends those companies pay. Although that wasn't the case on Friday. The Dow Jones Utilities Average (DJU) was one of the few bright spots on a day when the Nasdaq plunged 2.6%.

Still, investors may shun slow and steady companies like utilities in favor of tech and other cyclical sectors as long as the economy and earnings gain more momentum. Plus, rising interest rates should weigh on utilities as investors will have better opportunities to earn more income from bonds.

First Published: April 6, 2014: 9:50 PM ET

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