Investors snapped up shares of technology bellwethers a day after the semiconductor index <.SOXX> fell for a fifth straight day. Apple Inc led the Nasdaq higher, climbing 1.8 percent to $121.59, while the semiconductor index gained nearly 2 percent.

Stocks in defensive sectors such as consumer staples and health care also advanced, with Coca-Cola Co (KO) up 1.6 percent to $44.34 and Pfizer Inc adding 0.8 percent to $15.39.

“What we’ve seen the past three days is not that money’s leaving the market, but just flowing in that (defensive) direction and trying to find the better deal,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

The Dow Jones industrial average <.DJI> was up 22.86 points, or 0.28 percent, at 8,307.75. The Standard & Poor’s 500 Index <.SPX> added 3.23 points, or 0.37 percent, at 887.15. The Nasdaq Composite Index <.IXIC> gained 12.78 points, or 0.77 percent, at 1,676.97.

Data showed the number of U.S. workers filing new claims for jobless benefits rose to 637,000 and was more than expected in the latest week, according to government data, pushed up by plant shutdowns related to automaker Chrysler’s bankruptcy.

In another report, the Labor Department said prices received by U.S. producers rose at a brisk pace in April, driven by a surge in food costs.

May 14 (Reuters)

Under provisions of the plan, companies would no longer be able to write off domestic expenses for generating profits abroad, a loophole that Obama says encourages U.S. companies to move jobs overseas. The plan would drastically reduce incentives for U.S. companies to base all or part of their operations in other countries.

Additionally, Obama is pushing for a $60.1 billion plan to restrict deductions for American companies that defer taxes on foreign profits and a $43 billion crackdown on abusive foreign tax credits. Combined, these measures would amount to the biggest tax increase on U.S. corporations since 1986, according to Bloomberg News.

Companies with significant overseas operations could lose billions if the president’s plan passes. Under existing laws, companies are taxed only on profits they bring home.  By stashing the profits in international subsidiaries they can defer paying taxes indefinitely.

While it debates the bill, Congress will remain under pressure from a significant lobbying campaign to scuttle significant portions of Obama’s plan.

Over 200 firms, including Pfizer Inc. (NYSE: PFE), Oracle Corp. (NASDAQ: ORCL), Microsoft Corp. (NASDAQ: MSFT), Johnson & Johnson (NYSE: JNJ) and General Electric Co. (NYSE: GE) signed a letter to congressional leaders in March opposing changes to the “deferral” provision.

The letter, also signed by the U.S. Chamber of Commerce, said the firms would not be on a level playing field with international rivals, many of which are not required to pay taxes at home on overseas units.

“This is bad stuff,” Kenneth Kies, a tax lobbyist at the Washington firm Federal Policy Group, told Bloomberg. “This is going to be the biggest fight for the corporate community in the next two years.”

The biggest squabble is likely to be over the repeal of so-called “check-the-box” rules, which took effect in 1997. They were designed to reduce paperwork by allowing companies to classify units within their corporate umbrella in the most tax-efficient manner without generating a tax challenge from the IRS.

The rules make it easy for multinationals to shift profits to entities in low-tax countries.   Once the assets are transferred, the parent company borrows from the subsidiary, making the interest payments deductible in the U.S. and tax-free in the haven. More than 80% of the nation’s 100 biggest companies have subsidiaries in tax havens, according to a Government Accountability Office report.

The rules were intended to help U.S. companies minimize their foreign tax liability, not to dodge the Internal Revenue Service (IRS), according to Drew Lyon, a former Treasury Department tax official who is now a principal at PricewaterhouseCoopers LLP’s Washington office.

The changes to the “deferral” provision would hit some of the nation’s biggest companies hard since half of multinationals firms’ income is earned abroad, Lyon told Reuters.

Another part of the package would shift the burden of proof to individuals when the IRS alleges assets are being hidden in bank accounts in offshore tax havens like the Cayman Islands and Switzerland.

The U.S. government has essentially declared war on U.S. citizens who make use of offshore accounts to stash money in overseas accounts and avoid taxation.

Swiss banking giant UBS AG (NYSE: UBS) agreed in February to pay a $780 million fine and identified about 320 of its American clients as it acknowledged that it helped U.S. customers hide assets from their government.

The U.S. is now suing UBS in a civil case to force it to divulge the identities of 52,000 Americans with accounts at the bank that it suspects are hiding about $14.8 billion in assets.

Obama also announced plans to hire nearly 800 new IRS agents to bolster enforcement of overseas tax evasion and wants to see stiffer penalties for those who fail to meet reporting requirements.

Source: Obama Wants New Law to Tax Overseas Profits and Nail Tax Dodgers

• Sources close to the matter told Bloomberg News that President-elect Barack Obama may name Steven Rattner as “car czar,” a top-level position that would oversee the conditions of which bailout money is given to U.S. auto companies, Bloomberg reported. Rattner co-founded private-equity firm Quadrangle Group LLC in 2000.

• Barclays plc is planning to cut more than 2,100 jobs from its investment banking and investment management units, sources told Reuters. About 1,300 jobs would be lost from Barclays Capital. About 500 from Barclays Wealth. And about 370 from Barclays Global Investors.

• Great Britain energy titan, BG Group plc, plans to invest between $4 billion and $5 billion to develop oil fields in Brazil through 2012. “We’re confident that these developments can be made economic at lower oil prices, but we’ll need to ensure the efficiency of the investment. Oil prices we see today are much more realistic,” Chief Executive Officer Frank Chapman told Bloomberg.

• Pharmaceutical giant Pfizer Inc. (PFE) said it plans to slash 800 research jobs, a reduction of 5% to 8% of its research workforce. Most of the cuts will come from labs in California, Connecticut and England, and are in addition to the near 10,000 jobs cut companywide since early 2007, Reuters reported.

• Crude futures halted a weeklong price slide yesterday (Tuesday), as light, sweet crude for February delivery rose 19 cents to settle at $37.78 a barrel on the New York Mercantile Exchange. Futures briefly touched $36.10 a barrel, a new low for the year, earlier in the day.

• Commercial banks borrowed more while investment banks borrowed less from the U.S. Federal Reserve’s emergency lending program over the most recent week. The Fed report said commercial banks averaged daily borrowing of $87.9 billion during the week that ended last Wednesday. That was an increase from the $86.6 billion in average daily borrowing for the week that ended Dec. 31. Investment firms borrowed nearly $36 billion over the past week, USA Today reported. That was down from the average of $38.5 billion for the week that ended Dec. 31, the newspaper reported.

• U.S. companies may have to contribute $109 billion to their corporate pension plans this year to fill funding gaps caused by turmoil in the financial markets, consulting firm Watson Wyatt Worldwide Inc. (WW) said yesterday (Tuesday). Watson Wyatt expects companies also will have to contribute more than $102 billion in 2010. Both of these figures are up significantly from the $38 billion that companies were required to contribute to the plans last year.

Source: Global Investment News Roundup Wednesday, January 14th, 2009

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 40.87 points (-0.32%), to trade at 12,578.40. The tech-laden Nasdaq Composite Index dropped 20.58 points (-0.88%), to reach 2,329.53. And the broader Standard & Poor’s 500 Index decreased 6.31 points (-0.46%), to hit 1,358.40.

Most sectors were down, with the transportation sector (down 1.31%) posting the largest decline.

“Analysts are expecting a pretty dour earnings season, and so are portfolio managers,” Charles Reinhard, director of portfolio strategy at Neuberger Berman, a unit of Lehman Brothers Holdings Inc. (LEH) that manages $129 billion, said in a Bloomberg Television interview. “The market is discounting a lot.”

Pharmaceutical firm Pfizer Inc. (PFE) dropped after announcing a 19% drop in first quarter profits as generic drugs continue to take a hit on the drug giant’s bottom line.

But blue-chip technology stock, International Business Machines Corp. (IBM), gained after the Dow component announced a 26% increase in first quarter profit, beating analyst estimates, and boosted its outlook for full-year 2008.

“IBM beat revenue and earnings expectations substantially with strength across the board,” American Technology Research Analyst Shaw Wu told MarketWatch. “We find this quite impressive in light of the tough economic environment.”

In overseas markets earlier today, Japan’s Nikkei 225 Index gained 1.9% with an increase of 252.17 points to close at 13,398.30. Hong Kong’s blue-chip Hang Seng Index rose 1.6% with a 380.61-point increase, to close at 24,258.96.

In Europe, most major bourses were down, with London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting losses. Only the Paris-based CAC40 managed to eke out a slight 7.04-point gain.

At midday, the dollar had gained ground against the euro (up 0.251%) and the yen (up 0.778%), but lost ground against the pound sterling (down 0.811%).