Reverse Spin: New Year’s hangover lasts an extra day

And you thought that your New Year’s Day hangover couldn’t get any worse.

U.S. stocks started 2001 on a dismal note, with the tech-laden Nasdaq Composite Index plunging to its lowest close since March 1999.

Thanks to resurfacing worries about such things as corporate profits, the Nasdaq on Tuesday plunged 178.66 points, or 7.23%, to a 22-month closing low of 2,291.86.

The blue-chip Dow Jones Industrial Average slipped 140.70 points, or 1.30%, to 10,646.15, while the broader Standard & Poor’s 500 stock index fell 37.01 points, or 2.80%, to 1,283.27.

The sell-off followed the release of economic data that showed U.S. manufacturing fell to its lowest level in more than a decade.

Of course, the markets got a much-needed shot of adrenaline on Wednesday when the Federal Reserve cut the federal funds target to 6%, from 6.5%, in a bid to head off a recession. It also cut the discount rate by half a point.

The Dow jumped 299.60, to 10,945.75, while the Nasdaq surged a record 14.17% to 2,616.69.

Bush is pushing for a jump-start

* President-elect George W. Bush is just burning to jump into the action. Mr. Bush said Thursday his proposed $1.3 trillion tax cut may have to be sped up to help jump-start the slowing economy.

“I think that tax relief is necessary; the question is how fast we implement it,” Mr. Bush reportedly said. “It is possible that we may need to implement it faster.” Mr. Bush’s tax cut would be phased in over five years beginning in 2002.

Hmm. One can’t help but wonder if the Federal Reserve’s surprise interest rate cut on Wednesday was intended to head off the tax cut.

A softening Sears pulls its neck in

* Talk about showing us its “softer side.” Sears Roebuck & Co. on Thursday announced plans to close 89 stores and eliminate 2,400 jobs during the first quarter.

The company, based in Hoffman Estates, Ill., also said that domestic sales in December dropped about 1.1% due to general industry softness and bad weather.

Sears operates 860 full-line stores and more than 2,100 retail specialty outlets.

SEC makes January look like July

* Since when does Independence Day come in January?

The Securities and Exchange Commission on Wednesday approved a package of new rules that require mutual funds to have more independent directors on their boards.

The rules, which have been the topic of sometimes-heated discussions in fund circles since 1998, require that a majority of directors on a fund board be completely independent of the fund, rather than the current 40% requirement.

The SEC also voted to mandate that lawyers who advise independent fund directors be free from any ties to the fund’s managers.

“Mutual fund independent directors are an investor’s front-line defense against conflicts of interest and other potential abuses,” says Paul Roye, director of the SEC’s division of investment management.

The rules will be phased in over the next 18 months.

Honeymoon delayed

* Another sad tale of merger interruptus: Viacom Inc., the entertainment giant, said Friday it expects to close its $12 billion acquisition of Infinity Broadcasting Corp. later than expected because the two companies have decided to hold an Infinity shareholder vote on the deal.

Viacom said it expects to close the deal by the end of the first quarter instead of the week of Jan. 8.