Kerry to host Afghan, Pakistani leaders for talks

BRUSSELS -- Secretary of State John F. Kerry is to host a meeting of top Afghan and Pakistani leaders here this week in hopes of breathing new life into flagging Afghan peace efforts.

The meeting set for Wednesday is to bring together Afghan President Hamid Karzai and his defense minister, Bismullah Khan Mohammadi, with Pakistani army chief Gen.  Ashfaq Kayani and Foreign Secretary Jalil Abbas Jilani.

A State Department official described the encounter as part of a series of three-way meetings that occur regularly at a lower level.

With most U.S. troops scheduled to leave Afghanistan by the end of next year, the Obama administration is eager to work out a peace accord between Karzai's government, Taliban militants and the country's neighbors. But the Taliban appear in no hurry to make a deal, and neighboring countries have their own goals in the talks.

The Afghan-Pakistani conversation has been strained by incidents at the countries’ borders and by other issues.

Karzai recently accused Pakistan of failing to live up to commitments it has made in previous talks. His spokesman, Aimal Faizi, said in Kabul that the president would attend this week's meeting in an effort to resuscitate the peace process.

The Pakistani Foreign Ministry said in a statement that the country has "consistently endeavored to facilitate an Afghan-led and Afghan-owned peace process."

In a Monday afternoon meeting with U.S. diplomatic staff here, Kerry said the leaders will talk about the peace effort “in the simplest, most cooperative, most cogent” way.

Kerry, in Brussels for a meeting of NATO foreign ministers, is also to meet Tuesday with Russian Foreign Minister Sergei Lavrov, part of an Obama administration campaign to win Russian support on the key issues of Syria and missile defense.

U.S. officials believe that withdrawal of Russian support could persuade Syrian President Bashar Assad to give up his bloody two-year fight against opponents of his regime.

Those officials also hope that a decision in March to redesign the United States' European-based missile defense system will reduce Russia’s loud objections to the project and allow the two countries to begin negotiating a reduction to their nuclear arsenals.

Russia, however, has resisted two years of entreaties by the U.S. on Syria, and so far has given no sign that Washington's shift on missile defense will remove its objections.

U.S. Stocks Gain as Caterpillar Rises

Caterpillar jumped 2.8 percent after saying it sees increased sales of building equipment and plans more production in China. Halliburton Co. (HAL) gained 5.6 percent after reporting first-quarter profit that exceeded analysts’ estimates. Microsoft Corp. soared 3.6 percent after activist investor ValueAct Holdings LP amassed about a $1.9 billion stake. Newmont Mining Corp. added 1.3 percent and Exxon Mobil Corp. advanced 0.7 percent as gold and oil prices rose.
The S&P 500 increased 0.5 percent to 1,562.50 at 4 p.m. in New York. The gauge fell 2.1 percent last week, its biggest drop since November, as earnings from Bank of America Corp. and International Business Machines Corp. missed estimates. The Dow Jones Industrial Average added 19.66 points, or 0.1 percent, to 14,567.17 today. About 5.6 billion shares traded on U.S. exchanges, 12 percent below the three-month average.
“We’re in the middle of earnings season and that continues to be a key driver,” Richard Sichel, who oversees about $1.8 billion as chief investment officer at Philadelphia Trust Co., said in a phone interview. “It’s important to us to hear what management teams are saying, how optimistic or pessimistic they sound about future growth.”
Slideshow: Best and Worst Investments of 2012
Eight S&P 500 companies including Netflix Inc. and Texas Instruments Inc. posted their quarterly earnings today. Of the 111 that have reported so far, 72 percent have exceeded analysts’ predictions for earnings, data compiled by Bloomberg show. Profit at S&P 500 companies dropped 1.1 percent in the first three months of the year, according to forecasts compiled by Bloomberg. That would mark the first year-over-year decrease since 2009.
Home Sales
Equities slumped earlier as figures from the National Association of Realtors showed purchases of previously owned houses, tabulated when a contract closes, fell 0.6 percent to a 4.92 million annual rate last month. The median forecast of 75 economists surveyed by Bloomberg projected sales would increase to a 5 million rate. Prices climbed, reflecting more demand for higher-priced houses.
“The home sales number was disappointing for the market but we still think the housing market is showing modest improvement,” Thomas Nyheim, a Wilmington, Delaware-based fund manager for Christiana Trust, which oversees about $17 billion, said in a phone interview.
Fed Stimulus
The S&P 500 has surged 131 percent from a 12-year low in 2009 as the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
New York Fed Bank President William C. Dudley said European economic weakness and U.S. budget woes mean “more needs to be done” to shore up the global economy and financial regulation.
“In the United States, the good news is that the economic outlook appears to be gradually improving,” Dudley said today at a conference in New York. “For Europe, the near-term macroeconomic outlook seems less bright.”
At a meeting in Washington late on April 19, the Group of 20 finance chiefs didn’t oppose the Bank of Japan (8301)’s plan to buy more than 7 trillion yen ($70 billion) of bonds a month. The central bank’s Governor Haruhiko Kuroda said he would proceed with his campaign to end 15 years of deflation. The Bank of Japan aims to increase inflation to 2 percent within two years.
‘More Confidence’
“Winning international understanding gives me more confidence to conduct monetary policy appropriately,” Kuroda told reporters after the meeting. “We will continue our qualitative and quantitative easing for the next two years.”
Caterpillar rose 2.8 percent to $82.71. The world’s largest maker of construction and mining equipment has seen “slightly increasing sales to users for a number of months” in construction, Doug Oberhelman, chairman and chief executive officer, said during a call with analysts. In China, Caterpillar will increase production this quarter after reducing output to let inventory levels fall.
The company also said it will start buying back stock in the second quarter and spend about $1 billion. Caterpillar fell earlier in the day after cutting its 2013 forecast and first- quarter earnings trailed analysts’ earnings estimates.
Microsoft Soars
Microsoft increased 3.6 percent to $30.83. Chief Executive Officer Steve Ballmer is working to deliver more software and services over the Internet to bolster sales amid a global PC slump that’s eroding demand for pre-installed programs. ValueAct, which has a history of investing in companies it believes are fundamentally undervalued, said that Microsoft can succeed in this effort, aided by the Azure cloud-computing platform.
Halliburton jumped 5.6 percent to $39.29. The world’s largest provider of hydraulic-fracturing services reported first-quarter profit that exceeded analysts’ estimates as the company reduced costs in North America. The company also benefited from lower prices on guar, an ingredient used in hydraulic fracturing to get oil and natural gas from dense rock formations.
Energy and raw-material companies rose the most among 10 S&P industries today, climbing more than 1 percent, while industrial and utility shares had the biggest declines. The S&P GSCI (SPGSCI) gauge of 24 commodities added 0.3 percent after falling 7.3 percent the past three weeks.
Newmont Mining increased 1.3 percent to $33.40. The price of gold has rebounded after reaching a more than two-year low on April 15. The metal entered a bear market this month amid decreased demand for a hedge against deflation and concern struggling European nations will sell gold to raise cash.
Exxon, Chevron
Exxon Mobil Corp. gained 0.7 percent to $88.09 and Chevron Corp. advanced 0.6 percent to $116.57 as West Texas Intermediate crude rose to a one-week high.
International Paper Co. climbed 3.2 percent to $47.15. The world’s largest maker of office paper is in talks about combining its xpedx unit with Unisource Worldwide Inc. to form the biggest distributor of office and copier paper. A deal may be in the form of a so-called Reverse Morris Trust in which International Paper would contribute xpedx’s assets, the Memphis, Tennessee-based company said today in a statement.
Power-One Inc. surged 57 percent to $6.33 after ABB (ABBN) Ltd., the world’s biggest builder of electricity networks, said it will buy the maker of solar-power inverters for about $1 billion, or about $6.35 a share. The price is 7.7 times Power- One’s earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg.
Volatility Gauge
U.S. equity volatility rose the most in almost four months last week after unexpectedly slow growth in China and a selloff in commodities triggered the biggest stock-market drop since November.
The Chicago Board Options Exchange Volatility Index climbed 24 percent to 14.97 on April 19, the most since December. The index known as the VIX surged 46 percent in four days, briefly erasing its year-to-date decline, before sliding 15 percent on the last day of the week. The VIX fell 3.9 percent to 14.39 today.
“Volatility is getting more sticky, it rushes up without going straight back down which we haven’t seen before this year,” Michael Purves, Greenwich, Connecticut-based Weeden & Co.’s head of derivatives research, said in a phone interview on April 19. “The markets are starting to process that the economic news has been getting softer and that we’re due for a correction. We obviously also had the extraordinary move in gold which has been enhancing volatility across asset classes.”

Boston Marathon bombing

Boston Marathon bombing suspect Dzhokhar Tsarnaev was charged today with using a weapon of mass destruction and malicious destruction of property resulting in death for the April 15 attacks that ripped through a crowd at the finish line of the world-renowned race.

Tsarnaev’s initial court appearance was conducted today by a federal magistrate judge in his hospital room, said Gary H. Wente, circuit executive for the federal courts in the First Circuit. Tsarnaev was obviously in serious condition but was able to respond to inquiries, nodding or mouthing yes or no, according to a person familiar with the proceedings in the hospital room.

The charges carry the possibility of the death penalty or life in prison for the 19-year-old man, who is in serious condition at Beth Israel Deaconess Medical Center after suffering multiple gunshot wounds before his capture by police on Friday.

The federal public defender’s office has been assigned to the case. Miriam Conrad, the chief public defender, had no comment.

The chames came a week to the day after two powerful explosions exploded at the Marathon finish line, killing three people, injuring more than 170, and leaving a region on edge.

“Although our investigation is ongoing, today’s charges bring a successful end to a tragic week for the city of Boston and for our country,” said Attorney General Eric Holder. “We’ve once again shown that those who target innocent Americans and attempt to terrorize our cities will not escape from justice. We will hold those who are responsible for these heinous acts accountable to the fullest extent of the law.”

Tsarnaev waived his right to a detention hearing. His next hearing will be May 30, court officials said.

An affidavit filed in support of the charges by FBI Special Agent Daniel R. Genck the case provided a new window into the case — and the evidence law enforcement has collected connecting Tsarnaev to the deadly bombs that ripped through the happy crowds on the Marathon finish line, killing three and injuring more than 170.

The affidavit said that, based on reviews of surveillance video, and photos and videos provided by the public, Tsarnaev stood for four minutes next to a bomb he had placed on the ground in front of the Forum Restaurant on Boylston Street.

He had a cellphone in his hand and appeared to take a photograph of the bomb on the sidewalk before he walked away, the affidavit said.

“Approximately 30 seconds before the first explosion, he lifts his phone to his ear as if he is speaking on his cellphone, and keeps it there for approximately 18 seconds. A few seconds after he finishes the call, the large crowd of people around him can be seen reacting to the first explosion,’’ Genck wrote.

“Virtually every head turns to the east (toward the finish line) and stares in that direction in apparent bewilderment and alarm. Bomber Two, virtually alone among the individuals in front of the restaurant, appears calm. He glances to the east and then calmly but rapidly begins moving west, away from the direction of the finish line.’’

Genck added: “He walks away without his knapsack, having left it on the ground where he had been standing. Approximately, 10 second later, an explosion occurs in the location where Bomber Two had placed his knapsack.’’

The affidavits also revealed that the FBI searched Tsarnaev’s dorm room at the University of Massachusetts Dartmouth Sunday and found “a large pyrotechnic, a black jacket and white hat of the same general appearance as those worn by Bomber Two at the Boston Marathon.’’

When he was captured in Watertown Friday night, Tsarnaev had his UMass-Dartmouth student ID card on him along with credit cards and other forms of IDs, the affidavit said.

The sworn statement by the agent also said that Tsarnaev had been shot multiple times when he was captured.

“He had visible injuries including apparent gunshot wounds to the head, neck, legs and hand,” Genck wrote.

The new developments came after the White House said that Tsarnaev would be tried in the federal court system.

Speaking at a media briefing in Washington, spokesman Jay Carney said Tsarnaev would not be tried as an enemy combatant.

“He will not be treated as an enemy combatant. We will process this terrorist through our system of justice,” he said.

Pointing to other terrorists who have been tried and convicted in federal court, he said, “The system has repeatedly proven that it can successfully handle the threat that we continue to face.”

He also said that US citizens cannot be tried before military commissions. Tsarnaev is a naturalized US citizen. He was sworn in as a citizen in September.

Tsarnaev’s brother, Tamerlan Tsarnaev, who authorities believe conspired with him, died after a gun battle early Friday with police in Watertown. Dzhokhar Tsarnaev, who fled from the battle and eluded a daylong manhunt, was spotted by a vigilant resident and captured Friday evening after a standoff in Watertown.

Russian authorities warned the FBI in early 2011 that Tamerlan Tsarnaev may have been a follower of “radical Islam,” but the agency has said it investigated and “did not find any terrorism activity.”

Carney defended the FBI today, citing the FBI’s statement and saying “they investigated it thoroughly and did not find terror activity, domestic or foreign.”

But he also noted that President Obama has “called for answers to a number of questions” about the case.

The Tsarnaev brothers also killed MIT Police Officer Sean Collier and wounded MBTA Transit Police Officer Richard Donohue Jr., authorities say.

Donohue is breathing on his own now after a breathing tube was removed, and he called for his wife today, a law enforcement source said.