"Great Rotation"- A Wall Street fairy tale?

NEW YORK (Reuters) - Wall Street's current jubilant narrative is that a rush into stocks by small investors has sparked a "great rotation" out of bonds and into equities that will power the bull market to new heights.

That sounds good, but there's a snag: The evidence for this is a few weeks of bullish fund flows that are hardly unusual for January.

Late-stage bull markets are typically marked by an influx of small investors coming late to the party - such as when your waiter starts giving you stock tips. For that to happen you need a good story. The "great rotation," with its monumental tone, is the perfect narrative to make you feel like you're missing out.

Even if something approaching a "great rotation" has begun, it is not necessarily bullish for markets. Those who think they are coming early to the party may actually be arriving late.

Investors pumped $20.7 billion into stocks in the first four weeks of the year, the strongest four-week run since April 2000, according to Lipper. But that pales in comparison with the $410 billion yanked from those funds since the start of 2008.

"I'm not sure you want to take a couple of weeks and extrapolate it into whatever trend you want," said Tobias Levkovich, chief U.S. equity strategist at Citigroup. "We have had instances where equity flows have picked up in the last two, three, four years when markets have picked up. They've generally not been signals of a continuation of that trend."

The S&P 500 rose 5 percent in January, its best month since October 2011 and its best January since 1997, driving speculation that retail investors were flooding back into the stock market.

Heading into another busy week of earnings, the equity market is knocking on the door of all-time highs due to positive sentiment in stocks, and that can't be ignored entirely. The Standard & Poor's 500 Index <.spx> ended the week about 4 percent from an all-time high touched in October 2007.

Next week will bring results from insurers Allstate and The Hartford , as well as from Walt Disney , Coca-Cola Enterprises and Visa .

But a comparison of flows in January, a seasonal strong month for the stock market, shows that this January, while strong, is not that unusual. In January 2011 investors moved $23.9 billion into stock funds and $28.6 billion in 2006, but neither foreshadowed massive inflows the rest of that year. Furthermore, in 2006 the market gained more than 13 percent while in 2011 it was flat.

Strong inflows in January can happen for a number of reasons. There were a lot of special dividends issued in December that need reinvesting, and some of the funds raised in December tax-selling also find their way back into the market.

During the height of the tech bubble in 2000, when retail investors were really embracing stocks, a staggering $42.7 billion flowed into equities in January of that year, double the amount that flowed in this January. That didn't end well, as stocks peaked in March of that year before dropping over the next two-plus years.

MOM AND POP STILL WARY

Arguing against a 'great rotation' is not necessarily a bearish argument against stocks. The stock market has done well since the crisis. Despite the huge outflows, the S&P 500 has risen more than 120 percent since March 2009 on a slowly improving economy and corporate earnings.

This earnings season, a majority of S&P 500 companies are beating earnings forecast. That's also the case for revenue, which is a departure from the previous two reporting periods where less than 50 percent of companies beat revenue expectations, according to Thomson Reuters data.

Meanwhile, those on the front lines say mom and pop investors are still wary of equities after the financial crisis.

"A lot of people I talk to are very reluctant to make an emotional commitment to the stock market and regardless of income activity in January, I think that's still the case," said David Joy, chief market strategist at Columbia Management Advisors in Boston, where he helps oversee $571 billion.

Joy, speaking from a conference in Phoenix, says most of the people asking him about the "great rotation" are fund management industry insiders who are interested in the extra business a flood of stock investors would bring.

He also pointed out that flows into bond funds were positive in the month of January, hardly an indication of a rotation.

Citi's Levkovich also argues that bond investors are unlikely to give up a 30-year rally in bonds so quickly. He said stocks only began to see consistent outflows 26 months after the tech bubble burst in March 2000. By that reading it could be another year before a serious rotation begins.

On top of that, substantial flows continue to make their way into bonds, even if it isn't low-yielding government debt. January 2013 was the second best January on record for the issuance of U.S. high-grade debt, with $111.725 billion issued during the month, according to International Finance Review.

Bill Gross, who runs the $285 billion Pimco Total Return Fund, the world's largest bond fund, commented on Twitter on Thursday that "January flows at Pimco show few signs of bond/stock rotation," adding that cash and money markets may be the source of inflows into stocks.

Indeed, the evidence suggests some of the money that went into stock funds in January came from money markets after a period in December when investors, worried about the budget uncertainty in Washington, started parking money in late 2012.

Data from iMoneyNet shows investors placed $123 billion in money market funds in the last two months of the year. In two weeks in January investors withdrew $31.45 billion of that, the most since March 2012. But later in the month money actually started flowing back.

(Additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)

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Suicide Bomber Attacks Mosque in Pakistan

Abdul Basit/Associated Press

People gathered at the scene of the explosion in a market in northwestern Pakistan on Friday.

PESHAWAR, Pakistan — An explosion in a market in northwestern Pakistan on Friday killed at least 21 people and wounded 33 in what police described as a suicide bombing.

The Pakistani Taliban claimed responsibility for the attack in Hangu, about 70 miles west of Peshawar, the capital of Khyber-Pakhtunkhwa Province. Abu Omar, a Taliban commander in the neighboring tribal region of North Waziristan, said in a telephone interview that the attack was in revenge for the killing on Thursday of a Sunni cleric.

The cleric, Mufti Abdul Majeed Deenpuri, 60, was shot in the southern port city of Karachi, setting off fears of reprisals against Shiites.

Mr. Deenpuri was a senior teacher at Jamia Binoria, one of the largest seminaries in Pakistan. A gunman opened fire on a vehicle carrying the cleric and a colleague at a busy intersection and then fled.

While the security situation is precarious across Pakistan, Rehman Malik, the interior minister, had warned of the potential for an attack in Karachi, a sprawling, violence-prone port city. Cellphone service was suspended there from noon to 3 p.m. during Friday Prayer.

Sectarian violence has also occurred in Hangu in the past, often forcing the authorities to impose a curfew. The town borders the Orakzai tribal region, where the army and paramilitary forces are fighting Taliban militants.

Friday’s explosion occurred just after Friday Prayer as worshipers filed out of a Sunni mosque and a nearby Shiite place of worship, police officials said. “People were coming out of the mosque when the explosion occurred,” said one officer in Hangu, speaking on the condition of anonymity.

Another police official in Hangu said a suicide bomber had detonated his explosives. While Shiites were the likely target, the dead included people from both Islamic sects, he said. “There are Sunnis and Shias killed.”

Separately, a Pakistani intelligence official, speaking on the condition of anonymity, said 30 mortar shells fired from Afghanistan on Friday morning killed six residents of Angoor Adda, a border village in South Waziristan. However, there was no official comment from the Pakistani military. 

In recent years, Pakistan and Afghanistan have traded barbs over allegations of cross border rocket and artillery fire. The 1,510 mile long craggy border between the two countries has long posed a problem for both sides, each accusing the other of not manning the border effectively. Both sides maintain that insurgents easily cross over the porous border, but plans to fence the border have been shot down as impractical.

On Thursday, Human Rights Watch released its World Report 2013, which sharply criticized the Pakistani government and its military and intelligence agencies for failing to reduce human rights abuses.

“Pakistan’s human rights crisis worsened markedly in 2012 with religious minorities bearing the brunt of killings and repression,” said Ali Dayan Hasan, the director in Pakistan for Human Rights Watch. “While the military continued to perpetrate abuses with impunity in Baluchistan and beyond, Sunni extremists killed hundreds of Shia Muslims and the Taliban attacked schools, students, and teachers.”

Ismail Khan reported from Peshawar, and Salman Masood from Islamabad, Pakistan. Ihsanullah Tipu Mehsud contributed reporting from Islamabad.

This article has been revised to reflect the following correction:

Correction: February 1, 2013

Because of an editing error, an earlier version of this article misidentified the capital of Khyber-Pakhtunkhwa Province. It is Peshawar, not Hangu.

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Woman Who Lost Her Legs in Tornado Starts Foundation Helps Others

Heroes Among Us

By Janine Rayford

02/01/2013 at 10:15 AM EST

Stephanie Decker with her kids, Dominic and Reese, and her husband Joe

Courtesy Stephanie Decker

When a storm of deadly twisters ravaged Indiana in March 2012, Stephanie Decker saved her two kids – but lost both her legs.

Now, less than a year after the tragedy, Decker, 38 – who describes the sacrifice as a "small price to pay" for her kids' safety – is already up on prosthetic legs thanks to countless hours of grueling physical therapy. She has barely let the traumatic experience slow her down – and instead created the Stephanie Decker Foundation that aims to help kids with disabilities.

"I'm a better person now," says Decker. "Life goes on."

The tornado that ripped through Henryville leveled the Deckers' house on top of Stephanie as she covered son Dominic, 9, and daughter Reese, 6. A steel beam crashed down on top of the three of them, but her children escaped the disaster without a scratch.

"As parents, we sacrifice for our kids," says Decker.

These days, her routine at home is pretty similar to what it used to be. "The only difference is I wake up in the morning and I put legs on," she says. "There are days that I go 'This is hard, it hurts.' But all I have to do is take one look at my kids and it's enough. I wasn't going to let this stop me."

That determination is clear in Decker, who went as high up as President Obama to help her access a military grade water resistant prosthetic leg so she can swim with her children.

"Stephanie's never been one to take no for an answer," says her husband Joe, a high school math teacher. "I'm so thankful I didn't get to the house and find my wife and kids dead. Stephanie's so strong, she's the core of our family."

Though the kids still have nightmares, the Decker family is getting better every day, and are grateful to be together.

The Deckers' son, Dominic, says getting past the tragedy took a bit of time. "My mom and dad made us take baby steps," he says. "We'd sleep in their bed, and then sleep right by their bed, and then sleep on the couch and then sleep in the front room and then sleep upstairs."

Asked if his mom is a hero, he says, "Yeah, because she saved me."

And Decker aims to help others, too.

In December, her fledging foundation received a $10,000 donation from Shutterfly during an appearance on Ellen DeGeneres's show. She's also recently partnered with NubAbility Athletics – which helps kids with congenital and traumatic amputations compete in sports – to set up scholarships for kids to attend their sports camps.

"I should have been dead in 15 minutes," says Decker. "But I told my kids I was going to be here and that everything was going to be okay."

Stephanie Decker and her family with President Barack Obama

Pete Souza / The White House

Know a hero? Send suggestions to heroesamongus@peoplemag.com. For more inspiring stories, read the latest issue of PEOPLE magazine

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Dow hits 14,000 on strong data

NEW YORK (Reuters) - Stocks extended gains on Friday, with the Dow industrials trading above 14,000 for the first time since October 2007, as jobs and manufacturing data pointed to a stronger U.S. economy.

The Dow Jones industrial average <.dji> rose 133.89 points or 0.97 percent, to 13,994.47, the S&P 500 <.spx> gained 12.09 points or 0.81 percent, to 1,510.2 and the Nasdaq Composite <.ixic> added 24.44 points or 0.78 percent, to 3,166.58.

The Dow hit a session high of 14,000.97, a level not seen since October 17, 2007, up more than 1 percent on the day.

(Reporting by Rodrigo Campos; Editing by Bernadette Baum)

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Way of the World: A Symbol of Progress, or Villainy?

NEW YORK — Is oil like red meat or is it like tobacco? Your answer to that question determines how you feel about the North American boom in unconventional sources of fossil fuel, particularly the Canadian oil sands.

If you think oil is like tobacco, it is a strictly noxious commodity, which seriously harms its users and those around them. We should stop consuming it at once and at all costs. But if you think oil is like red meat, you take a more nuanced view. For the health of the planet, we should find greener alternatives to it whenever we can, but used wisely and in moderation, it has an honorable role in the 21st-century economy.

This morality play is being acted out with the greatest intensity in the fight over the proposed Keystone XL pipeline, which would stretch from Canada to the Texas Gulf Coast. “Keystone is really a symbol of oil, it is very emotive,” Daniel Yergin, the Pulitzer Prize-winning energy expert and chairman of IHS Cambridge Energy Research Associates, told me. “It is probably the most famous pipeline in the history of the world, and it hasn’t even been built yet. It is a symbol around which the opponents of hydrocarbon have rallied.”

Last autumn, the consensus view was that the pipeline would be approved after the U.S. presidential election, no matter who won. In recent weeks, those odds have shifted.

“If you had asked me prior to the U.S. election, I would’ve said, ‘Of course it’s going to be built after the election, regardless of who wins,”’ said Naheed Nenshi, the mayor of Calgary, Alberta, where many of the oil companies that are counting on Keystone have their headquarters.

“If you had asked me immediately after the U.S. election, I would’ve said, ‘Of course it’s going to be built, now that the immediate political pressure is off,”’ he said. But today, Mr. Nenshi is less certain: “The feeling in Canada over the past four or five weeks has become less optimistic about this thing being built.”

Jim Flaherty, the Canadian finance minister, took the same view. “I actually don’t know,” he replied, when I asked him if the Keystone pipeline would be built. “I had reason for optimism before the election that the president would approve it, were he re-elected.”

But, Mr. Flaherty said, President Barack Obama’s inaugural address “was not encouraging.”

Many politicians and business leaders in Canada, whose economy relies heavily on fossil fuels, have been caught by surprise by the intense opposition to the Keystone pipeline, and to the oil sands crude it would carry south. The paperback edition of Mr. Yergin’s latest book, “The Quest,” provides a powerful explanation of that mystery.

“We have to start somewhere to end the addiction to oil,” is the way one environmentalist explained the broader strategy to Mr. Yergin. “The pipeline is a convenient device for fighting a larger battle,” Mr. Yergin said.

Canadians, who are accustomed to being thought of as the world’s official nice guys — think of all those students globe-trotting with maple leaves on their backpacks — are uncomfortable with this new role as climate change villains. (Disclosure: I am a proud Canadian myself.)

“I think it’s a shame that a one-meter-in-diameter pipe is suddenly having to wear all of the sins of the carbon economy,” Mr. Nenshi said. “You know, it’s not clubbing seals with child labor.”

Mr. Yergin agrees. “The one thing that doesn’t get much talked about is that this oil sands technology continues to advance, it is not static,” he said.

“We reached peak oil demand in the U.S. more than half a decade ago. Our oil demand is going down. Our cars are getting more efficient,” he said. “Meanwhile, there is a supply of energy we do need now. The real trade-off is, is it going to be Canadian oil, or is it going to be Venezuelan oil?”

That trade-off used to be viewed in primarily strategic terms: Were our oil suppliers political friends or foes? By that measure, the Canadians score high. But the World Economic Forum at Davos, Switzerland, of all places, underscored another consequence of the North American boom in unconventional sources of oil: its impact on jobs.

Participants from slow-growth Europe and more vigorous Asia alike were dazzled by the job-creating potential of North America’s renaissance as a fossil fuel producer. Moreover, these jobs happen to be the very sort that are being hollowed out by globalization and the technology revolution: high-paying, skilled, blue-collar work that cannot be outsourced or done by robots.

Which may be why the Canadians are picking up such mixed messages from the White House on the Keystone pipeline. For the Al Gore wing of the Democratic Party, it has become a symbolic battle in the fight to save the planet; for the Joe Biden wing, Keystone and the unconventional oil revolution are a source of the middle-class jobs many feared modern economies could no longer provide.

The pipeline is also a litmus test for what you think is the most important problem in the early 21st century.

Chrystia Freeland is editor of Thomson Reuters Digital.

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Telecoms boom leaves rural Africa behind

JOHANNESBURG/FREETOWN (Reuters) – While mobile phone usage has exploded across Africa over the last decade, transforming daily life and commerce for millions, it’s a revolution that has left behind perhaps two thirds of its people.

Poor or no reception outside the towns helps explain why the continent’s mobile penetration, in terms of the percentage of the population using the service, is far lower than previously thought, and the cost of providing that service to impoverished, sparsely populated areas remains prohibitive.

In rural Sierra Leone, a country where GDP per capita is less than $ 400 a year, money doesn’t grow on trees, but mobile reception can, says street trader Abass Bangura in Freetown, the West African country’s capital.

In parts of Tonkolili, a district in the center of the country, or Kailahun to the east, it’s the only way you can get reception, he said.

“You climb stick, like mango tree, before you have network,” he said.

In South Sudan, the world’s newest state, it’s a similar story. Less than a year old, the country already has five mobile operators, and its capital, Juba, is teeming with giant billboards advertising mobile phones, but go just a few kilometers beyond a handful of fast-growing towns, and cell phones become useless.

Multiple SIM cards help users navigate patchy network coverage and take advantage of price promotions from rival operators.

That is typical of much of the continent.

With a population of just over a billion people, Africa has over 700 million SIM cards, but with most users owning at least two cards, penetration is only about 33 percent, according to a study released in November by industry research firm Wireless Intelligence.

“If we look at the fact that the rural population of Africa is about 60-70 percent of the population, and if we look at the degree of penetration into the rural market, it’s very, very low,” said Spiwe Chireka of advisory firm IDC.

In Nigeria, Africa’s most populous country, there are more than enough SIM cards for everyone, but penetration is only 61 percent, according to a 2012 study by research firm Informa.

The average mobile phone user in Nigeria owns an average of 2.39 SIM cards. Globally, only Indonesia is higher, with an average of 2.62 SIM cards per user.

Even in Africa’s biggest economy, South Africa, SIM numbers comfortably exceed the population, but given the number of people using multiple devices, actual population penetration is closer to 80 percent, says market leader Vodacom.

“You’ve got a lot of people buying SIMs, but maybe not enough phones to put it in,” said Olayemi Jinadu, an executive with the Sierra Leone arm of Indian telco Bharti Airtel.

COST VERSUS BENEFIT

The unserved rural millions could represent another growth opportunity for Africa-focused telcos like South Africa’s MTN Group, Bharti Airtel and Kuwait’s Zain, but first they have to figure out a cost-effective way to push into sub-Saharan Africa’s remote corners.

“There’s great potential, but the big concern for us is operational costs,” said Andre Claasson, chief operating officer at Zain South Sudan.

In rural Africa, the cost of running a network tower often exceeds the revenue it reaps. Fuel is typically about 40 percent of a tower’s operating cost, and in remote areas companies burn more diesel by bringing fuel to towers than is used powering them.

Although roughly 73 percent of Africa’s land has cell phone coverage, according to market research firm IDC, that still leaves vast tracts of rural Africa without network access.

Africa has 170,000 mobile towers now and needs another 60,000, according to tower company IHS Group, which at an average $ 200,000 each means an outlay of $ 12 billion.

“If you are an operator asked to spend $ 200,000 to build a site and another $ 2,000 a month to run it in an area with 500 people herding cows, it doesn’t make sense,” said Issam Darwish, IHS’s chief executive.

Average revenue per user is also low. It can vary between $ 1 and $ 10 per month, much lower than in developed markets such as the United States, which delivered ARPU of $ 51 in 2012 or Britain, $ 27.

Bharti, sub-Saharan Africa’s third-largest telecom group, says it makes $ 6.40 per user in Africa, which is higher than its home Indian market, where it makes only $ 3.30 a month, but the cost of operating in Africa is much higher and there isn’t a comparable middle class ready and able to spend more.

“You either have a handful of people in the affluent part of the society or you have lots of people who can’t afford the services,” its Chairman Sunil Mittal said last year.

Operators can save money by sharing towers, but even then, some sites will never make sense without government subsidies, analysts say.

African expansion has not been cheap for telcos. Over the past five years, mobile operators have spent a combined $ 16.5 billion on capital expenditure in the key markets of South Africa, Nigeria, Kenya, Senegal and Ghana, according to Wireless Intelligence.

Bharti has earmarked $ 1.5 billion for capex this year, while fourth-placed France Telecom is spending $ 9.3 billion between 2010 and 2015.

Spare cash is increasingly rare for debt-strapped European telecoms operators, which are cutting their dividends to cope with falling revenues and network upgrade costs in their home markets.

Some African regulators have set up funds to promote coverage, to which operators are expected to contribute.

In Sierra Leone, the Universal Access Development Fund (UADF) is yet to subsidize the cost of putting up a single mast, though it has been active for several years. The regulator complains networks do not contribute the fees they should.

“If we can’t subsidize, they’ll never erect towers there,” said Bashir Kamara, Project Manager at UADF.

($ 1 = 0.6350 British pounds)

(Additional reporting by Hereward Holland in Juba and Chijioke Ohuocha in Lagos; Editing by David Dolan and Will Waterman)

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Keri Russell's The Americans: Are You Hooked?

TV Watch

By Tim Nudd

01/31/2013 at 10:25 AM EST

Keri Russell in The Americans

FX

She's come a long way since Felicity.

That much was clear in the very first scene of The Americans on Wednesday night, as Keri Russell was shown in an extremely compromising position with a Department of Justice agent. Long gone is that sweet college girl from the '90s.

In the new FX drama, Russell, 36, and Matthew Rhys play suburban parents who are actually KGB agents, living in the early-'80s Washington, D.C.

Their lives are complicated. The husband is growing fond of American culture, while Russell's character is steadfastly devoted to the Soviet Union. An FBI agent just moved in down the road. And another KGB agent has defected, putting other agents in danger.

The gritty, suspenseful period piece has been getting good reviews. But did you watch on Wednesday? What did you think of it. Tell us below.

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Sex to burn calories? Authors expose obesity myths

Fact or fiction? Sex burns a lot of calories. Snacking or skipping breakfast is bad. School gym classes make a big difference in kids' weight.

All are myths or at least presumptions that may not be true, say researchers who reviewed the science behind some widely held obesity beliefs and found it lacking.

Their report in Thursday's New England Journal of Medicine says dogma and fallacies are detracting from real solutions to the nation's weight problems.

"The evidence is what matters," and many feel-good ideas repeated by well-meaning health experts just don't have it, said the lead author, David Allison, a biostatistician at the University of Alabama at Birmingham.

Independent researchers say the authors have some valid points. But many of the report's authors also have deep financial ties to food, beverage and weight-loss product makers — the disclosures take up half a page of fine print in the journal.

"It raises questions about what the purpose of this paper is" and whether it's aimed at promoting drugs, meal replacement products and bariatric surgery as solutions, said Marion Nestle, a New York University professor of nutrition and food studies.

"The big issues in weight loss are how you change the food environment in order for people to make healthy choices," such as limits on soda sizes and marketing junk food to children, she said. Some of the myths they cite are "straw men" issues, she said.

But some are pretty interesting.

Sex, for instance. Not that people do it to try to lose weight, but claims that it burns 100 to 300 calories are common, Allison said. Yet the only study that scientifically measured the energy output found that sex lasted six minutes on average — "disappointing, isn't it?" — and burned a mere 21 calories, about as much as walking, he said.

That's for a man. The study was done in 1984 and didn't measure the women's experience.

Among the other myths or assumptions the authors cite, based on their review of the most rigorous studies on each topic:

—Small changes in diet or exercise lead to large, long-term weight changes. Fact: The body adapts to changes, so small steps to cut calories don't have the same effect over time, studies suggest. At least one outside expert agrees with the authors that the "small changes" concept is based on an "oversimplified" 3,500-calorie rule, that adding or cutting that many calories alters weight by one pound.

—School gym classes have a big impact on kids' weight. Fact: Classes typically are not long, often or intense enough to make much difference.

—Losing a lot of weight quickly is worse than losing a little slowly over the long term. Fact: Although many dieters regain weight, those who lose a lot to start with often end up at a lower weight than people who drop more modest amounts.

—Snacking leads to weight gain. Fact: No high quality studies support that, the authors say.

—Regularly eating breakfast helps prevent obesity. Fact: Two studies found no effect on weight and one suggested that the effect depended on whether people were used to skipping breakfast or not.

—Setting overly ambitious goals leads to frustration and less weight loss. Fact: Some studies suggest people do better with high goals.

Some things may not have the strongest evidence for preventing obesity but are good for other reasons, such as breastfeeding and eating plenty of fruits and vegetables, the authors write. And exercise helps prevent a host of health problems regardless of whether it helps a person shed weight.

"I agree with most of the points" except the authors' conclusions that meal replacement products and diet drugs work for battling obesity, said Dr. David Ludwig, a prominent obesity research with Boston Children's Hospital who has no industry ties. Most weight-loss drugs sold over the last century had to be recalled because of serious side effects, so "there's much more evidence of failure than success," he said.

___

Online:

Obesity info: http://www.cdc.gov/obesity/data/trends.html

New England Journal: http://www.nejm.org

___

Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

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Wall Street flat after mixed data; Qualcomm lifts Nasdaq

NEW YORK (Reuters) - Stocks were little changed on Thursday as investors mulled a mixed bag of economic data, though earnings from Qualcomm helped lift the Nasdaq.

Data showed the labor market improved modestly; the number of Americans filing new claims last week for unemployment benefits rose, beating expectations and bouncing off five-year lows in the prior week.

That comes ahead of Friday's payrolls report, which is expected to show employers added 160,000 jobs in January after an increase of 155,000 in December.

A separate report showed incomes climbed in December by the most in eight years, in an encouraging sign that the economy may be propelled forward through consumer spending.

A gauge of business activity in the U.S. Midwest showed a pick up in January from a more than three-year low in December as new orders jumped. The report followed a disappointing survey from the mid-Atlantic and New York regions.

Qualcomm Inc gained 5.9 percent to $67.25 as the top boost to the Nasdaq 100 <.ndx> after the world's leading supplier of chips for cellphones beat analysts' expectations for quarterly profit and revenue, and raised its targets for the year.

The worst performer on the Nasdaq was Facebook Inc , which lost 5.9 percent to $29.39. The social network company said Wednesday it doubled its mobile advertising revenue in the fourth quarter; however, that growth trailed some of Wall Street's most aggressive estimates.

The Dow Jones industrial average <.dji> gained 22.88 points, or 0.16 percent, to 13,933.30. The Standard & Poor's 500 Index <.spx> gained 0.21 points, or 0.01 percent, to 1,502.17. The Nasdaq Composite Index <.ixic> gained 8.43 points, or 0.27 percent, to 3,150.73.

The S&P 500 <.spx> has gained 5.3 percent in January, after legislators in Washington temporarily sidestepped a "fiscal cliff" of automatic tax increases and spending cuts that could have derailed the economic recovery, and amid improving economic data and better-than-expected corporate earnings.

But the benchmark index has stalled recently and is virtually flat for the week, hovering near the 1,500 mark, as investors look for fresh trading incentives to justify further gains.

"Unfortunately it's still a mixed picture, it appears we are just getting a lot of conflicting data right now," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

"There is certainly a lot of information coming out this week - a lot of economic data, a lot of earnings and of course we have the employment number looming Friday, so with 1,500 right here, my guess is there is just not enough conviction to push us substantially higher yet."

United Parcel Service Inc lost 1.6 percent to $79.95 after the world's largest parcel delivery reported fourth-quarter earnings below analysts' estimates on Thursday and forecast weaker-than-expected profit for 2013.

But the Dow Jones Transportation average <.djt> gained 0.5 percent as Kirby Corp added 7.6 percent to $71.57 and Ryder Systems Inc climbed 4.7 percent to $56.79 after posting quarterly results.

Thomson Reuters data through Thursday morning shows that of the 231 companies in the S&P 500 that have reported earnings this season, 69.3 percent have exceeded expectations, a higher proportion than over the past four quarters and above the average since 1994.

Overall, S&P 500 fourth-quarter earnings are forecast to have risen 3.7 percent. That's above a 1.9 percent forecast at the start of the earnings season, but well below a 9.9 percent profit growth forecast on October 1, the data showed.

WMS Industries Inc surged 52.5 percent to $24.96 after the company agreed to be acquired by Scientific Games Corp for $26 per share in cash. Scientific Games jumped 19 percent to $10.63.

(Editing by Bernadette Baum)

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India Ink: No Knowledge of Pakistan Complaints, Indian Officials Say

Following the recent killings of Indian and Pakistani soldiers near the Kashmir border, a local newspaper reported classified United Nations documents show that the cycle of violence between troops of the two countries has continued despite the cease-fire in 2003.

The Hindu, a national English-language daily newspaper, said Wednesday that Pakistan has repeatedly complained to the United Nations Military Observer Group in India and Pakistan about the killings of at least 18 of its soldiers, including four beheadings, by Indian forces between 2000 and 2011. The United Nations group was set up in 1949 to monitor cease-fire violations between the two countries.

Indian officials denied the report on Wednesday.

In the worst flare-up since the 2003 cease-fire, Indian and Pakistani troops exchanged gunfire near the Line of Control earlier this month, resulting in deaths on both sides. At the time, India accused Pakistan of beheading one of its soldiers, a charge Pakistan denies.

Among the complaints it filed, Pakistan alleged in 2003 that Indian forces decapitated one of its soldiers, the Hindu said.

The Hindu also reported that Pakistan also complained that Indian forces decapitated two civilians during a massacre in the village of Bandala in 1998, which claimed 22 civilian lives.

Indian army spokesperson Col. Jagdeep Dahiya described the article as “erroneous and speculative.”

“The Indian Army is highly professional and does not indulge in un-soldierly acts as alleged in the article,” he said. “The very fact that Pakistan has not raised such issues in bilateral interactions since 1998 bears testimony to allegations leveled against the Indian army being misleading,” he said.

Col. Dahiya also said that there is an existing mechanism to regulate conflict near the line of control between India and Pakistan. “The article seems to have been based on one-sided allegations made by the Pakistan army to UNMOGIP,” he said, an organization whose status is questionable.

Sitanshu Kar, spokesman for the Indian Ministry of Defense, said that he had no knowledge of Pakistan’s complaints to the United Nations group, and that he had not been contacted for The Hindu article. “It’s the first time I’m hearing about this,” he said. “I have not seen any such document.”

Syed Akbaruddin, the spokesman for the India’s Ministry of External Affairs, said that India did not have any formal exchange with the United Nations Military Observer Group. “We feel that Unmogip has outlived its relevance,” he said. The country’s relationship with the organization ended after India and Pakistan entered the 1972 Simla Agreement, in which both countries said they would resolve their disputes bilaterally.

Mr. Akbaruddin added that Pakistan had not raised these complaints directly with India. “Frankly, this is not a discussion we have had diplomatically,” he said.

An official at the United Nations organization’s office in Srinagar refused to comment on the report, or whether such complaints by Pakistan had been received. Calls made to the group’s office in Delhi were not answered.

Lt. Gen. Baljit Singh Jaswal, who from October 2009 to December 2010 led the Northern Command, which supervises troops in Jammu and Kashmir, said that India had engaged in no cross-border violations during that time.

General Jaswal, now retired, added that Pakistan had violated the cease-fire “numerous times” and that India had exchanged retaliatory fire.

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