On Tuesday January 25, 2011, 7:29 pm EST
Second wave of housing bust
hammers more cities
A second wave of falling
home prices is battering some cities that had escaped the worst of the housing
market bust.
Prices in Seattle,
Charlotte, N.C., and Portland, Ore., have hit their lowest points since peaking
in 2006 and 2007. Denver and Minneapolis are nearing new lows. High
unemployment and rising foreclosures are taking a toll even on markets that
never overheated during the boom years.
Home values are dwindling
in nearly every American market. Prices fell in November in all but one of the
20 cities in the Standard & Poor's/Case-Shiller index released Tuesday.
Eight of those markets hit their lowest point since the housing bubble burst.
The damage from the real
estate bubble has spread well beyond Las Vegas, Phoenix and Miami, which built
frantically during the mid-2000s, and is sapping prices from coast to coast. In
many places, prices are expected to keep falling for at least the next six
months.
UK economy shrinks and
pound plunges
LONDON (AP) -- An
unexpected downturn in the British economy shocked investors on Tuesday,
prompting a sharp drop in the pound and reigniting debate about the
government's plans to slash spending and raise taxes to reduce public debt.
The figures showing a 0.5
percent GDP drop in the last three months of 2010 fueled speculation that the
British economy was heading back into recession -- defined as two quarters of
negative growth -- and reined in expectations that the Bank of England would
start raising interest rates soon in response to stubbornly high inflation
levels.
The figures are
preliminary, leaving them open to revision, and followed four quarters of
growth -- including 0.7 percent in the third quarter -- as Britain climbed out
of a deep recession.
In the text of a speech in
Newcastle, Bank of England governor Mervyn King appeared to indicate that he
wasn't in a rush to start raising borrowing costs, a move that could dampen
growth.
Within a minute or two of
the data's release, the pound had dropped over a cent against the U.S. dollar,
falling to a low of $1.5753 before settling around the $1.58 mark.
Johnson & Johnson posts
drop in 4th-qtr profit and sales over product recalls, health reform
Johnson & Johnson's
revenue has slumped for a second straight year, prompting its CEO to make an
extraordinary pitch to soothe investors and defend the company's handling of 17
costly product recalls.
The health care giant,
hammered by the weak global economy, growing pricing pressures and recalls that
have kept many popular nonprescription medicines off store shelves, reported
Tuesday a 12 percent profit decline and a 5.5 percent drop in sales for the
fourth quarter.
Revenue fell 0.5 percent in
2010, after dropping 3 percent in 2009 -- its first annual decline since the
Depression.
Chairman and Chief
Executive William C. Weldon tried to reassure analysts and investors that
J&J has its manufacturing and other problems under control, in an unusually
lengthy, sometimes repetitive conference call.
Wall Street wasn't buying
it, though, with J&J shares down $1.14, or 2 percent, to $61.08 at the end
of the trading day after initially dropping 2.4 percent -- a big drop for a
huge, diversified company that rarely sees stock volatility.
Consumer Confidence Index
hits 8-month high
WASHINGTON (AP) -- Consumer
confidence hit an eight-month high in January. The increase suggests the rising
spirits that fueled a holiday shopping boom are carrying over into the new year
as people feel better about the job market.
The Conference Board said
Tuesday its Consumer Confidence Index climbed to 60.6 this month from 53.3 in
December.
While confidence is still
far from the 90 that signals a healthy consumer mindset, the January
improvement was better than expected. Some economists said the big tax relief
package Congress passed in late December may have helped.
The $858 billion package
extended the Bush-era tax relief at all income levels for two years, provided
tax breaks for businesses and reduced Social Security payroll taxes by 2
percentage points this year.
The Social Security
reduction means an estimated $1,000 in additional after-tax income for the
average family, according to White House estimates.
Other analysts suggested
that the recent gains in the stock market and improving labor market conditions
were trumping higher gasoline prices and falling home prices.
Unemployment rises in 20
states, falls in 15
The unemployment rate rose
in 20 states last month as employers in most states shed jobs.
The Labor Department says
the unemployment rate rose in 20 states and fell in 15. It was unchanged in
another 15 states. That's nearly the same as in November, when the rate rose in
21 states, fell in 15 and was the same in 14.
The report is evidence that
the job market is barely improving even as the economy grows. Most economists
expect hiring to pick up this year, although the unemployment rate will likely
remain high.
Google to hire more than
6,200 workers this year
SAN FRANCISCO (AP) --
Google Inc. plans to hire more than 6,200 workers this year in the biggest
expansion yet by the Internet's most profitable company.
The hiring spree will
likely be welcomed by President Barack Obama, who is expected to emphasize the
need for more jobs during his State of the Union address Tuesday night. Google
CEO Eric Schmidt was among a group of business leaders who met with Obama last
month to discuss ways to bolster the listless economy.
But Google's push to
further expand a work force that grew by 23 percent last year may not be as
well received on Wall Street, where the Internet search leader's spending has
annoyed some investors who would prefer a more frugal approach in hopes of
fatter returns.
Google executives have
consistently brushed aside those concerns, saying that the company needs to
aggressively recruit the smartest computer engineers and most persuasive sales
representatives to maintain its lead in online search and advertising, as well
as to diversify into other services in computing, telecommunications and the
media.
Successful bonds sales calm
European debt fears
MADRID (AP) -- Successful
debt sales helped maintain relative calm on European bond markets Tuesday, but
top European Union officials urged governments not to procrastinate on new
measures to tackle the crisis that has pummeled the continent over the past
year.
Spain -- the country that
many analysts say could make or break the 17-country eurozone if it runs into
financial trouble -- auctioned euro2.2 billion ($3 billion) in short-term debt
at much lower interest rates. Meanwhile, the currency union's bailout fund
effortlessly sold euro5 billion in five-year bonds to fund its first
contribution to the euro67.5 billion rescue loan for Ireland.
But despite the good news
from financial markets, EU officials and analysts warned that governments
should not be tricked into thinking the current crisis is over.
Yahoo's 4Q earnings double,
revenue falls 12 pct
SAN FRANCISCO (AP) -- Yahoo
Inc.'s fourth-quarter earnings more than doubled, but the Internet company's
crumbling revenue made it clear that it's still struggling to cash in on the
online advertising boom.
The results announced
Tuesday show why many investors are wondering if Yahoo CEO Carol Bartz is the
right person for the job as she enters the second half of a four-year contract
she signed in January 2009.
Although Bartz has boosted
Yahoo's earnings through layoffs and other cost-cutting measures, the company's
revenue has fallen from its levels before her arrival.
The financial pressure has
prompted Yahoo to lay off more than 700 workers in the past two months. In the
latest cutbacks Tuesday, Yahoo is laying off 100 to 150 employees, roughly 1
percent from a work force that totaled 13,600 people at the end of December.
Investors allege massive
fraud by Countrywide
A lawsuit alleges
Countrywide Financial Corp. and two of its former executives misled
institutional investors who were stuck with huge losses from mortgage-related
investments that they say were portrayed as low-risk.
The lawsuit was filed
Monday in New York State Supreme Court by investors who bought hundreds of
millions of dollars in Countrywide's mortgage-backed securities from 2005 to
2007, before the housing market went bust. The list of a dozen plaintiffs
includes New York Life Insurance Co., TIAA-CREF Life Insurance Co. and Dexia
Holdings Inc.
The complaint names
Countrywide, various subsidiaries that issued the securities, two former
company executives including ex-CEO Anthony Mozilo, and Bank of America, which
bought Countrywide in 2008.
Countrywide had been the
nation's largest home loan originator before the housing market collapse left
many of its borrowers unable to repay mortgages that in many cases required no
proof of income or down payment.
The plaintiffs allege they
wanted conservative investments
Shareholders can register
views on executive pay
WASHINGTON (AP) -- Federal
regulators are giving shareholders at large public companies the right to
register their opinions on executive pay at least once every three years.
The Securities and Exchange
Commission adopted the rule Tuesday by a 3-2 vote. It also lets shareholders
decide if they want to vote every year, every other year or once every three
years. Voting would begin this year.
The votes on pay packages
will occur as part of the proxy process, the annual ballot that shareholders
use to elect boards of directors. The financial overhaul law enacted last
summer gave shareholders a non-binding vote on executive compensation. But
lawmakers left it to regulators to determine how often they should vote.
Shareholders at smaller
public companies, with market value of $75 million or less, will begin voting
in 2013.
By The Associated Press
The Dow Jones industrial
average lost 3.33 points, or less than 0.1 percent, to 11,977.19. It had been
down as far as 11,898.74 in earlier trading.
The Standard & Poor's
500 index inched up 0.34, or less than 0.1 percent, to 1,291.18.
The Nasdaq composite index
gained 1.7 points, or 0.1 percent, to 2,719.25.
Benchmark crude for March
delivery lost $1.68 to settle at $86.19 per barrel on the New York Mercantile
Exchange. Oil hasn't been below $87 since Dec.1. It's fallen more than 4
percent since Thursday, when it was approaching $92 a barrel. About half of the
drop happened in the last two days.
In other trading on the
Nymex, heating oil gave up 2.65 cents to settle at $2.5966 a gallon, gasoline
futures lost 6.73 cents to settle at $2.3706 a gallon and natural gas for March
delivery fell 10.8 cents to settle at $4.490 per 1,000 cubic feet.
In London, Brent crude
dropped $1.36 to settle at $95.25 per barrel on the ICE Futures exchange.