, On Wednesday March 9, 2011, 6:11 pm
EST
Wholesale inventories and
sales rise in January
Businesses at the wholesale
level added to their stockpiles in January and their sales jumped by the
largest amount in 14 months. But the spike in sales was partially influenced by
rising oil prices.
Wholesale inventories rose
1.1 percent in January, the Commerce Department said Wednesday. It was the 12th
gain in 13 months.
Sales at the wholesale
level rose for the seventh straight month. The 3.4 percent increase was the
largest gain since November 2009.
Still, a 10.6 percent rise
in demand for petroleum helped drive the jump in sales, reflecting higher oil
and gas prices.
The rise in inventories
left stockpiles at $436.9 billion. That's 13.1 percent higher than the low
reached in September 2009, when companies were slashing their stockpiles to
keep costs under control during the recession.
Greater sales should
encourage businesses to keep restocking their shelves and drive factory
production in the months ahead.
Mortgage applications
spike; home sales still weak
The number of people
applying for a mortgage jumped last week. But analysts cautioned that the
increase was likely driven by investors, not first-time homebuyers who are
needed to help housing markets recover.
The Mortgage Bankers
Association says its overall mortgage application index rose 16.1 percent from
the previous week, the biggest jump since June. But the index is still far off
where it was last spring and summer following four straight months of declines.
The refinance index rose
17.2 percent and the purchase index increased 12.5 percent, to the highest
level so far this year. The refinance share of activity increased to 65.5
percent of all applications from 64.9 percent the previous week.
Mortgage rates have been at
their lowest levels in decades, but that hasn't helped home sales much.
Mortgage applications will
likely fall for the next few months because homeowners with a mortgage are
unable to trade up, and cash buyers and investors, lured by low prices and
rising rents, represent the bulk of sales, said Paul Ashworth, chief U.S.
economist with Capital Economics.
Walgreen selling pharmacy
benefits ops for $525M
NEW YORK (AP) -- Walgreen
Co. said Wednesday that it is leaving the pharmacy benefits management
business, selling that operation to Catalyst Health Solutions Inc. for $525
million in cash and freeing it to focus on its drugstore network, the largest
in the United States.
The companies expect to
complete the deal by the end of June assuming regulators approve. The pharmacy
benefits management business, known as Walgreens Health Initiatives, has never
approached the size of Caremark, the pharmacy benefits management business of
CVS Caremark Corp., which is Walgreen's largest drugstore competitor. Caremark
says it manages prescription benefits for about 60 million people.
Caremark is the
third-largest pharmacy benefits manager in the U.S., behind Medco Health
Solutions Inc. and Express Scripts Inc.
While Catalyst remains much
smaller than those companies, the purchase more than doubles its size. After
the deal is complete, Catalyst's total membership will rise to about 18 million
from 7 million. The Rockville, Md., company said it will handle about 165 million
prescriptions a year, compared to about 80 million previously.
Catalyst shares rocketed
$7.12, or 16 percent, to $51.65 in midday trading.
Dynegy warns it may have to
file for bankruptcy
NEW YORK (AP) -- Dynegy
Inc. said it may have to seek bankruptcy protection if it can't meet certain
earnings requirements by its creditors this year.
The power producer also
announced Wednesday that it has elected four board members, two of whom were
nominated by billionaire investor Carl Icahn's company and one by Seneca
Capital -- one of Dynegy's biggest shareholders.
Both groups have wrestled
for more control over the company. A $665 million takeover offer from Icahn,
which was opposed by Seneca, expired last month after it failed to get enough
support from shareholders.
Dynegy has been hurt by
lower power prices over the last two years.
The company owns power
plants that burn natural gas, coal and oil. It sells electric energy and
related services to grids and utilities in the Midwest, the Northeast and the
West. As businesses shuttered and consumers turned off the lights during the
recession to save money, prices for commodities to produce it plunged. Low
demand meant utilities weren't able to raise prices to recoup losses.
EU debt crisis mounts as
market strains Portugal
LISBON, Portugal (AP) --
Europe's government debt crisis has flared up again in the run-up to two
crucial meetings of EU leaders as Portugal had to pay 50 percent more to raise
cash in the markets on Wednesday than it had to just six months ago.
Investor tensions grew
after the Portuguese government revealed it is paying 5.99 percent interest to
raise 1 billion euros ($1.4 billion) in two-year bonds. That was way above the
4 percent demanded at the last similar auction in September and around four and
a half percentage points more than the rate Germany has to offer -- even though
the two countries share the same currency.
The yield on Portugal's
10-year bonds rose a further 0.06 percentage point to 7.68 percent, a euro-era
record and above the rates Greece and Ireland saw before accepting bailouts
from the EU and International Monetary Fund last year.
The major concern in the
markets is that the March 24-25 summit of EU leaders in Brussels will not yield
the "comprehensive solution" to the debt crisis that has been
trumpeted. There's also a realization that higher borrowing costs will make it
far more difficult for countries like Greece and Portugal to grow themselves
out of the debt mire they find themselves in.
American Eagle 4Q earnings
up; CEO to retire
NEW YORK (AP) -- American
Eagle Outfitters Inc.'s fiscal fourth-quarter net income rose 47 percent as the
company cut costs faster than sales declined, the teen clothing retailer said
Wednesday. Its CEO also announced plans to retire.
CEO James V. O'Donnell's
retirement comes at a time when takeover speculation has swirled around the
Pittsburgh company. O'Donnell, 70, will stay with the retailer until a
successor is chosen and will work through the transition.
American Eagle's stock rose
nearly 7 percent. Analysts said the company's business might turning the corner
and new management will help rejuvenate the company, which has struggled with
sales declines.
O'Donnell started with
American Eagle as its chief operating officer in 2000. He became co-CEO in 2002
and CEO in 2003.
American Eagle's earnings
climbed to $87 million, or 44 cents per share, for the fourth quarter. That's
up from $59.3 million, or 28 cents per share, a year ago. Last year's quarter
included a $20.3 million loss from stores it has since closed.
That beat the 43 cents per
share that analysts polled by FactSet predicted.
Exxon CEO says oil prices
not yet hurting economy
NEW YORK (AP) -- Exxon
Mobil CEO Rex Tillerson said Wednesday he doesn't think the recent jump in oil
prices is hurting the U.S. economy -- yet.
At the same time, he
acknowledged that gasoline prices are approaching an uncomfortable threshold
for American families.
Oil is about $104 per
barrel, and the national average for gasoline is now $3.52 per gallon. Drivers
on the West Coast are paying close to $4. And the price is expected to rise
through spring and into summer.
Tillerson told reporters at
the New York Stock Exchange that in 2008 American families appeared to change
their driving and spending habits when gasoline hit $4 per gallon that June.
Gas peaked at $4.11 in July that year as oil climbed to $147 per barrel.
Unemployment in Greece
jumps to 14.8 percent
ATHENS, Greece (AP) --
Unemployment in Greece jumped to 14.8 percent in December, the Statistical
Authority said Wednesday, as painful austerity measures and the financial
crisis took a toll.
Greece's largest labor
union, the GSEE, called on the Socialist government to ease the measures
demanded by European countries and the International Monetary Fund in exchange
for euro110 billion ($153 billion) that the country began receiving last May.