AP Business Highlights

Companies:

·                     Walt Disney Co.

·                     Netflix, Inc.

On Tuesday August 10, 2010, 5:47 pm EDT

Fed, worried about recovery, will buy US debt

WASHINGTON (AP) -- As recently as two months ago, the Federal Reserve sounded optimistic about the economic recovery. Now the central bank is clearly more worried, and economists say there's not much more it can do to help.

The Fed said Tuesday that it would spend a relatively small amount of money -- about $10 billion a month, economists estimate -- buying government debt. The move is designed to drive interest rates on mortgages and corporate borrowing at least a little lower and help the economy grow faster.

Stocks cut losses on Fed's economic stimulus plans

NEW YORK (AP) -- The stock market had a half-hearted comeback Tuesday after the Federal Reserve announced it would take small steps to stimulate the economy.

The Dow Jones industrial average, down about 100 points before the Fed announced its plans, recovered to a loss of 54. The other major market indexes also bounced back from their lows. But investors were still cautious: The Dow was able to briefly show a gain, but fell back again as traders recognized that the Fed's moves, while welcome, would be small and won't cure the economy's problems.

Productivity falls 0.9 percent in second quarter

WASHINGTON (AP) -- Worker productivity dropped this spring for the first time in more than a year, a sign that companies may need to step up hiring if they hope to grow.

Productivity declined at an annual rate of 0.9 percent in the April-to-June quarter after posting large gains throughout 2009, the Labor Department said Tuesday. Unit labor costs edged up 0.2 percent in the second quarter, the first increase since the spring of 2009.

Output of U.S. workers is the key ingredient to boosting living standards. It allows companies to pay workers more because of the increased production without being forced to raise the cost of their goods, which sparks inflation.

China's July exports up but import growth weakens

BEIJING (AP) -- China's exports grew strongly in July but import growth fell as its rapid economic expansion cooled, possibly hurting global demand.

Exports rose 38.1 percent over a year ago to $145.5 billion while imports gained 22.7 percent to $116.8 billion, the customs agency reported Tuesday. Export growth eased from June's 43.9 percent rate while import growth tumbled from June's 34.1 percent expansion.

Weakness in China's demand for imports could dent its ability to help to drive a global recovery amid Europe's debt crisis and slack sales elsewhere.

FDIC takes step toward cutting use of ratings

WASHINGTON (AP) -- Federal regulators have taken a first step toward eliminating the use of credit ratings in rules for banks, under a mandate of the new financial overhaul law. The head of the Federal Deposit Insurance Corp. said Tuesday it won't be easy to come up with a replacement.

The FDIC board voted to take public comment for 60 days on alternatives to relying on credit rating agencies to assess the risk of investments. The Federal Reserve and the Treasury's Office of the Comptroller of the Currency published the document requesting comment with the FDIC.

3 United flights had long tarmac delays in June

NEW YORK (AP) -- Only three flights sat on the tarmac for more than three hours in June compared with nearly 300 a year ago, the government said Tuesday. But airlines didn't cancel more flights to avoid potentially massive fines for those long delays.

All the flights that exceeded the limit were operated by United Airlines, and each topped the three-hour time by five minutes or less. All were flying out of Chicago's O'Hare airport on the same day -- June 18 -- when thunderstorms and strong winds battered the area. United later canceled two of the three flights that were held up.

House OKs emergency bill to halt teacher layoffs

WASHINGTON (AP) -- Summoned back from summer break, the House on Tuesday pushed through an emergency $26 billion jobs bill to protect 300,000 teachers, police and others from election-year layoffs. President Barack Obama was to sign the measure by day's end.

Lawmakers streamed back to Washington for a one-day session as Democrats declared a need to act before children return to classrooms minus teachers laid off because of budgetary crises in states that have been hard-hit by the recession.

Disney 3Q profit soars on ESPN, studio gains

LOS ANGELES (AP) -- The Walt Disney Co. said net income for the latest quarter jumped 40 percent from a year ago thanks to a huge boost from ESPN and a turnaround at its movie studio because of "Toy Story 3."

Disney said Tuesday that fiscal third-quarter net income was $1.33 billion, or 67 cents per share. That's up from $954 million, or 51 cents per share, a year ago. Revenue rose 16 percent to $10 billion, from $8.6 billion.

Feds: Storms delay drilling for final BP well plug

NEW ORLEANS (AP) -- Approaching storms forced crews to suspend drilling the final stretch of a relief well aimed at shooting a permanent underground plug into BP's busted oil well in the Gulf of Mexico, the government's point man for the disaster said Tuesday.

Retired Coast Guard Adm. Thad Allen said the suspension could mean a delay of two or three days in completing the relief well, one of the last steps toward ending any threat from the well that spewed more than 200 million gallons of oil over three months before a temporary cap sealed it in mid-July.

Netflix to stream Paramount, Lionsgate, MGM movies

LOS ANGELES (AP) -- Netflix Inc. will pay nearly $1 billion during the next five years for the online streaming rights to movies from Paramount, Lionsgate and MGM in a deal that could help Netflix attract even more subscribers.

The agreement announced Tuesday marks another breakthrough in Netflix's bid to stock its online streaming library with more compelling material, so it can keep its subscription service relevant as more households order entertainment through high-speed Internet connections. The online streaming push also helps the company reduce its postage bill for mailing DVDs to its 15 million subscribers.

By The Associated Press

The Dow closed down 54.50, or 0.5 percent, at 10,644.25.

The Standard & Poor's 500 index fell 6.73, or 0.6 percent, to 1,121.06. The Nasdaq composite index closed down 28.52, or 1.2 percent, at 2,277.17.

Benchmark crude lost $1.23 to settle at $80.25 a barrel on the New York Mercantile Exchange after falling as low as $79.20 a barrel earlier in the day.

In other Nymex trading in September contracts, heating oil gave up 2.84 cents to settle at $2.1254 a gallon, gasoline dropped 3.34 cents to settle at $2.0853 a gallon and natural gas fell 1.2 cents to settle at $4.297 per 1,000 cubic feet.

In London, Brent crude $1.39 to settle at $79.60 on the ICE Futures exchange.