AP Business Highlights
On
Thursday September 9, 2010, 6:09 pm
Fears of a second recession
ease, at least for now
WASHINGTON (AP) -- No, the
economy isn't roaring ahead. And no, companies aren't making lots of job
offers. But a fresh batch of economic data Thursday at least eased summertime
fears that the economy might be on the brink of another recession.
Far fewer people applied
for unemployment aid last week, suggesting layoffs are easing. And the nation's
trade deficit narrowed in July, thanks to a bigger appetite overseas for
American exports.
Analysts say they think the
economy will continue to plod along in the coming months. The economy will
grow, though too weakly to create many jobs for the nearly 15 million
unemployed Americans. Some say the threat of a double-dip recession hasn't been
extinguished.
Trade deficit narrows to
$42.8 billion in July
WASHINGTON (AP) -- The
trade deficit narrowed significantly in July as exports climbed to the highest
level in nearly two years, reflecting big gains in sales of U.S.-made airplanes
and other manufactured goods while imports declined.
The July deficit fell 14
percent to $42.8 billion, the Commerce Department reported Thursday. That was
much lower than economists had forecast. The lower trade deficit should give a
boost to overall economic growth.
Exports rose 1.8 percent to
$153.3 billion, the best showing since August 2008, as sales of jetliners,
industrial machinery, computers and telecommunications equipment all posted
large gains. Imports, which had been surging, dropped 2.1 percent to $196.1
billion reflecting the slowdown in the U.S. economy during the spring as
businesses cut back on rebuilding inventories and consumer demand slackened
under the weight of high unemployment.
Mortgage rates edge up;
Housing market still slow
NEW YORK (AP) -- Record-low
mortgage rates failed to pull the housing market out of its funk. Now rates are
inching higher, but don't blame them if home sales stay sluggish.
On Thursday, mortgage buyer
Freddie Mac said the average rate for a 30-year fixed loan was 4.35 percent,
the first weekly rise since mid-June. That's up from 4.32 percent the previous
week, the lowest number since Freddie Mac began tracking rates in 1971.
Rates have been falling
since spring as investors have shifted money into safe Treasury bonds. That
influx of money has lowered Treasury yields, which mortgage rates tend to
track.
But just as bargain
financing couldn't save the housing market, analysts say, a gradual rise in
rates won't necessarily crush it. Cheap money matters less than the larger
forces at work, especially a 9.6 percent unemployment rate, which keeps
would-be homebuyers in fear of losing their next paycheck.
Stocks extend gains after
drop in jobless claims
NEW YORK (AP) -- Stocks
extended their September rally Thursday following more encouraging news on the
job market.
The Dow Jones industrial
average rose 28 points after the Labor Department said first-time claims for
unemployment benefits fell last week to the lowest level in two months. In
another hopeful sign on the economy, the trade deficit narrowed in July.
Stocks pared their gains in
the afternoon after a report came out saying Deutsche Bank is considering
raising new money through a stock sale in what could be another troubling sign
for European banks. Trading volume was very light.
The jobs report came in
much better than analysts had expected and added to other positive signals on
the economy, including a pickup in job creation for August reported last week.
Treasury prices and gold fell as investors found themselves with more appetite
for risk.
Cold drinks, hot summer
fuel McDonald's sales rise
NEW YORK (AP) -- August's
summer heat provided a lift for fast-food giant McDonald's, pushing a key
revenue figure up 4.6 percent in the U.S. during the month as customers came in
for frappes and fruit smoothies.
But the results weren't as
strong as analysts were expecting, largely on weakness in Europe, and shares
fell Thursday.
The world's largest
hamburger chain said that August sales at restaurants open at least 13 months
climbed 4.9 percent. While the performance was strong and beat growth of 2.2
percent from in August 2009, it is down from July's 5.7 percent rise. The
measurement is key for restaurant operators because it measures growth at
existing locations. It excludes growth at stores that open or close during the
year.
McDonald's Corp. said the
figure climbed 2.2 percent in Europe on strong results in the U.K. and Russia.
In the rest of the world, those sales were up 7.8 percent -- marking a reverse
from a drop of 0.5 percent in the same period last year. Among the strongest
performers were Japan, China and Australia.
Burger King buyer names
rail exec as future CEO
NEW YORK (AP) -- Burger
King's soon-to-be new owners have named a former Latin American railroad
executive to be CEO of the fast-food chain after the $3.26 billion deal goes
through.
The appointment of Bernardo
Hees by 3G Capital is a signal that the investment firm is serious about
expanding the Burger King brand further into Latin America and elsewhere
abroad. Hees will replace John Chidsey, who had been CEO since 2006 of the
fast-food chain, which has struggled in the economic downturn to keep people
dining at its restaurants. Chidsey will become co-chairman after the deal
closes.
Hees was most recently CEO
of America Latina Logistica, Latin America's largest railroad company, in which
3G Capital owns a stake of about 6 percent. He became a partner at 3G Capital
in July.
Ties between the companies
are deep. Alexandre Behring, managing partner at 3G Capital, co-founded the
railroad company in 1997 and served as its CEO from 1998 to 2004. He is set to
become co-chairman as well after the deal closes.
Gulf oil dilemma: accept
payout from BP or sue
MIAMI (AP) -- Alabama
seafood market owner David Scott faces a difficult decision as he tries to
rejuvenate his business after the Gulf oil spill: He can accept a piece of BP's
$20 billion claims fund -- relatively fast, easy money -- or sue the oil giant
for a bigger payday, wait years and risk ending up with nothing.
Thousands of business
owners, fishermen and others along the Gulf Coast are confronting a similar
conundrum. Those who accept a check for their long-term losses from the
victims' compensation fund will have to give up their right to sue BP. Others
fear that it could take years for the extent of the economic blow to be known,
making it difficult to figure out whether a payout negotiated now will make
them whole.
How many are expected to
file claims for long-term losses is anyone's guess. As of Wednesday afternoon,
more than 51,000 interim claims had been submitted, including more than 44,000
for lost earnings. Of the total, 10,252 claims had been paid, for a total of
almost $80 million.
Hurd's Oracle gig: Is
Ellison perk or problem?
SAN FRANCISCO (AP) -- As
co-president at Oracle Corp., ousted Hewlett-Packard Co. CEO Mark Hurd will
have to adapt to a new role playing second fiddle to one of Silicon Valley's
most domineering bosses -- Larry Ellison.
Although the two men have
been pals for several years, working together may test their friendship given
that they have both been accustomed to being the top dog. Ellison, in
particular, has never left any doubt who's calling the shots at the business
software juggernaut that he co-founded 33 years ago.
In a high-profile power
struggle a decade ago, Ellison ousted a president, Ray Lane, who had played an
instrumental role in rebuilding Oracle's sales force after an accounting
scandal. Many other executives have left Oracle after falling out with Ellison
or realizing that he would never loosen his reins of power.
Hurd, meanwhile, knows how
to serve as a subordinate, but he has been a chief executive for the past seven
years and could be angling for Oracle's top job when Ellison retires. Hurd's
appointment could mean that Ellison is finally ready to groom a successor.
Ellison's track record suggests that he's been cold to the idea before, but in
Hurd, Oracle gets a Wall Street darling who's proven he can take a company that
is undergoing a massive shift and deliver steady financial results.
By The Associated Press
The Dow Jones industrial
average rose 28.23, or 0.3 percent, to close at 10,415.24. The Dow had risen as
much as 90 points earlier.
The Standard & Poor's
500 index rose 5.31, or 0.5 percent, to 1,104.18, while the Nasdaq composite
index rose 7.33, or 0.3 percent, to 2,236.20.
Benchmark oil for October
delivery lost 42 cents to settle at $74.25 a barrel on the New York Mercantile
Exchange. Natural gas for October delivery fell 4.6 cents to settle at $3.768
per 1,000 cubic feet on the Nymex.
In other trading in October
contracts, heating oil gave up 1.33 cents to settle at $2.0684 a gallon and
gasoline lost 0.4 cent to settle at $1.9354 a gallon.
In London, Brent crude fell
70 cents to settle at $77.47 on the ICE Futures exchange.