On Tuesday October 5, 2010, 6:14 pm
Gain in services powers
stocks; Dow up nearly 200
NEW YORK (AP) -- Stocks
surged to their highest level in five months Tuesday after a measure of the
most important driver of the U.S. economy surged ahead in September, a hopeful
sign for the country's main source of employment.
A surprise move by the Bank
of Japan to cut its key interest rate to virtually zero also lifted stocks
worldwide. The dollar fell as investors shed defensive assets, and a gauge of
U.S. stock market volatility fell.
The Institute for Supply
Management reported that the U.S. services industry grew slightly faster in
September as demand from customers improved. It was the ninth-straight month of
expansion in services, which have been growing at a slower pace in the U.S.
relative to the much smaller manufacturing sector.
AP analysis: Economic
stress declined in August
WASHINGTON (AP) -- The
nation's economic stress eased slightly in August thanks to lower foreclosure
rates in the hardest-hit states, according to The Associated Press' monthly
analysis of conditions around the country.
But the improvement was
meager, and it added to evidence of sluggish economic growth. Even the dip in
foreclosure rates resulted mainly from lenders delaying foreclosure proceedings
rather than an improved housing market. Unemployment rates ticked up slightly, and
bankruptcy rates remained unchanged.
Ex-French trader must pay
$6.7 billion for fraud
PARIS (AP) -- Ex-trader
Jerome Kerviel was convicted on all counts Tuesday in history's biggest rogue
trading scandal, sentenced to at least three years in prison and ordered to pay
his former employer damages of euro4.9 billion ($6.7 billion) -- a sum so
staggering it drew gasps in the courtroom.
The court rejected defense
arguments that the 33-year-old trader was a scapegoat for a financial system
gone haywire with greed and the pursuit of profit at any cost -- a decision
sure to take some pressure off the beleaguered banking system overall.
Treasury cuts bailout price
tag to $50 billion
WASHINGTON (AP) -- The $700
billion financial bailout will cost about $50 billion, the Treasury Department
said Tuesday.
The price tag was included
in a report on the two-year program and is lower than earlier projections --
including a $66 billion estimate this summer by the Congressional Budget
Office.
Treasury notes in the
report that the bailout, known as the Troubled Asset Relief Program, or TARP,
helped stabilize the financial system and prevent a deeper crisis. It says
independent economists credit the program with preventing economic collapse.
Service sector growth
accelerates in September
NEW YORK (AP) -- The U.S.
service sector, the nation's predominant employer, expanded in September for a
ninth straight month, although the growth has not been consistent enough to
dent the high unemployment rate.
The Institute for Supply
Management said Tuesday that its service-sector index rose last month to 53.2
from 51.5 in August. The rate hit a high point of 55.4 in March, stayed there
in April and May, and has fluctuated since. Readings above 50 signal growth.
Weak consumer spending has
kept the service industry, which employs about 83 percent of workers in the
private sector, from gaining momentum after the recession ended. Economists say
Tuesday's reading was better than expected, but not enough to change their
outlook of high unemployment and slow job growth for the rest of the year.
High safety scores now
harder for trucks and cars
WASHINGTON (AP) -- New cars
and trucks will have to work harder to make the grade in the government's
safety ratings program.
The Transportation
Department said the upgrades to the 5-Star Safety Rating System will make it
more difficult for new vehicles to earn top scores of five stars. Consumers use
the so-called "Stars on Cars" system to assess and compare a
vehicle's safety value, which is posted on window stickers adorning cars and
trucks in dealer lots.
The 2011 BMW 5 Series and a
version of the 2011 Hyundai Sonata were the only two vehicles to receive five
stars out of an initial testing of 34 vehicles. Most of the vehicles tested
received four stars. The department intends to test another 21 vehicles this
year.
Yum Brands post 7 percent
gain in 3Q profit
LOUISVILLE, Ky. (AP) -- Yum
Brands Inc., the owner of the Pizza Hut, Taco Bell and KFC fast-food brands,
said Tuesday that its third-quarter profit grew 7 percent on the strength of
surging overseas sales, mainly in China.
Buoyed by its performance,
the company raised its forecast for full-year earnings to $2.48 per share from
$2.43 per share.
Yum shares dipped in
aftermarket trading, perhaps because the company said its U.S. operating profit
fell 2 percent, dragged down in part by sluggish sales at KFC.
EU pushes China on
currency, but action unlikely
BRUSSELS (AP) -- Countries
around the world are acting to keep their currencies from rising, in what one
official calls a looming "international currency war." Europe,
however, stands out as unlikely to intervene and lower the value of the euro.
European leaders do
complain publicly that the euro is too strong against China's yuan, a key trade
disadvantage for the 16 countries that use the shared currency.
At a meeting Tuesday with
Chinese Prime Minister Wen Jiabao -- whose country's lock on its currency is
criticized for discouraging growth in its trade partners -- three top euro zone
economic officials called for "a significant and broad-based
appreciation" of the Chinese yuan.
But analysts say that the
Europeans' displeasure probably won't go farther than talk.
Zero interest rates back in
Japan
TOKYO (AP) -- Japan's
central bank cut its key interest rate to virtually zero in a surprise move
Tuesday and is looking to set up a $60 billion fund to buy government bonds and
other assets as it tries to inject life into a faltering economy.
The Bank of Japan's
nine-member policy board voted unanimously to set its overnight call rate
target to a range of zero to 0.1 percent, returning to zero rates for the first
time in more than four years.
The decision underscores
growing worries about the Japanese economy, which is being battered by a strong
yen and persistently falling prices. The central bank had left rates untouched
since December 2008 when it lowered the target to 0.1 percent.
It also suggests Japan is
taking a page from U.S. Federal Reserve Chairman Ben Bernanke's playbook.
Senator demands lenders
reveal foreclosure errors
WASHINGTON (AP) -- A key
lawmaker is demanding that more than 100 mortgage companies determine whether
foreclosure documents they approved contain errors and reveal their findings.
Sen. Robert Menendez,
D.-N.J., sent letters Tuesday to three banks that have halted foreclosures in
23 states after evidence surfaced that their employees or outside lawyers
signed documents without reading them. Menendez leads a Senate subcommittee
that oversees housing issues.
He wrote to the three major
lenders that have halted thousands of foreclosures -- JPMorgan Chase, Bank of
America and Ally Financial -- along with dozens of other companies.
Grupo Televisa to invest
$1.2B in Univision
NEW YORK (AP) -- Mexico's
Grupo Televisa SAB said Tuesday it will invest $1.2 billion in New York-based
Univision Communications in exchange for a minority stake, expanding
cooperation between the Spanish-language media heavyweights.
The deal brings an end to
long-standing legal disputes between the companies, recently over privately
held Univision's rights to distribute Televisa's programs online and to phones.
It also helps Televisa, known for popular soap operas, strengthen its foothold
in the U.S., an important market as the company works to widen its reach beyond
Mexico.
By The Associated Press
The Dow Jones industrial
average rose 193.45 points, or 1.8 percent, to close at 10,944.72. All but one
of the 30 companies that make up the average rose, led by Boeing Co. and Bank
of America Corp. American Express Co. fell again, a day after the company said
it would fight an antitrust lawsuit, even after Visa and MasterCard settled
similar suits.
The Standard & Poor's
500 index rose 23.72, or 2.1 percent, to 1,160.75. The index broke through
1,150, a level it hadn't traded above since mid-May, and kept on going.