AP
Business Highlights
Monday October 13, 6:04 pm ET

Wall Street soars as government pledges bank aid

NEW YORK (AP) -- Wall Street stormed back from last week's devastating losses Monday, sending the Dow Jones industrials soaring a nearly inconceivable 936 points after major governments' plans to support the global banking system reassured distraught investors.

All the major indexes rose more than 11 percent.

The market was expected to rebound after eight days of precipitous losses that took the Dow down nearly 2,400 points, but few expected this kind of advance, which saw the Dow by far outstrip its previous record one-day point gain, 499.19, set during the waning days of the dot-com boom.

The Standard & Poor's 500 index also set a record for a one-day point gains.

US, bankers rework bailout plan; stocks surge

WASHINGTON (AP) -- The Bush administration rushed to revamp the largest U.S. bailout plan in history Monday, working with executives of the nation's biggest banks to shift and shape new pieces and get desperately needed credit flowing.

Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and the bankers were modeling many parts of their revamped program after strong initiatives in Europe, where governments put $2.3 trillion on the line Monday in guarantees and other emergency measures to save banks there.

Europe puts more on the line for banks than US

PARIS (AP) -- Europe put $2.3 trillion on the line Monday to protect the continent's banks, a figure that dwarfs the Bush administration's $700 billion rescue program, in its most unified response yet to the global financial crisis after a stumbling start.

The pledges by Britain and the six countries that use the euro helped soothe stock markets, along with a promise by top central banks to provide unlimited short term dollar credits.

The action by Germany, France, the Netherlands, Spain, Portugal, Austria and Britain came after weeks in which the governments often acted at cross purposes and sniped at each other -- a piecemeal approach that failed to stop steep and frightening slides on financial markets.

Morgan Stanley gets lifeline, is ready for deals

NEW YORK (AP) -- Morgan Stanley averted disaster with a $9 billion lifeline from a major Japanese bank, and on Monday declared it will use that money to pick off smaller rivals.

Just a few days ago, some on Wall Street openly questioned if the embattled investment bank would be the next to collapse amid a deepening global credit crisis. Now, Morgan Stanley appears emboldened by the 21 percent stake taken by Japanese lender Mitsubishi UFJ -- and, for now, seems to have regained the market's confidence.

Investors poured back into Morgan Stanley shares, which last week plunged 60 percent. Shares recouped $8.42, or 87 percent, to close at $18.10.

British banks to get cash infusion from government

LONDON (AP) -- The British government injected an unprecedented 37 billion pounds ($63 billion) into some of the country's leading banks Monday to avoid a full-scale collapse of the sector.

In return for the rescue, the Royal Bank of Scotland Group PLC, Lloyds TSB Group PLC and HBOS PLC will cede major stakes to the government and halt cash bonuses for bank board members this year.

The banks also will be required to lend more money to small- and medium-sized businesses and homeowners in a bid to rescue the country's housing market.

GM to close stamping plant near Grand Rapids

DETROIT (AP) -- The U.S. automotive sales slump worked its way to two Midwestern automaking towns Monday when General Motors Corp. announced it would close a Michigan metal stamping plant and stop making sport utility vehicles in Wisconsin by the end of the year.

Workers at the Grand Rapids Metal Center in suburban Wyoming were told it will close by the end of 2009. The plant employs about 1,340 hourly and 180 salaried workers.

Earlier in Janesville, Wis., workers got the news that SUV production at the plant, with 1,200 employees represented by the United Auto Workers, will end Dec. 23.

Bush critic Paul Krugman wins economics Nobel

PRINCETON, N.J. -- Paul Krugman, whose relentless criticism of the Bush administration includes opposition to the $700 billion financial bailout, won the Nobel prize in economics Monday for his work on international trade patterns.

The Princeton University professor and New York Times columnist is the best-known American economist to win the prize in decades.

The Nobel committee commended Krugman's work on global trade, beginning with a 10-page paper in 1979 that knit together two fields of study, helping foster a better understanding of why countries produce similar products and why people move from the small towns to cities.

Chrysler CEO says company hasn't reached any deal

NEW YORK (AP) -- The chief executive of Chrysler LLC said Monday that his company hasn't reached any new deals with other automakers but has spoken with outside parties interested in working with the Dodge and Jeep maker.

In a memo to employees obtained by The Associated Press, Bob Nardelli said Chrysler doesn't comment on speculation or its private meetings, but he said the automaker has spoken with interested outsiders.

The memo comes after news surfaced over the weekend that Cerberus Capital Management LP, Chrysler's privately held majority owner, and General Motors Corp. have held preliminary talks about an acquisition or other combination of the two automakers.

Oil prices rebound after last week's huge losses

NEW YORK (AP) -- Oil prices rebounded from a 13-month low Monday, pushing above $81 a barrel after the dollar weakened and investors trickled back into financial markets on hopes that a globally coordinated rescue plan will stave off an economic crisis.

Prices were also supported by expectations that OPEC countries may tighten production in a bid to slow crude's precipitous decline; prices have fallen about 45 percent since shooting to a record $147.27 on July 11. Last week, crude tumbled more than $16 to levels not seen since September 2007, with over half the losses coming on Friday alone.

Potential deal for Sovereign could signal more M&A

NEW YORK (AP) -- Sovereign Bancorp said Monday it is in advanced discussions with Spain's Banco Santander regarding a possible buyout of the Philadelphia-based thrift. Such a deal would extend a wave of consolidation that has recently overcome the banking industry.

Following a slew of acquisitions among the national players, analysts generally expect mid-size, regional banks to be the next in line.

Santander already owns a 25 percent stake in Sovereign, and speculation has mounted that the Spanish bank would seek to protect its investment by orchestrating a takeover of the U.S. company.

Waste Management drops bid for Republic

HARTFORD, Conn. (AP) -- Waste Management Inc., the nation's largest garbage hauler, on Monday withdrew its $6.73 billion bid to acquire smaller rival Republic Services, saying the move wouldn't be prudent given current financial market turmoil.

The announcement ends a 3-month takeover struggle that began in July when Houston-based Waste Management first offered to buy rival Republic Services Inc., the nation's No. 3 trash hauler, and continued when Waste Management sweetened its takeover bid in August.

The moves were seen as an effort to derail an earlier deal between Republic Services and Allied Waste Industries Inc., the second-largest player in the industry.

By The Associated Press

The Dow Jones industrials rose 936.42, or 11.08 percent, to 9,387.61. The Dow's previous record for a one-day point gain was 499.19, or 4.93 percent, on March 16, 2000.

Broader stock indicators also jumped Monday. The S&P 500 index advanced 104.13, or 11.58 percent, to 1,003.35; it was the biggest point gain ever for the S&P 500, eclipsing the 66.33, or 4.76 percent, jump it had on March 16, 2000. It was the biggest percentage gain for the index since March 15, 1933, when it surged 16.6 percent.

The Nasdaq rose 194.74, or 11.81 percent, to 1,844.25, its 10th biggest point gain; during the dot-com boom, the index soared as much as 324.83 in one day. Its percentage gain Monday was second to the 14.2 percent logged Jan. 3, 2001, the same day that the Nasdaq set its record for a one-day point gain.

Light, sweet crude for November delivery rose $3.49 to settle at $81.19 a barrel on the New York Mercantile Exchange, after earlier rising as high as $82.52. The contract fell Friday $8.89 to $77.70, the lowest price since Sept. 10, 2007.

In other Nymex trading, heating oil futures rose 13.1 cents to settle at $2.341 a gallon, while gasoline future added 11.06 cents to settle at $1.9176 a gallon. Natural gas futures gained 14.4 cents to settle at $7.333 per 1,000 cubic feet.

In London, November Brent crude rose $3.37 to settle at $77.46 a barrel on the ICE Futures exchange.