AP
Business Highlights
Tuesday October 14, 6:52 pm ET

Bailout becomes buy-in as feds move into banking

WASHINGTON (AP) -- President Bush on Tuesday announced a $250 billion plan by the government to directly buy shares in the nation's leading banks, saying the drastic steps were "not intended to take over the free market but to preserve it."

Nine major banks will participate initially including all of the country's largest institutions, he announced. Some of the nation's largest banks had to be pressured to participate by Treasury Secretary Henry Paulson.

Some early signs were hopeful for the latest in a flurry of radical efforts to save the nation's financial system. Credit was a bit easier to come by, and stocks were down but not alarmingly so after Monday's stratospheric leap.

Stocks pull back as profit-taking sets in

NEW YORK (AP) -- Wall Street ended a relatively calm session with a moderate loss Tuesday as investors, while happy with the government's plans to spend $250 billion to buy stock in private banks, decided to cash in profits from the previous day's massive advance as they refocused their attention on the economy.

It was the first time in nine sessions that the Dow Jones industrial average didn't close up or down in triple digits although it did swing in a 700-point range. The Dow closed down 76 points a day after its record 936-point jump.

Big advances by many bank stocks helped offset some of the declines in the Dow and the Standard & Poor's 500 index, giving them a better showing for the day than the Nasdaq composite index, which fell more than 3 percent.

Credit markets see more gradual improvements

NEW YORK (AP) -- The government's efforts to crank open the credit markets have led to some mild improvements in lending rates and Treasury bill yields. But it will probably take months, and perhaps a few years, before lending returns to healthier levels.

It was clear Tuesday that there is still plenty of fear in the lending business -- one indicator, the difference between the rate at which banks lend to other banks and the rate at which they buy U.S. government debt remains near a 25-year high.

But analysts believe that as long as conditions keep improving, the economy should be able to grow.

Intel 3Q profit beats forecast but outlook cloudy

SAN JOSE, Calif. (AP) -- Intel Corp.'s third-quarter profit rose 12 percent, edging past Wall Street's estimates, but the chip maker cautioned that the pall the financial crisis has cast over the technology sector makes it hard to predict its results for the current period.

The company reported after the market closed Tuesday that its profit for the three months ended Sept. 27 was $2.01 billion, or 35 cents per share. That compares with the $1.79 billion, or 30 cents per share, from the year-ago period.

Analysts surveyed by Thomson Reuters expected 34 cents per share in profit.

PepsiCo to cut 3,300 jobs as profit falls 10 pct

NEW YORK (AP) -- PepsiCo Inc. is cutting jobs and closing factories to give it some "breathing room" to navigate the volatility that has permeated all corners of the global economy.

The maker of Pepsi-Cola, Doritos and Sun Chips said Tuesday it plans to eliminate 3,300 jobs and shutter six plants in an effort to save $1.2 billion over three years. It plans to use the savings primarily to revive lagging U.S. soft drink sales.

The announcement came as the global snacks and drinks company reported a 9.5 percent drop in third-quarter profit, missing Wall Street expectations. PepsiCo also issued a downbeat profit outlook for the fourth quarter and full year.

Apple to offer $999 entry laptop, better graphics

CUPERTINO, Calif. (AP) -- Apple Inc. touched up its line of laptop computers Tuesday with a minimal nod to the economic turmoil that might push consumers to be more frugal this holiday shopping season.

Apple did lower its least expensive laptop, the existing version of the entry-level MacBook, by $100 to $999.

But in the updated versions of its MacBook and MacBook Pro machines, Apple focused mainly on adding features.

Johnson & Johnson 3Q profit rises, tops views

TRENTON, N.J. (AP) -- Health care giant Johnson & Johnson on Tuesday posted a 30 percent jump in third-quarter profit and beat Wall Street expectations, mainly because the year-ago results were weighed down by a $745 million restructuring charge.

Higher sales of consumer products and medical devices, boosted overseas by the weak dollar, also helped the New Brunswick, N.J.-based maker of contraceptives, baby care items, medical devices and prescription drugs. It reported net income of $3.31 billion, or $1.17 per share, up from $2.55 billion, or 88 cents per share, in the year-ago period.

Revenue climbed 6.3 percent, to $15.9 billion from $14.97 billion, but was boosted 3.1 percent by favorable currency exchange rates.

Oil falls below $79 on profit-taking, demand drop

NEW YORK (AP) -- Oil prices fell below $79 a barrel in choppy trading Tuesday as investors took profits from the previous day's rally and shifted their focus back to signs of dwindling world energy demand.

A falling U.S. stock market, a day after a record-breaking advance, also weighed on crude prices as oil market traders continued to fixate on equities as a barometer for the overall confidence in the shaky world economy.

At the pump, retail gas price kept dropping.

Budget deficit in 2008 surges to all-time high

WASHINGTON (AP) -- The federal budget deficit soared to $454.8 billion in 2008 as a housing collapse and efforts to combat the economic slowdown pushed the tide of government red ink to the highest level in history.

The Bush administration said Tuesday the deficit for the budget year that ended Sept. 30 was more than double the $161.5 billion recorded in 2007.

It surpassed the previous record of $413 billion set in 2004. Economists predicted a far worse number next year as the costs of the government's rescue of the financial system and the economic hard times hit the nation's balance sheet.

Genentech 3Q profit rises, meets forecast

NEW YORK (AP) -- Genentech Inc.'s third-quarter profit rose 6.7 percent on rising sales of key cancer drugs, the biotechnology company said Tuesday, matching Wall Street's profit forecasts.

The company lowered the top end of its expected outlook for the year as a result of costs for a program it created in response to an unsolicited buyout offer during the quarter from cancer drug partner Roche.

The company earned $731 million, or 68 cents per share in profit, up from $685 million, or 64 cents per share during the same period a year prior. Revenue rose 17 percent to $3.41 billion from $2.91 billion.

Aid agencies: world's poor will be biggest victims

GENEVA (AP) -- The world's poorest people will be hungrier, sicker and have fewer jobs as a result of the global financial crisis, and cash-strapped aid agencies will be less able to help, aid groups are warning.

The charities that provide food, medicine and other relief on the ground say cutbacks have already started, but it will take months or more before the full impact is felt in the poorest countries of Africa, Latin America and Asia.

Aid agencies face more than just the prospect of plummeting donations. The economic conditions themselves -- higher food prices and more joblessness -- are greatly increasing the number of people who need assistance.

By The Associated Press

The Dow fell 76.62, or 0.82 percent, to 9,310.99.

Broader stock indicators also declined. The S&P 500 index fell 5.34, or 0.53 percent, to 998.01, and the Nasdaq fell 65.24, or 3.54 percent, to 1,779.01.

Light, sweet crude for November delivery fell $2.56 to settle at $78.63 on the New York Mercantile Exchange after fluctuating between positive and negative territory for most of the day.

In other Nymex trading, heating oil futures fell 8.13 cents to settle at $2.2882 a gallon, while gasoline futures fell 3.28 cents to settle at $1.8848 a gallon. Natural gas futures fell nearly a penny to settle at $7.324 per 1,000 cubic feet.

In London, November Brent crude lost $2.93 to settle at $74.53 a barrel on the ICE Futures exchange.