On Wednesday November 3, 2010, 6:14 pm EDT
Fed to buy $600 billion in
bonds to aid economy
WASHINGTON (AP) -- The
Federal Reserve announced a bold plan Wednesday to try to invigorate the
economy by buying $600 billion more in Treasury bonds.
The Fed said it would buy
about $75 billion a month in long-term government bonds through the middle of
2011 to further drive down interest rates on mortgages and other debt. This is
in addition to an expected $250 billion to $300 billion in Fed purchases over
the same period from reinvesting proceeds from its mortgage portfolio.
The idea is for cheaper
loans to get people to spend more and stimulate hiring. The Fed said it will
monitor whether adjustments are needed depending on how the economy is
performing.
Stalemate in Congress might
not be bad for economy
WASHINGTON (AP) -- Fresh
off sweeping gains in Tuesday's elections, Republicans vowed to shrink
government and repeal President Barack Obama's health care law.
Yet despite their capture
of the House and near-takeover of the Senate, there's little chance they can
summon the votes to enact their own prescriptions for the ailing economy.
Democrats, with their own economic ideas, will likely fight them to a draw.
It may not matter. On its
own, the economy is showing slow but steady improvement. Consumers and
businesses are spending a bit more. Some companies are hiring. And most
economists expect those gains to continue.
For both Democrats and
Republicans, the inability to do much for the next two years may not be such a
bad policy for the economy.
Dow hits new 2010 high
after Fed details stimulus
NEW YORK (AP) -- The Dow
Jones industrial average reached a new high for the year after the Federal
Reserve announced that it plans to buy $600 billion in Treasurys to stimulate
the economy. The aim is to drive interest rates lower in an effort to spark
spending and lending.
The Dow Jones industrial
average gained 26.41, or 0.2 percent, to 11,215.13, its highest close in two
years. Its previous high for 2010 of 11,205 was reached on April 26. The Dow
had traded above that level four other times in the past two weeks. Broader
indexes also rose.
The central bank had hinted
for two months that it planned to buy bonds in an effort to boost the economy.
The Fed made firmer commitments to buy bonds under the new program than many
investors had been expecting, which helped push stock indexes and most Treasury
prices higher.
Automakers report stronger
October US sales
DETROIT (AP) -- U.S. auto
sales put in their strongest performance of the year in October as buyers grew
more confident in the economy and new models lured them into dealerships.
Every major automaker but
Toyota chalked up better results last month. Overall industry sales climbed
13.4 percent to 950,165.
October's seasonally
adjusted annual sales rate -- which shows what sales would be if they stayed at
the same rate all year -- was 12.26 million vehicles. That's the best monthly
rate since August 2009, when Cash for Clunkers spurred Americans to buy more
cars and trucks.
Economy's service and
manufacturing sectors gain
WASHINGTON (AP) -- The
economy is picking up a bit from its late summer doldrums, according to two
reports Wednesday, with both the service and manufacturing sectors showing
better health. Yet the gains aren't likely to be enough to reduce high
unemployment soon.
The service sector, which
employs about 80 percent of Americans, grew faster in October than in the
previous month, a trade group said. It also posted its 10th straight month of
expansion.
A separate report Wednesday
showed that orders to U.S. factories rose broadly in September. Business
spending on big-ticket goods such as airplanes and heavy machines produced most
of the demand for factory orders, the Commerce Department said. But consumer
spending also rose 1 percent, after running flat in August.
Drop in care use boosts
health insurer 3Q earnings
INDIANAPOLIS -- The use of
health care services tumbled in the third quarter, helping insurers report
better-than-expected earnings and raise their 2010 profit forecasts.
But people haven't stopped
seeing the doctor; they're just filing fewer claims than they did last year,
when the unemployed were drawing on subsidized health insurance and the flu was
more prominent than it's been this year.
Several insurers also
reported that claims left over from previous quarters came in lower than
expected.
Freddie Mac posts $4.1B
loss for Q3
WASHINGTON (AP) --
Government-controlled mortgage buyer Freddie Mac managed a narrower loss of
$4.1 billion for the third quarter and asked for an additional $100 million in
federal aid -- far less than the $1.8 billion it sought in the second quarter.
But while the slimmer loss,
and recent glimmerings such as a slowing rate of new soured loans coming onto
Freddie's books, may be positive signs, they don't mean the end of the
company's travails, experts say.
GM expects to earn up to
$2.1B as IPO approaches
DETROIT (AP) -- General
Motors Co. said Wednesday that it expects to earn up to $2.1 billion when it
reports third-quarter results next week. The forecast came as GM announced its
stock will be priced from $26 to $29 per share in an initial public stock
offering.
No date for the IPO was
revealed Wednesday, but people briefed on the plan have said it could be around
Nov. 18. The sale will allow GM's largest owner, the U.S. government, to reduce
its stake in the company from 61 percent to around 35 percent.
The IPO is expected to
raise about $10 billion, with $7 billion going to the U.S. Treasury and $3
billion to GM's other owners, the Canadian and Ontario governments, a union
health care trust and former GM bondholders.
'Hobbit' money sought as
MGM files for bankruptcy
LOS ANGELES (AP) --
Hollywood studio Metro-Goldwyn-Mayer Inc., the home of James Bond, filed for
bankruptcy protection on Wednesday in a plan that had the backing of its
lenders, and it sought permission to begin funding its half of "The
Hobbit."
The "prepackaged"
bankruptcy plan, more than a year in the making, should go quickly. MGM is to
restructure and be managed by the co-CEOS of Spyglass Entertainment.
SEC adopts rules to curb
disruptive error
WASHINGTON (AP) -- Federal
regulators on Wednesday approved new requirements for brokerage firms aimed at
curbing risks posed by their trading customers that get split-second access to
markets to buy or sell stocks.
The Securities and Exchange
Commission voted 5-0 at a public meeting to adopt the new rules. They
effectively prohibit brokerages from providing customers with so-called
"unfiltered" or "naked" access to exchanges or trading
systems.
In arrangements known as
sponsored access, brokerages that are approved to trade on exchanges rent out
their access to them to unregulated clients such as high-frequency traders.
By The Associated Press
The Dow Jones industrial
average rose 26.41, or 0.2 percent, to 11,215.13. The Standard & Poor's 500
index rose 4.39, or 0.4 percent, to 1,197.96. The Nasdaq composite index 6.75,
or 0.3 percent, to 2,540.27.
Benchmark oil rose 79 cents
to close at $84.62 on the New York Mercantile Exchange.
In other Nymex trading in
December contracts, heating oil added 3.43 cents to settle at $2.3279 a gallon,
gasoline gained 2.84 cents to settle at $2.1380 a gallon and natural gas fell
3.4 cents to settle at $3.836 per 1,000 cubic feet.
In London, Brent crude rose
97 cents to close at $86.38 a barrel on the ICE Futures exchange.