AP
Business Highlights
Thursday December 18, 7:07 pm ET

Madoff monitored by feds; Obama reacts to scandal

NEW YORK (AP) -- Bernard Madoff spent his first day under electronic monitoring Thursday as President-elect Barack Obama said the scandal brought on by the disgraced investor "has reminded us yet again of how badly reform is needed."

The effects of the $50 billion fraud has spread around the globe, and the Securities and Exchange Commission has come under fire for failing to detect Madoff's alleged deception despite repeated warnings, especially from a Massachusetts investor who has been sounding the alarm for the past decade.

Stocks finish lower amid lingering economic fears

NEW YORK (AP) -- Wall Street extended its losses Thursday, as a negative ratings outlook on financial and industrial powerhouse General Electric Co. shook an already fragile investor psyche and sent stocks tumbling.

After moving within a narrow trading range for much of the session, the Dow Jones industrial average dropped about 220 points to 8,604.99. The broader Standard & Poor's 500 index lost more than 2 percent.

Bush considering "orderly" auto bankruptcy

WASHINGTON (AP) -- The Bush administration is looking at "orderly" bankruptcy as a possible way to deal with the desperately ailing U.S. auto industry, the White House said Thursday as carmakers readied more plant closings and a half million new jobless claims underscored the deteriorating national economy.

With General Motors, Chrysler and the rest of Detroit anxiously awaiting a White House decision on billions of dollars in emergency federal loans, press secretary Dana Perino said it wasn't simply a choice between government rescue and the disastrous collapse of a major industry.

Mortgage rates fall; unemployment data still weak

WASHINGTON (AP) -- Mortgage rates are falling as this week's dramatic action by the Federal Reserve provides a boost to the dismal housing market, but the nation's unemployment rolls are stuck at historically high levels amid a deepening recession.

Mortgage giant Freddie Mac on Thursday reported that rates had fallen to the lowest level on records dating back to 1971. Average rates on 30-year fixed-rate mortgages dropped to 5.19 percent, down from the year's previous low of 5.47 percent, set last week.

Obama appointees signal tighter market oversight

WASHINGTON (AP) -- President-elect Barack Obama is turning to seasoned pros for the Herculean task of overhauling the way the U.S. regulates its financial system, an effort he says is one of his top priorities.

His goal: to prevent crises like the one that has shattered Americans' nest eggs, devastated Wall Street and left the country in a painful recession.

Obama signaled an activist regulatory approach Thursday as he revealed key players on his incoming economics team.

Crude plunges as economy struggles, spending falls

Oil continued its downward march Thursday as mass layoffs pushed the U.S. economy deeper into recession, signaling a drastic pullback on energy spending.

Light, sweet crude for February delivery, fell $2.94 to settle at $41.67 barrel on the New York Mercantile Exchange. The January contract, which closes on Friday, fell 9 percent, or $3.84, to settle at $36.22 after dropping as low as $35.98, levels last seen in June 2004.

Regulators adopt new credit card rules

WASHINGTON (AP) -- Federal regulators on Thursday adopted sweeping new rules for the credit card industry that will shield consumers from increases in interest rates on existing account balances among other changes.

The rules, which take effect in July 2010, will allow credit card companies to raise interest rates only on new credit cards and future purchases or advances, rather than on current balances.

Discover Financial returns to profitability in 4Q

NEW YORK (AP) -- Discover Financial Services said Thursday it returned to profitability in its fiscal fourth quarter, thanks to a legal settlement, but it is nevertheless trying to get funding from the government.

Without the lawsuit settlement gain, the credit card lender would have had a loss due to rising defaults and delinquencies. Nearly all lenders are seeing more customers stop making their monthly payments as home prices tumble and unemployment surges.

FedEx 2Q profit rises, plans to further cut costs

NEW YORK (AP) -- FedEx Corp. on Thursday announced more broad cost cuts -- including salary reductions -- as deteriorating economic conditions continue to drag down demand, warning the outlook for 2009 remains murky.

FedEx reported its fiscal second-quarter earnings rose 3 percent, narrowly topping Wall Street's expectations.

The Memphis, Tenn.-based company earned $493 million, or $1.58 per share, compared with year-ago profit of $479 million, or $1.54 per share. Revenue rose 1 percent to $9.54 billion.

Pier 1 3Q loss widens amid spending free fall

NEW YORK (AP) -- Struggling home accessories retailer Pier 1 Imports Inc. said Thursday its fiscal third-quarter loss widened amid a free fall in consumer spending, raising some questions about its ability to weather the economic slowdown.

The company's loss for the quarter ended Nov. 29 grew to $36.9 million, or 41 cents per share, from $10 million, or 11 cents per share, a year earlier. Revenue fell 20 percent to $300.9 million.

Analysts surveyed by Thomson Reuters, on average, expected a smaller loss of 26 cents per share on revenue of $309.6 million.

By The Associated Press

The Dow fell 219.35, or 2.49 percent, to 8,604.99. The Standard & Poor's 500 index fell 19.14, or 2.12 percent, to 885.28, while the Nasdaq composite index fell 26.94, or 1.71, to 1,552.37.

The Russell 2000 index of smaller companies fell 7.42, or 1.52 percent, to 479.17.

Light, sweet crude for February delivery, fell $2.94 to settle at $41.67 barrel on the New York Mercantile Exchange.

In other Nymex trading, gasoline futures fell 4.26 cents to 96.3 cents a gallon. Heating oil fell 6.96 cents to $1.3729 a gallon while natural gas for January delivery fell 7 cents to settle at $5.548 per 1,000 cubic feet.