Monday August 18, 6:37 pm ET
Fannie, Freddie fall on renewed bailout fears
WASHINGTON (AP) -- Whether or not the government is actually on the verge of taking over mortgage finance companies Fannie Mae and Freddie Mac, investor fears that a bailout is imminent could turn such a worst-case scenario into reality.
Amid renewed concern that shareholders will wind up with nothing if the government intervenes to bail out the troubled companies, shares in the mortgage finance giants tumbled Monday to their lowest levels in nearly two decades.
The Treasury Department late last month gained the authority to boost Fannie and Freddie through an investment or a loan should the companies need their finances propped up due to soaring losses from bad mortgages.
Wall Street pulls back as financials fall
NEW YORK (AP) -- Wall Street retreated Monday after Fannie Mae and Freddie Mac fell to their lowest levels in nearly 20 years on concerns that the government might need to bail out the mortgage financiers. Weakness in the overall financial sector sent the Dow Jones industrial average down about 180 points to 11,479.39.
Meanwhile, The Wall Street Journal, citing unidentified sources, reported that Lehman Brothers Holdings Inc. might surprise Wall Street with weaker-than-expected third-quarter results.
The continuing bad news about financials wasn't a surprise, but it nonetheless depressed a market that is hoping for concrete signs that banks and brokerages can put the year-old credit crisis behind them and return to significant profit growth.
Researchers: Merck Vioxx study was for marketing
TRENTON, N.J. (AP) -- A 1999 Merck & Co. study of its since-withdrawn painkiller Vioxx, touted to participating doctors and patients as meant to show whether Vioxx caused fewer stomach problems than another drug, was primarily a stealth marketing strategy, researchers report.
The true purpose was to get lots of doctors and patients in the habit of using Vioxx just in time for its launch, according to doctors who uncovered internal Merck memos discussing the strategy behind the study, called ADVANTAGE. They did so while reviewing roughly a million Merck documents for plaintiffs' lawyers preparing for trials in Vioxx lawsuits.
Oil prices fall below $113 as storm threat eases
NEW YORK (AP) -- Crude prices settled below $113 a barrel for the first time in over three months Monday as Tropical Storm Fay steered clear of oil-producing infrastructure in the Gulf of Mexico.
Light, sweet crude for September delivery fell 90 cents to settle at $112.87 on the New York Mercantile Exchange, after earlier rising as high as $115.35. It was the first time crude ended below $113 since May 1. The contract fell $1.24 on Friday to settle at $113.77 a barrel, about $35, or 24 percent, lower than its trading record of $147.27, set July 11.
At the pump, a gallon of regular fell another penny overnight to a new national average of $3.741, according to auto club AAA, the Oil Price Information Service and Wright Express. With consumers cutting back on driving to save money, prices have now dropped 9 percent from the record $4.114 retail gas reached July 17.
Lowe's beats 2Q estimates, despite profit drop
CHICAGO (AP) -- Repairs to drought-stricken flower beds and sales of freezers designed to hold bought-in-bulk food helped Lowe's Cos. Inc. post a better-than-expected second-quarter profit.
But the nation's faltering economy and sluggish housing industry still sent profit at the nation's second-largest home improvement chain down nearly 8 percent.
For the three months ending Aug. 1, Lowe's earned $938 million, or 64 cents per share, boosted in part by consumers who undertook small outdoor gardening projects -- repairing their yards from last year's drought -- and bought freezers to accommodate bulk food purchases to cope with soaring grocery prices.
SoCal home sales climb in July, prices fall
SAN DIEGO (AP) -- Southern California home sales surged to a 16-month high in July as prices kept falling and bargain-hunters snapped up foreclosed properties, a research firm said Monday.
A total of 20,329 homes and condos -- including new and existing models -- were sold during July in the six-county region, up 13.8 percent from July 2007 and up 16.7 percent from June, MDA DataQuick said.
It was the highest monthly tally since March 2007, when 21,856 homes were sold, and the first annual increase since September 2005, the firm said.
Ocean platform could take 20 pct of US oil imports
HOUSTON (AP) -- An oil terminal and pipeline network expected to be built off the Texas Gulf Coast and open in about two years would be capable of handling nearly 20 percent of the nation's daily imported oil.
Demand from expanding refineries along the coast, from Freeport to Port Arthur, is driving the $1.8 billion project, executives of the joint partnership said Monday. It will be the second offshore port in the Gulf of Mexico.
The Texas Offshore Port System, or TOPS, is a joint venture of Enterprise Products Partners LP and Teppco Partners LP, both based in Houston, and Oiltanking Holding Americas Inc., a subsidiary of Germany's privately held Marquard & Bahls AG.
FDA reports new deaths with diabetes drug Byetta
WASHINGTON (AP) -- Federal regulators are working on a stronger label for a widely used diabetes drug marketed by Amylin Pharmaceuticals Inc. and Eli Lilly & Co. as deaths continue to be reported despite earlier government warnings.
The Food and Drug Administration said Monday it has received six additional reports of patients developing a dangerous form of pancreatitis while taking Byetta. Two of the patients died and four were recovering.
Regulators stressed that patients should stop taking Byetta immediately if they develop signs of acute pancreatitis, a swelling of the pancreas that can cause nausea, vomiting and abdominal pain. The FDA warned that it is very difficult to distinguish acute pancreatitis from less dangerous forms of the condition.
Electronic Arts won't extend Take-Two deadline
NEW YORK (AP) -- Video game publisher Electronic Arts Inc. is retracting its hostile bid for smaller rival Take-Two Interactive Software Inc., but a deal -- and a friendly one at that -- is likelier than ever.
Take-Two, best known for the popular "Grand Theft Auto" video game series, confirmed Monday it expects to sign a confidentiality agreement with EA to begin formal discussions about "strategic alternatives."
EA had said earlier it wouldn't extend the Monday night deadline for its $2 billion tender offer to buy Take-Two. The companies have been unable to agree on a price for the past six months.
Homebuilder sentiment index unchanged in August
LOS ANGELES (AP) -- Homebuilders are a little more optimistic about the prospects for home sales over the next six months, but an index reflecting the sector's confidence overall remained at an all-time low, an industry trade association said Monday.
The National Association of Home Builders/Wells Fargo housing market index remained unchanged this month at 16, where it's been since July.
But benchmarks for sales improved: The gauge of current sales conditions climbed one point to 16, while an index of builders' sales expectations over the next six months rose by two points to 25.
Entergy deal good for shareholders; others wary
NEW ORLEANS (AP) -- Power provider Entergy Corp. is advancing its plans to spin off nuclear plants that generate free-market electricity, a deal that may be a boon for shareholders but a potential burden for taxpayers, according to critics, particularly in the Northeast.
If approved by regulators, Enexus Energy Corp., to be based in Jackson, Miss., will become a separate, publicly traded company in the next several months.
Stockholders of New Orleans-based Entergy would receive Enexus shares on a pro-rata basis. The exact number has not been determined.
By The Associated Press
The Dow Jones industrial average fell 180.51, or 1.55 percent, to 11,479.39. The Dow had been down about 225 points at its lows of the session.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 19.60, or 1.51 percent, to 1,278.60, and the Nasdaq composite index fell 35.54, or 1.45 percent, to 2,416.98.
Light, sweet crude for September delivery fell 90 cents to settle at $112.87 on the New York Mercantile Exchange.
In other Nymex trading, heating oil futures fell 3.43 cent to settle at $3.0848 a gallon, while gasoline prices lost 4.5 cents to settle at $2.8152 a gallon. Natural gas futures fell 20.4 cents to settle at $7.888 per 1,000 cubic feet.
In London, October Brent crude fell 61 cents to settle at $111.94 a barrel.