AP
Business Highlights
Tuesday January 20, 6:11 pm ET

Stocks tumble on fresh worries about banks

NEW YORK (AP) -- The dawn of the Obama presidency could not shake the stock market from its dejection over the rapidly deteriorating state of the banking industry.

Financial stocks, many of them falling by double digit percentages, led a huge drop on Wall Street Tuesday that left the major indexes down more than 4 percent and the Dow Jones industrials down 332 points. Although traders on the floor of the New York Stock Exchange paused to watch the inauguration ceremony and Obama's remarks, the transition of power didn't erase investors' intensifying concerns about struggling banks and their impact on the overall economy.

Bank stocks pummeled as worries mount

NEW YORK (AP) -- Fear that the global banking crisis is worsening sent financial stocks plunging Tuesday, with many companies' shares down by double-digit percentages and Citigroup Inc. diving to a 17-year low.

Disheartening news came from U.S. and British banks: They are still suffering losses from loans and are warning that those losses will not subside anytime soon.

Regional banks as well as the big money center banks are struggling.

Fiat and Chrysler sign alliance plan

ROME (AP) -- Fiat and Chrysler said Tuesday they have agreed to form a strategic alliance that would give the Italian auto empire a 35-percent stake in the troubled U.S. carmaker and could eventually bring it full control.

The deal means Chrysler, which is fighting off bankruptcy and struggling to sell less fuel efficient larger models, would have access to new markets and cheaper, more environmentally friendly technologies.

Fiat Group SpA, which makes Fiat, Lancia and Alfa Romeo vehicles, would gain a foothold in the huge U.S. market.

IBM sees strong '09 profit, but recent sales down

SAN FRANCISCO (AP) -- IBM Corp. forecast significantly higher profits for 2009 than Wall Street expected, a surprisingly bullish sign that reflects IBM's belief it can outmaneuver the financial crisis by focusing on landing high-margin services and software contracts. Shares leaped 4 percent in extended trading.

The Armonk, N.Y.-based company predicted at least $9.20 per share in profit in 2009. Analysts surveyed by Thomson Reuters were expecting $8.75 a share.

The gap reveals that analysts had been expecting IBM to be hurt worse by its heavy dose of sales to big banks and other customers devastated by the economic downturn. Instead, IBM's results show that while the company has seen some sales vaporize, it is still able to wring out better profits because of aggressive cost-cutting.

Johnson & Johnson 4Q profit rises 14 percent

TRENTON, N.J. (AP) -- Health care products maker Johnson & Johnson on Tuesday posted a 14 percent increase in fourth-quarter profit, topping Wall Street forecasts, as big one-time gains offset slumping sales.

But the maker of baby shampoo, contraceptives and other health items forecast weaker results in 2009, blaming the global recession, unfavorable currency exchange rates and intensified pressure from both generic drugs and competitors' new products.

Still, its CEO said the economic uncertainty and J&J's strong cash flow -- $12.2 billion in 2008 -- put the company "in a great position" to acquire companies or products.

Clear Channel cuts 1,850 jobs, 9 pct of work force

Clear Channel Communications Inc. is laying off 1,850 employees as the nation's largest owner of radio stations grapples with the economic meltdown.

The cuts represent about 9 percent of the company's total work force and affect staff throughout the company, in radio, outdoor advertising and corporate offices.

Time Warner's Warner Bros. cuts nearly 800 jobs

LOS ANGELES (AP) -- Time Warner Inc.'s Warner Bros. Entertainment movie studio said Tuesday it is eliminating nearly 800 jobs, or 10 percent of its global work force, and is examining further cost reductions.

The cuts come after the studio posted a 9 percent drop in third-quarter revenue to $2.88 billion, despite the success of the summer blockbuster, "The Dark Knight." Earlier this month, parent Time Warner said it will post a loss for the full year due to a $25 billion write-down of its assets in cable, magazines and Internet, caused in part by the advertising slowdown.

Cost-cutting Google scraps newspaper ad program

SAN FRANCISCO (AP) -- Google Inc. is giving up on selling print ads for the ailing newspaper industry, ending a 2-year-old attempt to extend its dominance of Internet marketing into another medium.

The retrenchment announced Tuesday is part of a cost-cutting campaign aimed at boosting Google's profits as the deepening recession eats away at Google's bread-and-butter business of selling ads on its own Web site and thousands of other Internet destinations.

Saudi prince's firm loses $8.3B in 4Q

DUBAI, United Arab Emirates (AP) -- The Saudi investment company that bet big on now-ailing Citigroup and other major global companies said Tuesday it lost more than $8 billion in the last three months of 2008.

Prince Alwaleed bin Talal's Kingdom Holding Co. attributed the drop to losses stemming from the company's investments in capital markets, according to a statement posted on the Saudi Tadawul exchange's Web site.

Kingdom Holding said it lost 30.98 billion riyals ($8.26 billion) in the fourth quarter of 2008. That compares with a gain of 255.6 million riyals ($68.2 million) in the same period a year earlier.

Oil markets suggest broad pessimism over demand

DENVER (AP) -- Crude futures for March and beyond sank Tuesday revealing broad pessimism in the markets over energy demand for the foreseeable future.

A limited number of traders took advantage of the February contract which expires Tuesday, the only month that saw prices rise.

Crude prices have fallen as the places to store it have thinned, with millions of barrels of unwanted oil now being stored at sea or in facilities on land.

By The Associated Press

The Dow Jones industrial average fell 332.13, or 4.01 percent, to 7,949.09, its lowest close since Nov. 20, when the blue chips ended at 7,552.29 -- their lowest point in more than five years. It was also the blue chips' biggest drop since Dec.

Broader stock indicators also fell sharply Tuesday. The Standard & Poor's 500 index fell 44.90, or 5.28 percent, to 805.22, and the Nasdaq composite index fell 88.47, or 5.78 percent, to 1,440.86.

Light, sweet crude for February delivery rose $2.23 to settle at $38.74 per barrel on the New York Mercantile Exchange. Trading in the final day of the contract was very light, leading to price swings close to $7.

The March contract, where the vast majority of trading took place, fell $1.53 to settle at $40.68.

In London, the March Brent contract fell $1.18 to settle at $43.62 on the ICE Futures exchange.

In other Nymex trading, gasoline futures fell 2.4 cents to settle at $1.1431 a gallon. Heating oil dropped 9.76 cents to settle at $1.3758 a gallon while natural gas for February delivery slid nearly 16 cents to settle at $4.642 per 1,000 cubic feet.