AP Business Highlights

On Tuesday March 23, 2010, 6:04 pm EDT

February existing home sales drop 0.6 percent

WASHINGTON (AP) -- Sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. There is concern the fragile housing rebound is faltering, making it harder for the overall economy to recover.

The National Association of Realtors said Tuesday that sales of previously occupied homes dropped 0.6 percent in February to a seasonally adjusted annual rate of 5.02 million.

The weakness in sales depressed prices with the median home price dropping almost 2 percent from a year ago to $165,100.

China thwarts Google's detour around censorship

SAN FRANCISCO (AP) -- Google's attempted detour around China's Internet censorship rules was met with countermeasures Tuesday by the communist government, which blocked people on the mainland from seeing search results dealing with such forbidden topics as the pro-democracy movement.

China's maneuver, as well as its public rebuke of Google's decision to stop censoring searches for the government, rattled some of the company's investors, advertisers and users.

The chief concern is whether Google poisoned its business in one of the world's most promising Internet markets. One analyst critical of Google's move predicted the maneuver will cause the company's stock to fall by as much as $50 -- or about 10 percent -- in the coming weeks.

Stocks climb after home sales top expectations

NEW YORK (AP) -- Investors are starting to believe that the stock market is on the verge of another big rally.

The Dow Jones industrials rose 103 points to 10,888.83 Tuesday, their biggest point gain in five weeks. The day's economic news was tepid as the National Association of Realtors reported a drop in homes sales. But analysts said many investors, after seeing the Dow rising 15 out of the past 18 days, grew afraid of missing out on further gains.

The market's continuing advance has been welcome but analysts are divided over whether stocks have run too far or if they have more to gain because of improvements in the economy. The recent gains have been mild in contrast to those of 2010 when triple-digit gains in the Dow were frequent as the index soared higher from a 12-year low.

Pay cut for 25 top earners at 5 bailed-out firms

WASHINGTON (AP) -- The administration's pay czar said Tuesday that the top 25 earners at five companies still receiving extraordinary aid from the government's bailout fund will be paid an average 15 percent less in 2010 than in 2009 under his restrictions.

The companies include troubled automakers General Motors and Chrysler and insurance giant American International Group.

Pay czar Kenneth Feinberg also said he is asking 419 companies that received bailout money to provide details of compensation they received at the height of the financial crisis at the end of 2008 and early 2009.

Yellen: Record low rates needed to rev up recovery

WASHINGTON (AP) -- Record-low interest rates are still needed to energize the economic recovery, a Federal Reserve official said Tuesday.

Janet Yellen, head of the Federal Reserve Bank of San Francisco and President Barack Obama's top pick to be vice chair of the central bank, said the sluggish recovery she anticipates means unemployment will stay high for years.

The jobless rate -- now at 9.7 percent -- will dip only to 9.25 percent by the end of this year and then to 8 percent by the end of 2011, she predicted, calling the scenario a "very disappointing prospect."

Despite encouraging signs late last year, the housing market now "seems to have stalled," she observed in a speech delivered in Los Angeles.

PepsiCo looks for new, no-cal, natural sweeteners

NEW YORK (AP) -- A race to develop natural, zero-calorie sweeteners is bubbling up in the nation's $100 billion beverage industry.

PepsiCo, looking to revive itself in the declining soda industry, is boosting its development spending for this search and to mix up new drinks.

PepsiCo Inc. said Tuesday at an investor meeting that it is putting "unprecedented resources" toward reformulating its beverages with natural, no-calorie sweeteners such as stevia, an herb grown in South America and Asia, and to find new ones.

Adobe posts lower 1Q profit, exceeds expectations

NEW YORK (AP) -- Adobe Systems Inc. said Tuesday that fiscal first-quarter earnings declined on higher expenses, but sales climbed as demand for its design and publishing software improved with the economy.

The results surpassed Wall Street's expectations, and Adobe also gave a strong forecast for the current quarter. Its shares rose in after-hours trading.

Adobe earned $127.2 million, or 24 cents per share, in the three months that ended March 5. That is down 19 percent from a year earlier. Excluding items such as stock compensation costs, Adobe earned 40 cents per share in the latest quarter, above the 37 cents that analysts polled by Thomson Reuters were expecting.

Walgreen 2Q profit up as prescription sales rise

NEW YORK (AP) --Walgreen Co., the largest U.S. drugstore chain, said Tuesday that even while the flu season has tapered off dramatically, its profit rose 4.5 percent during its fiscal second quarter as its prescription drug sales rose.

The steep and unanticipated drop-off in sales of flu shots and cough and cold products -- as well as costs connected to store remodeling and inventory changes -- dragged the results below Wall Street's expectations.

The company said it sold about 2 million flu shots in December, January and February, less than half the 5 million it administered over the three previous months but more than the 1.2 million it gave during the 2008-09 flu season.

Geithner, lawmakers spar on mortgage firms' future

WASHINGTON (AP) -- The Obama administration is taking baby steps to develop a system that could replace mortgage giants Fannie Mae and Freddie Mac, amid criticism that officials are dragging their feet.

In September 2008, the government seized control of Fannie and Freddie -- massive companies that purchase home loans, package them into investments and guarantee them against default. Since then, the government has pumped a combined $126 billion into the companies to keep them afloat.

Obama officials have given few details on their long-term thinking. At a hearing on Capitol Hill Tuesday, Treasury Secretary Timothy Geithner delivered a broad outline of the administration's goals but no specific plan, infuriating Republican lawmakers.

Sprint to promote video calling with '4G' phone

NEW YORK (AP) -- Sprint Nextel Corp. is aiming to make video calls a selling point of the new, faster data network that it's spending billions with co-investors to build.

The wireless carrier on Tuesday announced that this summer, it is launching the first phone that will be able to use the new Clear wireless broadband network. Though it is live in 27 cities and offers faster data speeds for laptops than current cellular broadband networks, Clear doesn't yet work with phones.

To capitalize on the network, Sprint will be releasing a large, iPhone-style smart phone called the Evo 4G, made by HTC Corp. of Taiwan.

By The Associated Press

The Dow rose 102.94, or 1 percent, to 10,888.83, its biggest point and percentage gain since March 5.

The Standard & Poor's 500 index rose 8.36, or 0.7 percent, to 1,174.17. It also stands at an 18-month high. The Nasdaq composite index rose 19.84, or 0.8 percent, to 2,415.24, a 19-month high.

Benchmark crude for May delivery reversed earlier losses and gained 31 cents to settle at $81.91 a barrel on the New York Mercantile Exchange.

In other Nymex trading in April contracts, heating oil rose 1.81 cents to settle at $2.1018 a gallon, and gasoline added 0.66 cent to close at $2.2628 a gallon. Natural gas gained 5.1 cents to settle at $4.13 per 1,000 cubic feet.

In London, Brent crude rose 16 cents to settle at $80.70 on the ICE futures exchange.