Consumer spending gain provides hope for rebound
WASHINGTON (AP) -- Consumers
snapped back to life at the start of the year, renewing hopes the recession is
losing steam.
Even though the economy
shrank again in the first three months -- and by a lot -- Americans stepped up
purchases of cars, furniture and appliances. The surge in consumer spending,
which accounts for about 70% of the economy, could set the stage for a rebound
later this year.
Many consumers have been
fortified by fatter paychecks from tax cuts and smaller mortgage bills from
refinancings. If they keep spending, their dollars could deliver a powerful
punch: Businesses will need to replenish their shrunken inventories, leading
factories to boost production and nourishing economic activity.
Stocks end higher as Fed
sees recession easing
NEW YORK (AP) -- The Fed
confirmed what Wall Street has already concluded: The recession is starting to
ease.
Federal Reserve policymakers
said at the end of a two-day meeting that while the economy is still receding,
the pace of decline "appears to be somewhat slower" than the last
time they met in mid-March.
That was confirmation enough
for the stock market. Major indexes, which had already been up sharply ahead of
the announcement, posted gains of more than 2 percent. The Dow Jones industrial
average jumped 169 points 8,185.73, its highest close since Feb. 9.
AP sources: Fiat to sign
Chrysler partnership deal
DETROIT (AP) -- Italian
automaker Fiat Group SpA will sign paperwork to become a partner with Chrysler
LLC by Thursday as negotiations continue to keep the struggling automaker alive
without filing for bankruptcy protection, according to three people briefed on
the deal.
The partnership is the last
piece of a huge restructuring plan needed for Chrysler to continue operations
as it approaches Thursday's government deadline to cut labor costs, slash debt
and take on a partner.
But it was unclear Wednesday
whether the struggling Auburn Hills, Mich., automaker will be able to stay out
of bankruptcy court. That, according to the people, hinges on whether a group
of hedge funds that hold 30 percent of its debt agree to forgive most of what
they're owed.
Small GM bondholders rally
for better deal
WARREN, Mich. (AP) --
Individuals who hold General Motors Corp. bonds said Wednesday they want a
better deal than the debt-for-equity swap the company is offering.
At a news conference in the
Detroit suburb of Warren, several bondholders from as far away as Colorado said
holding stock in a newly restructured GM doesn't compare to the bond interest
payments they rely on to supplement their retirement or pay property taxes or
medical bills. They also said they can't afford to lose the principal they lent
to the company.
Fed sees signs recession may
be easing
WASHINGTON (AP) -- The
Federal Reserve said Wednesday it sees signs the recession is easing and that
the economic outlook has "improved modestly" since last month.
Against that backdrop, Fed
Chairman Ben Bernanke and his colleagues left a key interest rate at a record
low of between zero and 0.25 percent, and decided against taking any new steps
to shore up the economy.
Aggressive action already
taken -- including a $1.2 trillion effort last month -- should gradually help
bolster economic activity, the Fed said. It did, however, leave the door open
to future action if needed.
BofA delays release of votes
on Lewis, directors
CHARLOTTE, N.C. (AP) -- Ken
Lewis is keeping his seat on the Bank of America Corp. board, but his job title
is less certain.
Shareholders at Bank of
America's annual meeting Wednesday voted to re-elect the bank's entire
18-member board including Lewis, according to company spokesman James Mahoney,
although final vote totals have not been made official by the bank.
But executives said at the
nearly four-hour meeting they needed more time to count the ballots for the 11
proposals that were put to a vote -- including a shareholder proposal to strip
Lewis of his chairman's title, leaving him with just the CEO's job.
Time Warner 1Q profit falls
on cable spin
LOS ANGELES (AP) -- Time
Warner Inc. said Wednesday that its first-quarter profit fell 14 percent on
charges related to its cable unit spin-off. Amid an ad slump, the media
conglomerate reaffirmed its guidance on flat profits for the full year.
The company also moved
further toward shedding the beleaguered Internet unit AOL, while suggesting
that its Time Inc. magazine business may go some day.
Chief Executive Jeffrey
Bewkes said Time Warner's future will focus more on the global expansion of its
networks such as CNN and HBO and its TV show and movie productions led by the
Warner Bros. studio.
Crude rises despite large
buildup in inventory
NEW YORK (AP) -- Oil prices
rose Wednesday even though the government reported that the nation is consuming
less than it has in years and inventories are bloated with the most surplus
crude in nearly two decades.
Energy prices have
stabilized well below the levels reached in recent years, however, and retail
gasoline prices have been largely stagnant since rising above $2 a gallon for
the first time this year in late March.
Benchmark crude for June
delivery gained $1.05 to settle at $50.97 a barrel on the New York Mercantile
Exchange. In London, Brent prices increased 79 cents to settle at $50.78 a
barrel on the ICE Futures exchange.
Jobless rates rise in all US
metro areas in March
WASHINGTON (AP) --
Unemployment rates rose in all of the nation's largest metropolitan areas for
the third straight month in March, with Indiana's Elkhart-Goshen once again
logging the biggest gain.
The Labor Department
reported Wednesday all 372 metropolitan areas tracked saw jobless rates move
higher last month from a year earlier. Elkhart-Goshen's rate soared to 18.8
percent, a 13 percentage-point increase. That was the fourth-highest jobless
rate in the country.
The Indiana region has been
hammered by layoffs in the recreational vehicle industry. RV makers Monaco
Coach Corp. Keystone RV Co. and Pilgrim International have sliced hundreds of
jobs.
General Dynamics 1Q up 3
percent
WASHINGTON (AP) -- General
Dynamics Corp.'s first-quarter earnings rose 3 percent, beating Wall Street
expectations, as sales of warships and other military equipment made up for
lower profits from business jets.
Weapons sales to the
Pentagon have buoyed most defense contractors through the recession, but those
that have large commercial divisions have faced a difficult balancing act in
recent quarters. General Dynamics still has healthy demand for its tanks,
submarines and ships, but its Gulfstream corporate jet business has grown steadily
weaker as the global economic downturn hurts air travel.
By The Associated Press
The Dow jumped 168.78, or
2.1 percent, to 8,185.73.
The Standard & Poor's
500 index gained 18.48, or 2.2 percent, to 873.64, its highest close since Jan.
28.
The Nasdaq composite index
advanced 38.13, or 2.3 percent, to 1,711.94. The tech-heavy index posted its
highest finish since Nov. 4 and is up 8.6 percent for the year.
Benchmark crude for June
delivery gained $1.05 to settle at $50.97 a barrel on the New York Mercantile
Exchange.
In London, Brent prices
increased 79 cents to settle at $50.78 a barrel on the ICE Futures exchange.
In other Nymex trading,
gasoline for May delivery increased 5.07 cents to settle at $1.4484 a gallon.
Heating oil for May delivery rose 1.24 cents to settle at $1.3291 a gallon.
Natural gas for June
delivery dropped 3.7 cents to settle at $3.403 per 1,000 cubic feet.