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1st quarter wiped out $1.3 trillion for Americans

 

WASHINGTON (AP) -- American households lost $1.33 trillion of their wealth in the first three months of the year as the recession took a bite out of stock portfolios and dragged down home prices.

The Federal Reserve reported Thursday that household net worth fell to $50.38 trillion in the January-March quarter, the lowest level since the third quarter of 2004. The first-quarter figure marked a decline of 2.6 percent, or $1.33 trillion, from the final quarter of 2008.

Net worth represents total assets such as homes and checking accounts, minus liabilities like mortgages and credit card debt.

The damage to wealth in the first quarter came from the sinking stock market. The value of Americans' stock holdings dropped 5.8 percent from the final quarter of last year.

CEO: Government pushed bank to buy Merrill Lynch

WASHINGTON (AP) -- House lawmakers on Thursday accused federal regulators of a gross misuse of power in orchestrating a "shotgun wedding" between Bank of America Corp. and Merrill Lynch & Co. that cost U.S. taxpayers $20 billion.

They also took aim at Bank of America Chief Executive Officer Kenneth Lewis, questioning whether he played dumb last fall as Merrill's financial losses mounted and threatened not to go through with the merger to squeeze money from the government.

In his testimony, Lewis said publicly for the first time that his job was threatened after he expressed second thoughts about the merger. Lewis said then-Treasury Secretary Hank Paulson and federal regulators made clear that if the bank reneged on its promise they would force his ouster and that of board members at the bank.

Better data, strong 30-year auction lift stocks

NEW YORK (AP) -- The Dow Jones industrial average tacked on a modest 32 points Thursday after being up as much as 139, and the Standard & Poor's 500 index edged up to reach its highest level since November.

Investors welcomed a drop in jobless claims, growth in retail sales and better-than-expected demand at a government debt auction. But traders also seemed mindful of how far the market has come in its three-month rally.

The stock market has at times run low on fresh evidence of economic recovery that could push the rally further. The data out Thursday helped but weren't enough to keep the pace of buying strong through the end of trading.

Weak job market may crimp spending, slow recovery

WASHINGTON (AP) -- The number of people receiving unemployment benefits has set another record, a development likely to weigh on consumer spending and slow the economy's recovery.

While retail sales rose in May, the increase resulted largely from a spike in gasoline prices and higher auto sales, according to a report from the Commerce Department. Overall, the retail report Thursday showed consumers remain reluctant to spend, economists said.

The number of people continuing to claim benefits exceeded 6.8 million in the week ending May 30, the Labor Department said Thursday. That was the 19th straight weekly record, after a drop last week was revised to an increase.

No smoking: Historic vote could bring new limits

WASHINGTON (AP) -- The Senate struck a historic blow against smoking in America Thursday, voting overwhelmingly to give regulators new power to limit nicotine in the cigarettes that kill nearly a half-million people a year, to drastically curtail ads that glorify tobacco and to ban flavored products aimed at spreading the habit to young people.

President Barack Obama, who has spoken of his own struggle to quit smoking, said he was eager to sign the legislation, and the House planned a vote for Friday.

Cigarette foes said the measure would not only cut deaths but reduce the $100 billion in annual health care costs linked to tobacco.

Fierce opposition by the industry and tobacco-state lawmakers had prevented passage for years.

Oil prices near $73 as energy rally continues

NEW YORK (AP) -- Oil prices hit an eight-month high as the dollar fell and a series of reports suggested that consumers and business may be more willing and able to spend money on energy.

Benchmark crude for July delivery rose $1.35 to settle at $72.68 on the New York Mercantile Exchange. Prices hit $73.23 at one point.

Crude prices rose sharply in the morning after the federal government announced a drop in first-time jobless claims last week. Another report said retail sales grew in May for the first time in three months, in part because of spiking gasoline prices.

Gas prices are following crude upward, even though most energy experts can find no solid basis for either.

AP source: GM nearing deal to sell Saab unit

DETROIT (AP) -- General Motors Corp. is nearing a deal to sell its Saab unit, but nothing has been finalized, a person briefed on the negotiations said Thursday.

The news came as Swedish broadcaster SVT reported that Swedish luxury sports car maker Koenigsegg Automotive AB and Norwegian investors are planning to buy Saab.

The person would not identify the final bidders for Saab but said news could come "shortly," perhaps as early as Friday.

Airline passengers could get a 1-2-3 punch

ATLANTA (AP) -- Corporate travel and ticket sales of premium seats are down. Overall demand is weak. And fuel prices are rising -- again. The one-two-three punch could be bad news for consumers this fall, as airlines face pressure to raise fares or cut more capacity to cover their costs.

Executives at several airlines, including Delta, Southwest, US Airways, Continental and American, gave bleak outlooks Thursday during an investor conference in New York, and there was little talk from anyone of a near-term rebound. AirTran offered a bright spot amid the industry woes.

The rise in unemployment and hits Americans have taken to the value of their homes, coupled with the meltdown in the financial markets, has caused a significant slowdown in air travel. Airlines also have lost business from the swine flu, which has caused some people to cancel travel plans to Mexico.

Foreclosures fall 6 percent in May from April

WASHINGTON (AP) -- The number of U.S. households on the verge of losing their homes dipped in May from April, and the annual increase was the smallest in three years.

But as layoffs, rather than risky mortgages, become the main reason that borrowers default on their home loans, foreclosures likely will remain elevated this year and into 2010. Many economists expect unemployment, now at 9.4 percent nationwide, to rise as high as 10 percent, and some project it will exceed the post-World War II record of 10.8 percent.

Foreclosure filings fell 6 percent in May from April, according to RealtyTrac Inc. More than 321,000 households received at least one foreclosure-related notice last month -- 18 percent more than a year earlier -- but the smallest annual gain since June 2006.

Yahoo names new CFO, fills void left by shake-up

SUNNYVALE, Calif. (AP) -- Yahoo Inc. has lured a chief financial officer away from one of its Silicon Valley neighbors, filling a key piece of the new management team that's vying to end the Internet company's three-year stretch of mostly declining profits.

The Sunnyvale-based company said Thursday that it plucked Tim Morse from Altera Corp., a San Jose-based chip maker. Morse became Altera's CFO in 2007 after spending 15 years working for General Electric Co. in various jobs.

Morse's hiring ends Yahoo's 3 1/2-month search to replace its current CFO Blake Jorgensen, who announced his plans to leave a few weeks after the company hired Carol Bartz its new chief executive.

By The Associated Press

The Dow Jones industrials rose 31.90, or 0.4 percent, to 8,770.92. The S&P 500 rose 5.74, or 0.6 percent, to 944.89, just above its close on June 2 and its highest point since Nov. 5. The Nasdaq Composite index rose 9.29, or 0.5 percent, to 1,862.37, its best level since Oct. 6.

Benchmark crude for July delivery rose $1.35 to settle at $72.68 on the New York Mercantile Exchange. Prices hit $73.23 at one point.

In London, Brent prices added 99 cents to settle at $71.79 a barrel on the ICE Futures exchange.

In other Nymex trading, gasoline for July delivery rose 4.96 cents to settle at $2.0649 a gallon, and heating oil added 2.08 cents to settle at $1.8534 a gallon. Natural gas for July delivery rose 22.5 cents to settle at $3.933 per 1,000 cubic feet.

(This version CORRECTS item on tobacco legislation, deleting reference to minor differences to be worked out with House.)

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