WASHINGTON (AP) -- Setting
up a certain fight with big business, President Barack Obama is proposing a new
regulatory agency to police lenders and protect consumers in credit, savings
and other banking transactions.
The consumer agency and a
newly empowered Federal Reserve will be two of the central elements of a broad
overhaul of the financial regulatory system that the president will announce on
Wednesday, officials said.
Already the nation's central
bank, the Federal Reserve would supervise large financial institutions that are
considered so big that their failure could undermine America's economy,
according to the administration proposal.
Housing starts rebound;
inflation stays in check
WASHINGTON (AP) -- Fresh
signs that the economy is stabilizing -- though at very low levels -- emerged
Tuesday in reports that home construction rose more than expected last month
and wholesale prices remain in check.
The building of new homes
and apartments jumped 17.2 percent to a seasonally adjusted annual rate of 532,000
units from April's record low of 454,000 units, the Commerce Department said.
Building permits, an indicator of future activity, rose 4 percent to an annual
rate of 518,000 units, also better than expected.
But the gains in
construction were driven by a surge in the highly volatile category of
multifamily buildings, which soared 61.7 percent in May after plunging 49.4
percent in April. Single-family home construction rose at a much lower rate,
7.5 percent.
Mixed data on production,
housing weighs on stocks
NEW YORK (AP) -- More signs
of a weak economy gave investors a reason to sell stocks for a second day.
Stocks extended their
pullback Tuesday after news of a seventh straight monthly drop in industrial
production overshadowed better-than-expected reports on home construction,
building permits and inflation.
All the major stock indexes
fell more than 1 percent, and the Dow Jones industrial average lost 107 points
to 8,504.67, bringing its two-day drop to nearly 300 points, or 3.3 percent.
Investors are nervous that a three-month surge in stocks, based on optimism
about a recovering economy, might have been premature.
MySpace to cut 30 pct of
jobs to boost efficiency
LOS ANGELES (AP) -- MySpace
said Tuesday it is cutting nearly 30 percent of its work force in a bid to
become more efficient, bringing its staffing level more in line with its more
popular rival, Facebook.
The move, the latest
cost-cutting effort at the site, comes less than two months after the unit of
Rupert Murdoch's News Corp. hired former Facebook executive Owen Van Natta, 39,
as its new chief executive.
It also comes a day after
data from tracking firm comScore show Facebook has caught up with MySpace in
monthly U.S. visitors for the first time.
GM to sell Swedish unit Saab
to Koenigsegg
STOCKHOLM (AP) -- Saab
Automobile, General Motors Corp.'s struggling Swedish unit known for its family
cars, was rescued Tuesday by a consortium led by Koenigsegg Automotive AB, a
tiny company that produces only a dozen custom-made super cars a year.
Having penned a memorandum
of understanding, GM said the sale would include an expected $600 million
funding commitment from the European Investment Bank, guaranteed by the Swedish
government. Additional funding for Saab's operations and investments would be
provided by GM and the Koenigsegg Group AB consortium, it said.
FDA says Zicam nasal spray
can cause loss of smell
WASHINGTON (AP) -- Consumers
should stop using Zicam Cold Remedy nasal gel and related products because they
can permanently damage the sense of smell, federal health regulators said
Tuesday.
The over-the-counter
products contain zinc, an ingredient scientists say may damage nerves in the
nose needed for smell. The other products affected by the Food and Drug
Administration's announcement are adult and kid-size Zicam Cold Remedy Nasal
Swabs.
The FDA says about 130
consumers have reported a loss of smell after using Matrixx Initiatives' Zicam
products since 1999. Shares of the Scottsdale, Ariz.-based company plunged to a
52-week low after the FDA announcement, losing more than half their value.
Best Buy 1Q profit drops 15
pct but tops forecasts
NEW YORK (AP) -- Best Buy
Co. Inc. reported Tuesday that its first-quarter profit fell 15 percent -- even
as Circuit City, a key competitor, closed the last of its stores -- because
recession-weary shoppers were still limiting big-ticket purchases.
The earnings beat Wall
Street expectations, and the nation's largest consumer electronics seller
maintained its annual profit outlook.
The company earned $153 million,
or 36 cents per share, in the quarter that ended May 30. That compares with
profit of $179 million, or 43 cents per share, a year earlier when federal
stimulus checks briefly spurred consumer spending.
Large banks see recession
ending by late summer
WASHINGTON (AP) -- The
nation's largest banks expect the economy to recover from its deep slump by
late summer but remain weak until next year.
The American Bankers
Association's Economic Advisory Committee, which includes economists from Wells
Fargo & Co., PNC Financial Services Group, Morgan Stanley and others,
expects gross domestic product to increase 0.5 percent in the July-September
quarter, after falling a projected 1.8 percent in the April-June period.
Federal Reserve Chairman Ben
Bernanke also says the economy could recover by the end of this year. But jobs
will remain scarce and the unemployment rate will keep rising even after the
recovery begins, the committee said, peaking at 10 percent in the first three
months of 2010.
Retail gas rises for 49th
straight day
SIOUX FALLS, S.D. (AP) --
Retail gas prices rose for the 49th straight day Tuesday even though crude fell
yet again.
The national average price
for a gallon of regular unleaded gasoline gained a half cent overnight to
$2.674, according to auto club AAA, Wright Express and the Oil Price
Information Service, surpassing a stretch in early 2007 when prices moved up 48
straight days.
In late April, when this
streak began, a gallon of gas cost only $2.05.
Benchmark crude for July
delivery declined for the third straight day, falling 15 cents to settle at
$70.47 a barrel on the New York Mercantile Exchange.
Administration rejects auto
supplier aid request
WASHINGTON (AP) -- The Obama
administration has turned down a request by auto suppliers for up to $10
billion in additional federal aid to help the parts companies deal with the
bankruptcies of General Motors and Chrysler.
The Treasury Department said
in a statement Tuesday that an existing $5 billion support program for auto
parts suppliers was playing an important role in stabilizing the nation's auto
supply base.
Suppliers have lobbied for
$8 billion to $10 billion in loan guarantees to help them raise money to buy
raw materials and pay employees as Chrysler and GM resume production.
By The Associated Press
The Dow Jones industrial
average fell 107.46, or 1.3 percent, to 8,504.67.
The Standard & Poor's
500 index fell 11.75, or 1.3 percent, to 911.97, while the Nasdaq composite
index fell 20.20, or 1.1 percent, to 1,796.18.
Benchmark crude for July
delivery fell 15 cents to settle at $70.47 a barrel on the New York Mercantile
Exchange.
In other Nymex trading,
gasoline for July delivery rose 1.7 cents to settle at $2.0711 a gallon and
heating oil fell less than a penny to settle at $1.8250. Natural gas for July
delivery fell 7 cents to settle at $4.312 per 1,000 cubic feet.
In London, Brent crude
prices closed flat at $70.24 a barrel on the ICE Futures exchange