Sluggish July sales show tight-fisted consumers
NEW YORK (AP) -- Shoppers
remained tight-fisted in July, raising concern about the back-to-school and
holiday shopping seasons as well as for the broader economic recovery.
The big worry is that frugal
parents will focus on outfitting their children this fall with just necessities
like notebooks and jeans. And fear is bubbling up that frugal parents might
consider any extra splurges early Christmas gifts.
The persistent pullback
despite signs of a stabilizing economy could stall the overall recovery as
consumers account for 70 percent of all economic activity.
The bargain-hunting played
out again in the retailers' reports, with mall-based apparel stores faring the
worst. Among the disappointments were Macy's Inc. and teen retailers
Abercrombie & Fitch Co. and Wet Seal Inc. The few bright spots were apparel
discounters.
Fannie Mae seeks $10.7B in
US aid after 2Q loss
WASHINGTON (AP) -- Fannie
Mae says it needs an additional $10.7 billion in government aid after posting a
loss of $15.2 billion in the second quarter as the taxpayer bill from the
housing market bust keeps growing.
The mortgage finance
company, seized by federal regulators last September, posted a quarterly loss
of $2.67 per share. That compares with a loss of $2.6 billion, or $2.54 per share,
in the year-ago period.
The results were driven by
$18.8 billion in credit losses due to declining housing market conditions. The
request for federal aid is Washington-based Fannie Mae's third since the
takeover. It has received about $34 billion so far.
As jobless claims fall,
layoffs could slow further
WASHINGTON (AP) -- In a
positive sign for the economy, companies are laying off fewer workers as they
prepare to ramp up production to replenish their depleted stockpiles of goods.
Many analysts pointed to
Thursday's drop in jobless claims as evidence of a trend signaling fewer job
losses in coming months, particularly compared with the flood of layoffs
earlier this year.
Still, job openings remain
scarce. And most economists expect the unemployment rate to keep rising to 10
percent or higher by the end of this year. On Friday, the government will
report the July unemployment rate.
First-time claims for
jobless benefits dropped to a seasonally adjusted 550,000 last week, down from
588,000 in the previous week, the Labor Department said Thursday. The four-week
average of claims, which smooths out fluctuations, dropped to 555,250, its
lowest point since late January.
SEC: Ex-AIG CEO Greenberg
settles fraud charges
NEW YORK (AP) -- The
Securities and Exchange Commission said Thursday that former American
International Group Inc. CEO Maurice "Hank" Greenberg agreed to pay a
$15 million fine to settle fraud charges.
The charges are tied to an
accounting scandal earlier this decade at AIG that led to Greenberg's ouster in
2005. The following year, AIG paid more than $1.6 billion to settle charges of
improper accounting.
The case is unrelated to the
government bailout of AIG, which is in the process of trying to sell off assets
to pay off the $182.5 billion in loans it has received since last September.
The SEC said AIG's former
chief financial officer, Howard Smith, will pay a $1.5 million fine tied to the
investigation.
AIG Director Golub will
replace Liddy as chairman
NEW YORK (AP) -- AIG says
Director Harvey Golub on Monday will become its non-executive chairman,
replacing retiring Chairman Edward M. Liddy.
Golub, 70, was elected to
the AIG board in May 2009. He was chairman and CEO of American Express Co. from
1993 to 2001.
New York-based American
International Group Inc. announced in May that Liddy, who took over the insurer
in September, would step down as soon as a search for a replacement was
complete.
AIG's annual shareholder
meeting is June 30. At that time, investors will vote on a slate of new
independent directors.
Stocks slip after jobless
claims report
NEW YORK (AP) -- Investors
shuffled through the final day of trading before the government's July
employment report.
The Dow Jones industrial
average lost 25 points and other major indexes suffered moderate slides
Thursday as worries about the Labor Department's report dominated trading for a
third day. A stream of disappointing July sales numbers from major retailers
added to Wall Street's uneasy mood.
A recovery in the job market
is crucial to the economy's ability to pull itself from the longest recession
since World War II. Unemployment often keeps rising after a recovery begins,
but investors need to see the pace of job losses slowing before they'll
continue the rally that began in March.
Morgan Stanley repurchases
TARP warrants
NEW YORK (AP) -- Morgan
Stanley said Thursday it paid $950 million to buy back warrants from the
government that could have eventually been converted to common shares in the
bank.
New York-based Morgan
Stanley issued the warrants to the Treasury Department as part of the loan
package it received under the Troubled Asset Relief Program.
As part of the program,
Morgan Stanley received $10 billion in funding from the government to help
bolster its balance sheet as credit markets essentially shut down. In exchange,
the government received preferred shares in Morgan Stanley and the warrants to
purchase common shares.
Nasdaq, BATS to stop
offering flash trading
CHARLOTTE, N.C. (AP) -- The
operators of the Nasdaq and BATS stock exchanges said Thursday they will stop a
practice that gives some brokerages a split-second advantage in buying or
selling stocks.
Nasdaq OMX Group Inc. is
voluntarily ceasing the practice, known as flash order trades, on Sept. 1.
Randy Williams, a spokesman for BATS which also operates computerized stock
exchanges, said his company will also quit the practice.
Earlier this week,
Securities and Exchange Commission Chairman Mary Schapiro said the agency is
moving in the direction to ban the practice.
FTC issues rule policing oil
price manipulation
NEW YORK (AP) -- The Federal
Trade Commission said Thursday it would begin policing the petroleum industry
with new penalties for anyone attempting to manipulate energy prices.
The rule, which will go into
effect in November, targets anyone dealing with crude oil, gasoline and
petroleum distillates. It prohibits market distortions through false or
misleading statements about stockpiles, prices or crude and fuel output.
As part of its new powers,
the FTC will monitor reports from petroleum refiners on the amount of gas held
in storage by refiners. Those figures, which are collected and published by the
Department of Energy each week, can push prices up or down.
Hackers attack Twitter;
Facebook also slows down
NEW YORK (AP) -- A hacker
attack Thursday shut down the fast-growing messaging service Twitter for hours,
while Facebook experienced intermittent access problems.
Twitter said it suffered a
denial-of-service attack, in which hackers command scores of computers to a
single site at the same time, preventing legitimate traffic from getting
through.
The fact that a relatively
common attack could disable such a well-known Web site shows just how young and
vulnerable Twitter still is, even as it quickly becomes a household name used
by celebrities, large corporations, small businesses and even protesters in
Iran.
Senate readies fill-up for
'cash for clunkers'
WASHINGTON (AP) -- Acting
with unusual haste, the Senate readied a $2 billion fill-up Thursday for
"cash for clunkers," an economy-boosting program that sent car buyers
storming into formerly deserted auto showrooms at a pace that quickly exhausted
its $1 billion funding.
The House approved the $2
billion replenishment last week for the program, which gives consumers up to
$4,500 in federal subsidies for trading in their cars for new, more
energy-efficient models. A final Senate vote would send the bill to the White
House, where President Barack Obama's signature was assured.
Officials said the
additional money would help consumers purchase 500,000 more new-model cars.
The Senate's action capped
an unusually swift response by lawmakers, who were informed scarcely a week ago
that the program was quickly running short of money.
CBS 2Q net profit slumps 96
percent on weak ads
NEW YORK (AP) -- CBS Corp.
said Thursday its second-quarter net profit fell sharply as softness in the
advertising market continued. Yet the broadcast network saw early signs of
recovery during the quarter.
Net profit in the April-June
quarter dropped 96 percent to $15 million, or 2 cents per share, from $408
million, or 61 cents per share, a year earlier.
Adjusted earnings fell to 8
cents per share from 49 cents per share a year ago. That beat the 7 cents per
share expected by analysts polled by Thomson Reuters.
Revenue dropped 11 percent
to $3.01 billion from $3.39 billion. Analysts were expecting $3.03 billion.
By The Associated Press
The Dow Jones industrial
average fell 24.71, or 0.3 percent, to 9,256.26. The Standard & Poor's 500
index lost 5.64, or 0.6 percent, to 997.08, its first finish below 1,000 since
Friday. The Nasdaq composite index fell 19.89, or 1 percent, to 1,973.16.
Benchmark crude for
September delivery lost 3 cents to settle at $71.94 a barrel on the New York
Mercantile Exchange. In London, Brent prices fell 68 cents to settle at $74.83
a barrel on the ICE Futures exchange after hitting a new high for the year
Wednesday.
In other Nymex trading,
gasoline for August delivery climbed less than a penny to settle at $2.0607 a
gallon and heating oil dropped 2.02 cents to settle at $1.9367. Natural gas for
August delivery fell about 30 cents to settle at $3.743 per 1,000 cubic feet.