Bleak sales are another reality check for economy
WASHINGTON (AP) -- A bleak
report on retail sales Thursday reinforced a nagging worry of economists:
Shoppers won't spend enough to help a recovery take hold.
Sales fell 0.1 percent, the
Commerce Department said, after two months of modest gains. Economists had
expected a 0.7 percent increase. Excluding autos, which got a boost from the
Cash for Clunkers rebate program, sales fell 0.6 percent, also much worse than
predicted.
The figures served as a
reality check for an economy that lately has appeared poised to emerge from
recession and grow again. Consumer spending powers about 70 percent of economic
activity.
Wal-Mart, Kohl's beat
forecasts, see 'new normal'
Cutting their inventory
helped both Wal-Mart Stores Inc. and Kohl's Inc. earn more in the second
quarter than Wall Street expected, but neither retailer sees consumer spending
rebounding in the crucial coming months.
They said as they reported
their earnings Thursday that they're preparing for American consumers' newly
adopted frugality to be the new reality.
Wal-Mart saw an unexpected
drop in same-store sales at its U.S. stores for the quarter. Same-store sales
is a key industry metric comparing sales with the same period a year earlier at
stores open more than a year.
Wal-Mart, the world's
largest retailer, noted that its financially strained shoppers keep buying
less-expensive store products and smaller sizes. Customers also are paying for
more of their purchases in cash or with debit cards than with credit cards,
said Tom Schoewe, Wal-Mart's CFO.
Kevin Mansell, president
and Chief Executive of Kohl's, told The Associated Press that retailers should
lower their expectations for holiday shopping.
Stocks manage to extend
gains to 2nd day
NEW YORK (AP) -- Focused on
an economic recovery, investors shook off disappointing news and kept Wall
Street's summer rally going.
Investors sent stocks
higher for a second day in a row Thursday, giving all the major indexes a
moderate boost and adding to the gains that followed upbeat comments from the
Federal Reserve a day earlier.
Financial, technology and
energy companies were among the big winners, while stocks in defensive, or
relatively safer, industries like health care fell. Retailers declined after a
worse-than-expected report on retail sales.
Meanwhile, Treasury prices
rose after the government had a successful auction of 30-year bonds. The
Treasury Department issued a total of $75 billion of debt this week as part of
its ongoing efforts to fund the government's stimulus programs, and investors
were relieved that the market was able to absorb such a huge supply.
Ford to boost production of
Focus, Escape
DEARBORN, Mich. (AP) --
Ford said Thursday it will build more of its popular Focus and Escape models
and boost total vehicle production later this year to help dealers restock
depleted showrooms.
Ford Motor Co. needs to
keep up with demand for its Focus compact and Escape crossover, both ranked as
top sellers under the federal government's Cash for Clunkers program. It also wants
to maintain a reasonable level of cars and trucks so its dealers won't run
short on hot models during the final months of the year.
Cash for Clunkers, which
kicked off last month and has revived industry sales for the moment, uses
rebates of up to $4,500 to entice drivers to trade in older, gas guzzlers for
more fuel-efficient vehicles.
Ford's overall vehicle
production will be 2 percent higher than it expected in the third quarter. It
also plans to boost its fourth-quarter output of cars and trucks by 33 percent
from a year earlier.
Foreclosures rise 7 percent
in July from June
WASHINGTON (AP) -- The
number of U.S. households on the verge of losing their homes rose 7 percent
from June to July, as the escalating foreclosure crisis continued to outpace government
efforts to limit the damage.
Foreclosure filings were up
32 percent from the same month last year, RealtyTrac Inc. said Thursday. More
than 360,000 households, or one in every 355 homes, received a
foreclosure-related notice, such as a notice of default or trustee's sale.
That's the highest monthly level since the foreclosure-listing firm began
publishing the data more than four years ago.
Banks repossessed more than
87,000 homes in July, up from about 79,000 homes a month earlier.
Nevada had the nation's
highest foreclosure rate for the 31st-straight month, followed by California,
Arizona, Florida and Utah.
Anheuser-Busch InBev makes
$1.1 billion 2Q profit
BRUSSELS (AP) --
Anheuser-Busch InBev on Wednesday said second quarter profit rose 13 percent to
$1.1 billion, helped by sales of stakes in brewing companies, but cautioned
that the recession was flattening beer consumption in key markets worldwide.
The owner of Budweiser, the
world's best-selling beer -- and some 300 other brands -- said its profit
compared with a $850 million profit in the same period a year earlier.
Still, ABInbev reported a
1.1 percent drop in global sales in the second quarter.
FDA panel backs limited use
of Amgen bone drug
WASHINGTON (AP) -- A
federal health panel on Thursday said a highly anticipated bone drug from Amgen
benefits patients with osteoporosis, but should not be used to prevent the
disease because of long-term safety questions.
Food and Drug
Administration experts unanimously voted that Amgen's injectable drug denosumab
helps prevent bone fractures in women with postmenopausal osteoporosis. But
panelists said the drug should only be used by patients who face the greatest
risk of fractures.
In a separate 12-3 vote,
the panel ruled against using the drug as a preventive measure for women with
low bone density.
The FDA is not required to
follow the group's advice, though if usually does.
CIT Group adopts tax plan,
signs deal with NY Fed
NEW YORK (AP) -- CIT Group
Inc. and the Federal Reserve announced Thursday an agreement which gives the
central bank greater oversight of the troubled commercial lender.
The agreement calls for CIT
to report to the Federal Reserve Bank of New York by Aug. 28 its plans for
maintaining sufficient capital and to come up within 75 days with a business
plan that includes budgets for the remainder of this year and 2010.
CIT must give the New York
Fed a written plan that among other things details the company's current and
future capital requirements and how it will meet them. It also must spell out
how its capital raising plans will affect its projected earnings.
The agreement also calls
for CIT to provide by Aug. 28 a plan for improving the management of its
liquidity.
China might appeal WTO
ruling on film import
BEIJING (AP) -- China said
Thursday it might appeal a World Trade Organization ruling that told Beijing to
ease restrictions on imported movies, music and books in its latest trade
dispute with Washington.
The Commerce Ministry
insisted Beijing does not hamper imports of media products, despite Wednesday's
decision by a WTO panel of experts that it violates free-trade rules by forcing
such products to be routed through Chinese state-owned companies.
"The Chinese side will
conscientiously assess the expert group's ruling and does not rule out the
possibility of an appeal," ministry spokesman Yao Jian said in a written
statement.
The case is sensitive for
Beijing because the communist government sees its control over content of
movies, music, books and other media as a tool to protect its political power.
By The Associated Press
The Dow Jones industrial
average rose 36.58, or 0.4 percent, to 9,398.19 after rising 120 Wednesday in
response to the Fed's statement.
The Standard & Poor's
500 index rose 6.92, or 0.7 percent, to 1,012.73, while the Nasdaq composite
index rose 10.63, or 0.5 percent, to 2,009.35.
Benchmark crude for
September delivery added 36 cents to settle at $70.52 a barrel on the New York
Mercantile Exchange. In London, Brent crude prices climbed 59 cents to settle
at $73.48 a barrel on the ICE Futures exchange.
In other Nymex trading,
gasoline for September delivery gave up less than a penny to settle at $2.0192
a gallon. Heating oil rose 1.07 cents to settle at $1.9028 a gallon. Natural
gas for September delivery lost 14.3 cents to settle at $3.336 per 1,000 cubic
feet.