Business Highlights

• On Friday August 28, 2009, 6:01 pm EDT

Flat incomes raise doubts about economic recovery

WASHINGTON (AP) -- Household income in the United States is essentially stagnant, raising doubts about whether consumers already hurt by job losses can sustain an economic recovery.

The now-ended Cash for Clunkers program helped lift consumer spending last month and is expected to deliver a bigger boost in August. But any economic rebound likely would falter if shoppers lack the income to spend more in the long run.

Especially in the U.S., consumer spending is essential: It drives about 70 percent of economic activity -- more than for most European nations and well above the rates in developing countries such as China.

Intel raises sales forecast; shares jump 4 percent

NEW YORK (AP) -- Intel Corp. raised its third-quarter revenue forecast above Wall Street's expectations Friday, citing strong demand for its chips and giving another signal that business is improving for one of the world's biggest technology companies. Intel shares rose 4 percent.

The leading maker of computer microprocessors now expects sales of $8.8 billion to $9.2 billion. Its last guidance, which came July 14, was for revenue in the range of $8.1 billion to $8.9 billion.

Analysts polled by Thomson Reuters were expecting $8.55 billion in revenue before Friday.

Santa Clara, Calif.-based Intel also said it expects the quarter's gross profit margin to be in the upper half of the range it previously forecast.

Stocks mostly lower; Nasdaq buoyed by Intel news

NEW YORK (AP) -- Stocks mostly fell Friday as investors balked at extending the market's recent rally despite an improved outlook from Intel Corp.

Trading was quiet, as it has been all week, as summer vacations kept many traders out of the market. With fewer participants, the market has lost some of its recent momentum that sent the major indexes up about 5 percent in less than two weeks.

The market got an initial boost after the world's largest maker of computer chips raised the top end of its sales forecast for the current quarter from $8.9 billion to $9.2 billion.

The market's mood has turned cautious this week, dampening the euphoria around Federal Reserve Chairman Ben Bernanke's upbeat assessment of the economy that helped lift stocks about 2 percent last week.

Automakers see Aug. sales jump; hangover to come

NEW YORK (AP) -- Auto executives on Friday said new vehicle sales in August likely did something they haven't done in a long time: they increased compared with last year, thanks in large part to the government's popular Cash for Clunkers program.

It was the best month of the year for the sputtering industry. But sales will probably slow in the coming months now that the program is over.

Cash for Clunkers, which ended on Monday, drew hordes of buyers into sleepy showrooms, providing a much-needed lift in business. It spurred 690,114 new sales at a taxpayer cost of $2.88 billion, according to the Department of Transportation.

The program also helped boost sagging consumer spending, which rose 0.2 percent in July, matching economists' expectations.

Tiffany 2Q profit falls, tops view, boosts outlook

NEW YORK (AP) -- Tiffany & Co. said Friday that its second-quarter profit fell but beat analyst expectations as its steep sales declines moderated, providing a sparkle of hope amid the moribund luxury market.

The luxury retailer also raised its full-year earnings guidance.

The luxury sector has seen freefalling sales, as consumers cut back on higher-ticket items amid the recession. Neiman Marcus' sales declined 24 percent in the most recent quarter. Saks Inc.'s fell 15 percent.

But there have been some small signs of improvement: last month Coach Inc. said sales of full-price handbags were improving, though still weak. Tiffany's results are another sign, an analyst said.

Whirlpool to cut 1,100 jobs, shut plant in Indiana

INDIANAPOLIS (AP) -- Whirlpool Corp. announced Friday that it will close its refrigerator factory in Evansville, Ind., by next year and cut 1,100 jobs as it continues a push to trim excess capacity.

Whirlpool said it will move the production of refrigerators with freezers on top to a company location in Mexico, where they are cheaper to produce. Ice makers produced in Evansville will be moved to a yet-to-be-decided location.

The jobs will be eliminated in mid-2010. The Benton Harbor, Mich.-based appliance maker has aggressively cut costs as demand for big-ticket items has shrunk in the recession.

Court rejects cap on cable market share -- again

PHILADELPHIA (AP) -- An appeals court overturned a rule that said a cable TV company could not serve more than 30 percent of the nation's subscribers. The verdict Friday was a victory for the largest cable company, Comcast Corp., which has 25 percent share and sued to block the rule.

It was an embarrassing decision for the Federal Communications Commission, which had already seen the cap rejected and imposed it again. Friday's ruling from the U.S. Court of Appeals for the District of Columbia Circuit called the limit "arbitrary and capricious," and threw it out.

FDA: problems with Genzyme study of leukemia drug

WASHINGTON (AP) -- Federal regulators on Friday questioned whether Genzyme's leukemia drug Clolar should be approved for older patients based on limited studies conducted by the biotech drugmaker.

Cambridge, Mass.-based Genzyme has asked the Food and Drug Administration to approve its injectable drug for adults older than 60, who have leukemia but are not healthy enough to undergo chemotherapy. Leukemia is a cancer of the blood or bone marrow.

Clolar already is approved for a form of the disease called acute lymphoblastic leukemia in patients younger than 21 years old.

But in briefing documents posted online, FDA reviewers complained about several problems with the company's study.

Crude prices rise as the dollar weakens

HOUSTON (AP) -- The effect of the weak dollar is again pushing oil prices higher in the face of little demand for energy and huge surpluses of crude.

Since March, the dollar index, which weighs the U.S. currency against a basket of foreign currencies like the euro, the Japanese yen, the pound and the Swiss franc, has fallen nearly 12 percent. In that same period, crude has jumped 81 percent.

The dollar fell against the euro, the pound and the Japanese yen Friday and crude prices climbed higher. That's because crude is bought and sold in dollars, so it essentially becomes cheaper when the U.S. currency is weak.

Benchmark crude for October delivery rose 25 cents to settle at $72.74 on the New York Mercantile Exchange. Oil prices earlier this week hit $75, a high for the year.

Pair of Texas officials go after Exxon

DALLAS (AP) -- A pair of elected officials in Texas is going after Exxon Mobil, a name synonymous with the state, for allegedly stuffing abandoned oil wells with piles of junk, sludge and tools so other companies could not drill in the same places.

The Texas Supreme Court recently reversed a jury's finding that the world's largest publicly traded oil company intentionally wrecked the wells nearly 20 years ago.

The state land commissioner and comptroller, however, don't want Texas to drop the case. State Comptroller Susan Combs filed a brief asking the supreme court to rehear the case.

Texas is a huge beneficiary of Exxon's success in the oil patch. The company says it paid nearly $900 million in taxes and royalties to the state in 2008 and has more than 38,000 employees and retirees living in Texas.

By The Associated Press

The Dow fell 36.43, or 0.4 percent, to 9,544.20.

The Standard & Poor's 500 index fell 2.05, or 0.2 percent, to 1,028.93, while the Nasdaq composite index added 1.04, or 0.1 percent, to 2,028.77.

Benchmark crude for October delivery rose 25 cents to settle at $72.74 on the New York Mercantile Exchange.

Natural gas prices fell 17.3 cents to settle at $3.033 per 1,000 cubic feet Friday.

In other Nymex trading, gasoline for September delivery rose 3.04 cents to settle at $2.0618 a gallon and heating oil rose less than a penny to settle at $1.8603 a gallon.

In London, Brent crude rose 28 cents to settle at $72.79.

Buzz up!