Fed: consumers cut debt by record $21.6B in July
WASHINGTON (AP) -- Consumers
slashed their borrowing in July by the largest amount on record as job losses
and uncertainty about the economic recovery prompted Americans to rein in their
debt.
Economists expect consumers
will continue to spend less, save more and trim debt to get household finances
decimated by the recession into better shape. However, such action is a recipe
for a lethargic revival, as consumer spending accounts for 70 percent of
economic activity.
The Federal Reserve reported
Tuesday that consumers ratcheted back their credit by a larger-than-anticipated
$21.6 billion from June, the most on records dating to 1943. Economists
expected credit to drop by $4 billion.
Stocks gain on rising
commodities, takeover news
NEW YORK (AP) -- Rising
commodity prices and stirrings of corporate takeovers are making investors more
optimistic about the economy.
Stocks rose for the third
straight day Tuesday following gains among materials and energy stocks. The Dow
Jones industrial average rose 56.07, or 0.6 percent, to 9,497.34.
Gold topped $1,000 an ounce
for the first time since February and oil jumped more than $3 a barrel as
investors look for more ways to profit from an improving economy. A weaker
dollar also helped push commodity prices higher.
Meanwhile, a weekend pledge
by the world's 20 biggest economies to support the global recovery with
stimulus efforts also helped keep the market's tone positive.
Cold, hard cash may be key
to Cadbury's heart
PORTLAND, Ore. (AP) --
British candy maker Cadbury PLC is awaiting a sweeter offer than Kraft Foods
Inc.'s $16.7 billion stock-and-cash proposal. But it is unclear if Kraft or
other potential suitors -- like Hershey Co. and Nestle SA -- will put more cash
on the line, which could prove key to a deal.
Cadbury, the second-largest
global candy maker with brands like Trident, Dentyne and Cadbury Creme Eggs,
quickly rejected the surprise offer by Kraft Foods on Monday, saying it
fundamentally undervalues the company. But Kraft CEO Irene Rosenfeld is
continuing to make a case for the deal, which would expand Kraft's global
footprint.
Cadbury's rejection of the
bid, however, opens the door to discussions with others. Analysts suggest
Switzerland-based Nestle, the world's largest foodmaker, and U.S.-based candy
maker Hershey might come together to consider making a bid of their own.
Oil shoots above $71 a
barrel on weak dollar
NEW YORK (AP) -- Crude
prices settled above $71 a barrel Tuesday as a falling dollar pushed investors
to seek out commodities such as oil and gold.
Benchmark crude for October
delivery gained $3.08 to settle at $71.10 a barrel on the New York Mercantile
Exchange. The contract had settled at $68.02 on Friday after rising 6 cents.
The dollar fell to a low for
the year Tuesday against the euro and several other currencies as gold prices
surpassed $1,000 an ounce for the first time since February.
Investors often turn to
commodities as a hedge against inflation and dollar weakness, and gold seems to
be pulling oil along for the ride, said PFGBest analyst Phil Flynn.
Chinese solar plant expected
to be the biggest
NEW YORK (AP) -- First Solar
Inc. said Tuesday it has received initial approval from the Chinese government
to build what may become the largest solar field in the world.
First Solar, which makes
more solar cells than any other company, said it struck a tentative 10-year
deal to build in China's vast desert north of the Great Wall. The project would
eventually blanket 25 square miles (64 sq. kilometers) of Inner Mongolia --
slightly larger than the size of Manhattan -- with a sea of black,
light-absorbing glass.
The solar field would dwarf
anything in operation in the U.S. or Europe. At 2 gigawatts, or 2 billion
watts, the solar plant could pump as much energy onto China's grid as two
coal-fired plants, enough to light up three million homes. Like most solar
plants, however, it wouldn't produce electricity at night.
Smithfield posts larger 1Q
loss on big charges
MILWAUKEE (AP) -- The
nation's largest pork producer, Smithfield Foods Inc., said Tuesday it posted a
bigger first-quarter loss as one-time charges and lower domestic hog prices
hurt results, despite curtailed production.
But the fresh pork losses
were offset by significant improvements in the company's packaged-meat business
and were in line with analyst estimates. The company has been shifting focus to
packaged meats products like ham and bacon, which make more money and appeal to
consumers eating more at home.
CEO Larry Pope said the
company is now starting to see the benefits of its restructuring in its
packaged meat business.
The company announced a
restructuring this winter to cut 1,800 jobs and close about half a dozen plants
as it focuses more on packaged meats.
Labor impatient for Opel
decision
FRANKFURT (AP) -- General
Motors Co.'s board begins a two-day meeting in Detroit on Tuesday with European
labor organizations pressing for a decision on the fate of its European unit
Opel, where thousands of German jobs are on the line.
A person familiar with the
meeting said GM's board won't make any decision about the automaker, whose
brands also include Britain's Vauxhall, until Wednesday. The person spoke
anonymously because of the ongoing discussions.
Opel spokesman Frank Klaas
said Opel had no comment on the meeting, while GM Europe officials in Zurich,
Switzerland did not respond to requests for comment.
GM, which has repeatedly
delayed a decision, has two bids for Ruesselsheim-based Adam Opel GmbH to
choose from.
NY AG asks BofA for more
details on Merrill deal
NEW YORK (AP) -- Bank of
America Corp. and the New York Attorney General's office are sparring again
over the bank's acquisition of Merrill Lynch & Co.
Attorney General Andrew
Cuomo's office asked Bank of America to provide details by Monday about why it
didn't disclose certain information to shareholders ahead of the acquisition
that closed Jan. 1.
Cuomo's office, which has
been investigating the deal, said in a letter Tuesday that Bank of America
failed to let shareholders know about potential losses, write-downs and an
acceleration of bonus payments to Merrill Lynch employees. Bank of America also
failed to let shareholders know before they approved the deal in December that
senior executives considered backing out of the Merrill Lynch purchase.
FDA requires faster food
safety reporting
WASHINGTON (AP) -- Food
makers must alert government officials of potentially contaminated products
within 24 hours under a new rule designed to help federal regulators spot food
safety issues sooner.
The Food and Drug
Administration on Tuesday unveiled a new electronic database where
manufacturers must notify the government if they believe one of their products
is likely to cause sickness or death in people or animals.
Regulators said the database
will help the FDA prevent widespread illness from contaminated products and
direct inspectors to plants that pose a high safety concern.
The law creating the
database was passed in 2007, after Congress criticized the FDA for its handling
of safety problems with a range of foods and drugs.
Report: China August auto
sales 1.14 million units
BEIJING (AP) -- China's auto
sales surged 82 percent in August to 1.14 million units, but monthly sales
dropped to second place behind the United States after leading for much of the
year, data showed Tuesday.
Total sales for the first
eight months of 2009 rose to 8.33 million units, up nearly 30 percent from a
year earlier, the official Xinhua News Agency said, citing the state-sanctioned
China Association of Automobile Manufacturers.
Global automakers are
looking to China to drive revenues amid sluggish demand elsewhere.
August was the sixth month
that China's auto sales, boosted by tax cuts and subsidies as part of Beijing's
stimulus, exceeded 1.1 million units.
By The Associated Press
The Dow Jones industrial
average rose 56.07, or 0.6 percent, to 9,497.34.
The broader Standard &
Poor's 500 index rose 8.99, or 0.9 percent, to 1,025.39, and the Nasdaq
composite index rose 18.99, or 0.9 percent, to 2,037.77.
Benchmark crude for October
delivery gained $3.08 to settle at $71.10 a barrel on the New York Mercantile
Exchange.
In other Nymex trading,
gasoline for October delivery rose 5.26 cents to $1.8289 a gallon, and heating
oil gained 6.2 cents to $1.7825 a gallon. Natural gas rose 7.9 cents to $2.807
per 1,000 cubic feet.
In London, Brent crude was
up $2.89 to $69.42 on the ICE Futures exchange.