AP
Business Highlights
Wednesday October 1, 6:45 pm ET

Bailout heads for Senate win; House foes soften

WASHINGTON (AP) -- After one spectacular failure, the $700 billion financial industry bailout found a second life Wednesday, speeding toward passage in the Senate and gaining ground in the House where conservative opposition seemed to soften.

Senators loaded the economic rescue bill with tax breaks and other sweeteners for the right and left, hoping to secure approval in the House by Friday, just days after lawmakers there stunningly rejected an earlier version and sent markets plunging around the globe.

Tight credit, financial chaos slam auto sales

DETROIT (AP) -- Tight credit, economic worries and high gasoline prices combined to crush the sales of U.S. and foreign automakers alike last month, with Ford, Toyota, Chrysler and Nissan all posting drops of more than 30 percent.

Ford Motor Co.'s 34 percent decline marked its worst sales month this year, and the results across the industry are a strong indication that the financial turmoil that has swelled since mid-September is pushing the auto industry deeper into its trough.

General Motors Corp., buoyed by its offer of employee pricing on most of its vehicles, saw U.S. sales drop a less severe 16 percent, boosting the automaker's market share to its best level all year.

Lending remains tight as clock ticks on bailout

NEW YORK -- The credit markets remained choked Wednesday, keeping key lending rates and demand for Treasurys at lofty levels as investors awaited Congress' decision on the U.S. financial rescue plan.

Because of the recent drought in credit market activity, more large companies have been having trouble getting loans at rates they can tolerate -- and as a result, they're altering their business plans.

Investors, particularly money market mutual funds, have been rushing for the safety of Treasurys since the collapse of Lehman Brothers Holdings Inc. and the takeover of the world's largest insurer, American International Group Inc. in September.

Buffett's company to buy $3B of GE preferred stock

OMAHA, Neb. (AP) -- Warren Buffett's Berkshire Hathaway Inc. is investing $3 billion in General Electric Co., a huge vote of confidence for an iconic American company battered by the credit crisis.

It's the second time in as many weeks that Berkshire Hathaway has moved to shore up a company long associated with ironclad financial health. In late September, Buffett invested at least $5 billion in Goldman Sachs.

Buffett is buying $3 billion of General Electric Co. preferred shares. The perpetual preferred stock carries a dividend of 10 percent, similar to the terms Buffett struck with Goldman Sachs.

GE, based in Fairfield, Conn., also plans to sell at least $12 billion worth of common stock to the public.

Stocks end relatively calm day with modest loss

NEW YORK (AP) -- The financial markets saw some relative calm Wednesday as investors uneasily awaited a Senate vote on the banking bailout plan, with Wall Street falling only moderately and the credit markets still showing signs of strain.

The Dow Jones industrials zigzagged during the session, losing more than 200 points in early trading but closing down about 20 -- far from the huge swings the blue chips saw during the first two sessions of the week.

Many investors were reluctant to make any major moves before the vote expected Wednesday night on a revised version of the plan defeated earlier this week by the House.

Manufacturing shrinks to lowest level since 2001

NEW YORK (AP) -- A measure of U.S. manufacturing activity contracted more than expected last month, hitting the lowest level since the aftermath of the Sept. 11 attacks, as new orders slowed dramatically.

The Institute for Supply Management on Wednesday released a September reading of 43.5, the lowest level since October 2001. The reading dropped from 49.9 in August, the largest one-month decline since January, 1984, when it fell to 60.5 from 69.9.

A reading above 50 signals growth.

Report: ImClone's secret suitor is Eli Lilly

INDIANAPOLIS (AP) -- Drugmaker Eli Lilly & Co. reportedly is the secret suitor that's been courting ImClone Systems Inc. and is offering approximately $6.1 billion for the biotech company.

Indianapolis-based Lilly is in advanced talks about the deal, the Wall Street Journal reported Wednesday, citing people familiar with the matter. The newspaper said Lilly is the unnamed large pharmaceutical company that ImClone's chairman, Carl Icahn, has said offered three weeks ago to acquire the company for about $70 a share, pending a review of its books.

ImClone shares shot higher on the news, rising $2.95, or 4.7 percent, to $65.35, and an additional 20 cents in after-hours trading.

Candy with chemical in Chinese milk found in Conn.

HARTFORD, Conn. (AP) -- An industrial chemical blamed for sickening thousands of infants in China has been found in candy on American shelves.

Connecticut consumer protection Commissioner Jerry Farrell Jr. said Wednesday that tests on White Rabbit Creamy Candy found melamine.

The vanilla-flavored candy has been found in stores in Connecticut. It was imported from China and sold primarily at Asian markets, Farrell said.

Oil down on stronger US crude, gasoline supplies

NEW YORK (AP) -- Oil prices dipped below $100 a barrel Wednesday as ample increases in U.S. crude and gasoline supplies added to mounting evidence that a rough economy is forcing Americans to drive less.

Light, sweet crude for November delivery fell $2.11 to settle at $98.53 a barrel on the New York Mercantile Exchange. Prices traded erratically, however, rising as high as $102.84 overnight and falling to as low as $95.95.

Gov't launches mortgage aid program

WASHINGTON (AP) -- The government kicked off a program Wednesday that aims to prevent foreclosures by letting an estimated 400,000 troubled homeowners swap their mortgages for more affordable loans.

Lenders, rather than borrowers, will decide whether to participate in the program, which requires them to take a loss on the initial loan. The $300 billion, three-year program is designed to help borrowers who owe more on their loans than their homes are worth.

To qualify, borrowers must be spending more than 31 percent of their income on mortgage payments. Loans made this year are excluded, except for those completed on Jan 1. Borrowers must have made six months of payments on their loans.

Florida sues Merck to recover money spent on Vioxx

TRENTON, N.J. (AP) -- Florida has joined eight other states in suing drugmaker Merck & Co. over what the state alleges was deceptive marketing of its former prescription painkiller Vioxx.

In a lawsuit brought by Florida Attorney General Bill McCollum, the state is seeking restitution for all money spent by state health programs on Vioxx, plus interest.

Florida's Medicaid program alone spent more than $80 million on Vioxx, once a blockbuster arthritis treatment, between 1999 and 2004.

By The Associated Press

The Dow fell 19.59, or 0.18 percent, to 10,831.07. The blue chip index fell 778 points Monday, its steepest drop in years, after lawmakers rejected the bailout plan, then rallied 485 points Tuesday on hopes party leaders would find the votes to pass the measure.

Broader stock indicators were narrowly lower. The Standard & Poor's 500 index fell 5.30, or 0.45 percent, to 1,161.06, and the Nasdaq composite index fell 22.48, or 1.07 percent, to 2,069.40.

Light, sweet crude for November delivery fell $2.11 to settle at $98.53 a barrel on the New York Mercantile Exchange. Prices traded erratically, however, rising as high as $102.84 overnight and falling to as low as $95.95.

In other Nymex trading, heating oil futures fell 4.78 cents to settle at $2.8469 a gallon, while gasoline futures lost 9.77 cents to settle at $2.36 a gallon. Natural gas futures rose 29 cents to settle at $7.728 per 1,000 cubic feet.

In London, November Brent crude fell $2.84 to settle at $95.33 a barrel on the ICE Futures exchange.