AP
Business Highlights
Thursday October 2, 6:18 pm ET

Stocks decline on unemployment, factory reports

NEW YORK (AP) -- Pessimism about a protracted economic downturn washed over the financial markets Thursday, sending stocks plunging and further tightening the credit markets.

Reports on declining factory orders and a seven-year high in jobless claims stoked fears that the government's financial rescue plan won't ward off a recession, and the Dow Jones industrials skidded nearly 350 points.

The main concern is that the $700 billion bailout plan won't be enough to stimulate growth, and economic reports delivered Thursday show that the U.S. continues to struggle.

Tighter credit begins to hit manufacturing, jobs

WASHINGTON (AP) -- Tight credit is taking a toll on manufacturing and jobs.

More people than expected lined up at the unemployment lines last week and orders to U.S. factories plunged by the largest amount in two years, according to government data released Thursday.

New applications for unemployment benefits rose slightly last week to a seven-year high due to a weakening economy and the impact of Hurricanes Ike and Gustav, the Labor Department said Thursday.

Meanwhile, the Commerce Department said Thursday that factory orders in August plunged by 4 percent compared to July, a much steeper decline than the 2.5 percent drop analysts expected and the biggest setback since a 4.8 percent plunge in October 2006.

Bailout hopes rise as more 'no' votes switch

WASHINGTON (AP) -- Desperate to avoid another market-crushing defeat, House leaders won key converts Thursday to the $700 billion financial industry bailout on the eve of a make-or-break second vote.

President Bush and congressional leaders lobbied furiously for the dozen or so supporters they'd need to reverse Monday's stunning setback and approve a massive rescue plan designed to stave off national economic disaster.

Anything but reassured, investors sent the Dow Jones industrials plunging another 348 points, suggesting Wall Street is expecting tougher economic times even if the measure is rushed into law.

Financial crisis moves from Wall St. to the mall

NEW YORK (AP) -- Alarmed by the financial meltdown, stores nationwide are slapping sale signs on everything from fall sweaters to furniture -- frantically trying to attract shoppers who are cutting back.

Some analysts were already expecting the weakest sales growth for the holiday season in 24 years. With uncertainty roiling the banking system and a teetering economy, retailers' positions now seem bleaker.

At malls, shopping districts and on the Web, the discounts are growing desperate.

Financial companies borrow record amount from Fed

WASHINGTON (AP) -- Banks and investment firms borrowed in record amounts from the Federal Reserve's emergency lending facility over the past week, providing fresh evidence of the credit stresses squeezing the country.

The Fed's report released Thursday said commercial banks averaged a record $44.5 billion in daily borrowing over the past week. That compared with a daily average of $39.36 billion in the previous week.

On Wednesday alone, banks borrowed a record $49.5 billion, surpassing the previous high that came one day after the Sept. 11, 2001, terror attacks.

For the week ending Wednesday, investment firms drew a record $147.7 billion.

Oil falls below $94 on falling global demand

NEW YORK (AP) -- Oil prices closed at their lowest level in two weeks Thursday, tumbling below $94 a barrel on doubts that a revamped financial bailout plan will be enough to avoid a protracted economic slump and revive dwindling U.S. energy demand.

The declines came a day after the Senate overwhelmingly approved the rescue package. The bill now goes to the House of Representatives for an expected vote Friday.

Even if the plan wins approval, oil market traders are skeptical that it will steady the teetering U.S. economy and reverse flagging demand for energy in the world's largest consumer.

Despite crisis, ECB holds interest rates steady

FRANKFURT, Germany (AP) -- The European Central Bank left interest rates unchanged Thursday, even as bank President Jean-Claude Trichet warned of slowing growth amid high inflation and the spreading financial crisis.

Trichet said the bank's governing council decided unanimously to leave its refinancing rate at 4.25 percent -- after weighing their choices.

Trichet said the turmoil that has plagued markets since last year and exploded last month with the meltdown on Wall Street figured prominently in the bank's considerations.

Credit tightens as rescue bill heads back to House

NEW YORK (AP) -- The Senate's endorsement of the $700 billion financial bailout plan failed to relax the credit markets Thursday, with investors worried that the passage of the bill may not prevent the economy from sinking into a prolonged recession.

The market for loans has seized up in recent weeks, sidelining companies and municipalities in need of short-term cash.

Marriott books lower 3Q profit, expects tough 2009

BETHESDA, Md. (AP) -- Hotel company Marriott International Inc. said Thursday that its third-quarter profit dropped 28 percent, compared with 2007, and it warned investors about deteriorating conditions for 2009 amid the ongoing financial crisis.

Marriott said its revenue per available room declined in North America and timeshare sales dried up amid the tight credit market and cutbacks in business and consumer spending.

Revenue per available room, or revpar, is considered a key gauge of a hotelier's performance.

Execs at Paris auto show brace for industry storm

PARIS (AP) -- Auto executives agree: their industry is headed into a giant storm.

The clouds of global economic turmoil cast a pall over the opening of the Paris Motor Show on Thursday.

General Motors Corp. Chief Operating Officer Fritz Henderson said the U.S. hasn't seen such a slump in auto sales in two decades and predicted "chaos" if U.S. lawmakers don't approve a $700 billion financial bailout plan.

Ford Motor Co.'s CEO for Europe, John Fleming, said he is bracing for a difficult end to 2008 as declining housing markets and tightening credit take their toll.

And Carlos Ghosn, CEO of French carmaker Renault SA, said the global auto industry could remain in a funk for two years.

By The Associated Press

The Dow fell 348.22, or 3.22 percent, to 10,482.85. The blue chips plunged nearly 778 points Monday, logged a partial rebound Tuesday and finished modestly lower Wednesday; still the Dow has had triple-digit swings every day this week, having fallen more than 200 during Wednesday's trading.

Broader stock indicators also fell sharply Thursday. The Standard & Poor's 500 index fell 46.78, or 4.03 percent, to 1,114.28, and the Nasdaq composite index fell 92.68, or 4.48 percent, to 1,976.72.

Light, sweet crude for November delivery fell $4.56 to settle at $93.97 a barrel on the New York Mercantile Exchange. It was crude's lowest settlement since Sept. 16. Prices earlier jumped as high as $100.37 but eased back later as traders digested the details of the revised bailout package.

In other Nymex trading, heating oil futures fell 13.74 cents to settle at $2.7095 a gallon, while gasoline futures fell 10.5 cents to settle at $2.255 a gallon. Natural gas futures lost 24.7 cents to settle at $7.481 per 1,000 cubic feet.

In London, November Brent crude fell $4.77 to settle at $90.56 a barrel on the ICE Futures exchange.