AP
Business Highlights
Tuesday October 21, 6:45 pm ET

Government moving to help break credit logjam

WASHINGTON (AP) -- The Federal Reserve on Tuesday introduced a new program to finance the purchases of assets from money market mutual funds as the government continued to search for ways to battle a severe credit crisis.

JPMorgan Chase & Co. was chosen to run five special funds that will buy certificates of deposit, bank notes and commercial paper from money market mutual funds. The Fed will lend up to $540 billion to the five funds to support the effort.

Fed officials said that about $500 billion had flowed out of prime money-market funds since August as investors began to worry about their ability to redeem their investments.

Stocks end lower amid mixed earnings reports

NEW YORK (AP) -- Wall Street retreated Tuesday after forecasts from DuPont, Sun Microsystems and Texas Instruments raised fears that companies' outlooks for the fourth quarter and beyond could indeed signal a severe economic downturn. After logging sharp gains the previous session, the Dow Jones industrial average fell 2.5 percent, while the Nasdaq composite index lost more than 4 percent following a weak showing by technology names.

Some pullback was to be expected after the Dow shot up 413 points on Monday. But investors poring over a mix of companies' third-quarter reports found enough unsettling outlooks to set off heavy selling.

Yahoo firing 1,500 workers; 3Q profit falls 64 pct

SAN FRANCISCO (AP) -- Yahoo Inc. will fire at least 1,500 workers to cope with a crumbling economy that dented its third-quarter profit and turned up the heat on the Internet company's management as investors stew over a missed opportunity to sell to Microsoft Corp. for $47.5 billion.

The purge outlined Tuesday represents a 10 percent reduction in Yahoo's payroll of about 15,000 employees. It's the second time in nine months that Yahoo has resorted to mass layoffs in what so far has been an ineffectual effort to rebound from a financial funk that has left its stock price near a 5 1/2-year low.

Things got worse in the third quarter as Yahoo earned $54.3 million, or 4 cents per share. That was a plunge of 64 percent from $151.3 million, or 11 cents per share, at the same time last year.

Apple's profit up 26 percent on iPhone boom

Apple Inc. said its profit jumped 26 percent in its fiscal fourth quarter as the newest iPhone 3G outsold the market-leading BlackBerry from Research in Motion Ltd.

For the three months ended Sept. 27, Apple's profit climbed to $1.14 billion, or $1.26 per share, from $904 million, or $1.01 per share in the same period last year.

Sales jumped 27 percent to $7.9 billion from $6.22 billion in the year-ago quarter.

Cupertino, Calif.-based Apple's profit topped Wall Street's expectations, but sales missed.

On a conference call with analysts, Chief Executive Steve Jobs addressed concerns that economic weakness will eat into Apple's business through the holidays and beyond.

Kerkorian cuts his losses on Ford Motor stake

NEW YORK (AP) -- Billionaire Kirk Kerkorian's investment firm said Tuesday it sold part of its stake in Ford Motor Co., taking millions of dollars in losses on the investment and marking an abrupt about-face from the optimistic expectations he had for the automaker just four months ago.

But while the move doesn't bode well for Ford, industry observers said it may be more of a personal finance decision for Kerkorian.

Tracinda Corp., which sold the 7.3 million Ford shares at an average price of $2.43, added that it plans to further cut what is now a 6.1 percent stake in the No. 2 U.S.-based automaker, for a potential total loss of more than half a billion dollars. The company said it may sell its remaining 133.5 million shares depending on market conditions.

Pfizer, Schering-Plough beat modest expectations

TRENTON, N.J. (AP) -- Pfizer Inc. and Schering-Plough Corp. both managed to beat analysts' minimal expectations Tuesday, largely because of revenue buoyed by favorable currency exchange rates and growing sales overseas making up for slumping sales at home.

The two drugmakers also posted lower third-quarter sales of their key franchise, cholesterol drugs, which are becoming less of the cash cows they once were as more health plans and patients prefer far less-expensive generic versions of Zocor.

Despite flat sales, Pfizer's profit tripled, mainly because a huge charge depressed last year's results. But it reduced its 2008 earnings forecast -- to a range of $1.61 to $1.71, from $1.73 to $1.88 -- even as it raised the lower end of its revenue forecast.

Caterpillar's 3Q falls 6 pct, hurt by higher costs

PITTSBURGH (AP) -- Caterpillar Inc.'s third-quarter profit slipped 6 percent, as the world's largest maker of construction and mining equipment said Tuesday that higher steel and freight costs offset record global sales.

The company, which noted "recessionary conditions" in North America, forecast essentially flat sales for 2009.

Caterpillar has broad geographic reach and a range of products that tap into many global industries, making it a bellwether for the world economy. While the Peoria, Ill.-based company backed its earnings forecast for this year, its broader outlook for 2009 was much cloudier.

Oil falls below $71 as dollar gains against euro

NEW YORK (AP) -- Oil prices slumped back below $71 a barrel Tuesday as a stronger dollar overshadowed expectations of a sizable OPEC output cut and led investors to shed commodities bought as an inflation hedge.

At the pump, consumers got another price cut as a gallon of regular gasoline lost 3.4 cents overnight to a new national average of $2.89, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices have fallen 30 percent from their July 11 peak of $4.11 a gallon and are quickly closing in on year-ago levels.

Regional banks 3Q reports show ongoing credit woes

NEW YORK (AP) -- A bevy of regional banks reported worse-than-expected third-quarter results on Tuesday, burdened by investment losses and higher credit costs -- a stark indicator of more loan troubles ahead.

Still, analysts were able to find a silver lining in the reports, noting that several banks will likely benefit from the government's recent initiatives to aid ailing banks.

Ohio banks KeyCorp, National City Corp. and Fifth Third Bancorp all reported sizable losses for the quarter on Tuesday, while U.S. Bancorp, Regions Financial Corp., BancorpSouth Inc. and M&T Bank Corp. reported steep declines in profit.

UAL records $779 million 3Q loss on fuel

MINNEAPOLIS (AP) -- United parent UAL reported a $779 million third-quarter loss on Tuesday, by far the biggest airline loss of the season. In the same quarter it suffered from both expensive jet fuel and accounting charges due to falling oil prices.

The nation's second-biggest carrier said capacity cuts and charges for things like checking luggage should help make it profitable again.

Fees for things like luggage are here to stay, said John Tague, United's chief operating officer. He said customers have been frustrated as they get used to that, but the business has to be run in a way to make a profit.

By The Associated Press

The Dow fell 231.77, or 2.50 percent, to 9,033.66.

Broader indexes also declined. The Standard & Poor's 500 index fell 30.35, or 3.08 percent, to 955.05. The Nasdaq composite index shed 73.35, or 4.14 percent, to 1,696.68.

Light, sweet crude for November delivery fell $3.36 to settle at $70.89 on the New York Mercantile Exchange. On Monday, the contract rose $2.40 to settle at $74.25 a barrel.

In other Nymex trading, heating oil futures fell 3.24 cents to settle at $2.1975 a gallon, while gasoline prices lost 2.82 cents to settle at $1.6919 a gallon. Natural gas for December delivery rose 10.1 cents to settle at $7.312 per 1,000 cubic feet.

In London, December Brent crude fell $2.31 to settle at $69.72 a barrel on the ICE Futures exchange.