AP
Business Highlights
Monday October 27, 6:29 pm ET

First batch of bailout money for banks moving soon

WASHINGTON (AP) -- The government prepared Monday to move the first batch of bailout money to banks as fretful world markets plunged again. Wall Street ended with a big drop at the closing bell, sending the Dow Jones industrials to their lowest close since the financial meltdown began.

The Treasury Department said it would start moving $125 billion to nine major banks this week by buying ownership stakes, the first big transfer since the $700 billion bailout package was passed early this month.

Assistant Treasury Secretary David Nason said the infusion would go to the largest banks in the nation, including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.

A group of smaller but significant regional banks, including Capital One Financial and SunTrust Banks, began announcing their own preliminary deals with Treasury for another $125 billion. That money should be released as soon as paperwork is finished.

Stocks end lower as financials give up early gains

NEW YORK (AP) -- Wall Street has ended another highly volatile session with a big last-minute loss as the market's stubborn worries about a protracted economic downturn and tight credit erased budding optimism about a housing sector recovery.

The Dow Jones industrial average skidded 203 points to its lowest close in 5 1/2 years, with almost all the decline coming in the last 10 minutes of the session.

The Street's back-and-forth moves were typical for a turbulent market that has seen many recent rallies evaporate -- particularly as hedge and mutual funds sell off even strong assets so they can meet investors' demands for their money back. These forced sell-offs tend to happen late in the day, when the funds figure out how much cash they'll need to meet redemptions.

September new home sales rise by 2.7 percent

Sales of new homes unexpectedly rose last month, as many homebuyers seized on builder discounts and rushed to take advantage of expiring down payment assistance programs and other incentives.

Economists had expected sales of new, single-family homes to drop from August levels, but instead they rose 2.7 percent in September to a seasonally adjusted annual rate of 464,000 homes, the Commerce Department reported Monday.

Many homebuilders had ramped up incentives in August and September to capitalize on the end of seller-funded down payment assistance programs on Oct. 1. Builders also likely benefited from another factor motivating homebuilders: an increase from 3 percent to 3.5 percent in the down payment required to qualify for a Federal Housing Administration-insured loan, which also took effect Oct. 1.

Wal-Mart scaling back US namesake store growth

NEW YORK (AP) -- Wal-Mart Stores Inc., with its emphasis on low prices and improved merchandise, is stealing market share from competitors and is well-positioned for the holiday season, CEO and President Lee Scott told investors Monday.

The company, nevertheless, is scaling back the growth of its namesake stores in the U.S. and focusing on remodeling existing locations as it responds to a tough consumer spending climate.

Little relief in credit as market awaits rate cut

NEW YORK (AP) -- The still-cinched credit markets are anticipating a half-point interest rate cut from the Federal Reserve this week, but investors are worried it won't be enough to quickly revive the economy.

The Fed has been slashing rates and taking unprecedented action to get market participants back in the lending mood, including launching a facility Monday to buy the short-term corporate debt known as commercial paper.

But the central bank has already reduced its key rate -- the target federal funds rate -- to 1.5 percent. After the Fed's meeting Wednesday, the market predicts it will be down to 1 percent.

Humana reports sharply lower 3Q earnings

LOUISVILLE, Ky. (AP) -- Humana Inc. said Monday its third-quarter profit tumbled nearly 40 percent, dragged down by a bitter dose of investment losses and an expected decline in premiums from its Medicare prescription drug plans.

The health insurer also lowered its earnings projections for the fourth quarter and full year, but forecast sharply higher earnings next year.

Investors were less than pleased, however, sending shares tumbling $5.47, or 15.1 percent, to close at $30.80.

In the three months ended Sept. 30, Humana earned $183 million, or $1.09 per share, down from $302.4 million, or $1.78 per share, in the year-ago period. Third-quarter results included a loss of $108.3 million, or 40 cents per share, related to a downturn in the company's investment and securities lending porfolios and the sale of distressed financial institution securities.

Oil prices fall as investors eye weak demand

HOUSTON (AP) -- Oil prices waffled Monday, touching their lowest levels in nearly a year and a half but also showing some strength after a surprisingly upbeat home sales report gave investors a glimmer of hope that the housing market might rebound and help ease the economy's many problems.

Crude finally ended the day falling less than a dollar.

Oil dropped as low at $61.30 a barrel in early trading before rising in response to the Commerce Department report that sales of new single-family homes rose by 2.7 percent in September to a seasonally adjusted annual rate of 464,000 homes. Economists had expected sales would drop from August.

Verizon 3Q earnings up 31 percent

NEW YORK (AP) -- Verizon Communications Inc. said Monday earnings rose 31 percent in the third quarter as wireless did better than expected, while its traditional phone business continued to decline.

The country's second largest telecommunications company, after AT&T Inc., earned $1.67 billion, or 59 cents per share, up from $1.27 billion, or 44 cents a share, a year ago.

Revenue rose 4.1 percent to $24.7 billion.

Excluding charges for job cuts and merger costs, Verizon earned 66 cents per share, matching the average estimate of analysts polled by Thomson Reuters. They were expecting $24.52 billion in revenue.

Newspapers see sharp circulation drop of 4.6 pct

NEW YORK (AP) -- Circulation at the nation's daily newspapers is falling faster than anticipated this year as readers continue their migration to the Internet and papers narrow their distribution to cut costs.

The development, which compounds the fiscal challenge of plummeting advertising revenue, was revealed Monday when the Audit Bureau of Circulations released sales totals reported by newspapers for April through September.

Combined weekday circulation of all 507 papers that reported circulation totals this year and last averaged 38,165,848 in the six months ending in September, 4.6 percent below 40,022,356 a year earlier. The aggregate drop was only 2.6 percent in the September 2007 period, compared with September 2006.

Sunday circulation fell faster than daily circulation.

Arch Coal's profits up; company lowers forecast

T. LOUIS (AP) -- Coal-producing Arch Coal Inc. said Monday its third-quarter earnings more than tripled, beating Wall Street's expectations. But the miner lowered its earnings outlook for the year, citing near-term softening of coal demand.

Yet even with the weakening global economic backdrop, Arch's chairman and chief executive told analysts the St. Louis-based company remained on pace for its best financial showing ever.

Arch, one of the world's biggest coal producers, reported net income of $97.8 million, or 68 cents per share, compared with $27.2 million, or 19 cents per share, a year ago. Revenue during the July-through-September period rose to $769.5 million from $599.2 million.

By The Associated Press

The Dow fell 203.18, or 2.42 percent, to 8,175.77 after earlier rising by as many as 220 points. Even before the late-day selloff, it was an extremely volatile day for Wall Street -- the Dow crossed between positive and negative territory 60 times during the session.

Broader stock indicators showed more sizable losses. The Standard & Poor's 500 index fell 27.85, or 3.18 percent, to 848.92, and the Nasdaq composite index fell 46.13, or 2.97 percent, to 1,505.90.

Light, sweet crude for December delivery fell 93 cents to settle $63.22 a barrel in trading on the New York Mercantile Exchange after dropping to its lowest point since May 2007. At its low of $61.30, crude was down 58.4 percent from its record of $147.27 on July 11.

In other Nymex trading, November gasoline futures fell 0.1 cent to $1.4779 a gallon, while heating oil slipped 3.29 cents to $1.9144 a gallon. Natural gas for November delivery fell 11.8 cents to $6.121 per 1,000 cubic feet.

In London, November Brent crude fell 64 cents to settle at $61.41 a barrel on the ICE Futures exchange.