AP Business Highlights

On 6:01 pm EDT, Thursday October 29, 2009

Economy growing but recovery could be at risk

WASHINGTON (AP) -- The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. It's the strongest signal yet that the economy has entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended.

Going forward, many analysts expect the pace of the budding recovery to be plodding due to rising unemployment and continuing difficulties by both consumers and businesses to secure loans.

The much-awaited turnaround reported Thursday by the Commerce Department ended the streak of four straight quarters of contracting economic activity, the first time that's happened on records dating to 1947.

Investors rush back into stocks as economy grows

NEW YORK (AP) -- Stocks logged their best day in three months as investors rushed into the market on word the economy grew faster than expected during the summer.

The Dow Jones industrial average jumped 200 points to 9,962.58 Thursday to recoup most of its losses for the week, while demand for safe-haven holdings like Treasurys wilted. It was the best day for the Dow since July 15.

Coming on the 80th anniversary of the stock market crash that triggered the Great Depression, the Commerce Department's report that gross domestic product rose was the best indication yet that the longest recession since then has ended.

First-time jobless claims drop less than expected

WASHINGTON (AP) -- The number of people claiming jobless benefits for the first time dropped less than expected last week, evidence that the labor market remains weak even as the economy is recovering.

The Labor Department said Thursday its tally of newly laid-off workers seeking unemployment insurance fell by 1,000 to a seasonally adjusted 530,000. Analysts expected a steeper drop to 521,000, according to a survey by Thomson Reuters.

Initial claims need to fall below about 450,000 to signal that employers are actually adding jobs, several economists said. Still, many saw some positive signs in the report.

Consumers returning to big brands

Signs of an improving economy might be in your kitchen or bathroom cupboards.

Consumers are showing a willingness to pay a little more to get Colgate toothpaste, Kellogg's Frosted Flakes and Gillette Fusion shavers. That's good news for the economy and the multibillion-dollar companies that make those products and have been battling to keep shoppers from trading down to store brands to save money.

Procter & Gamble Co., Colgate-Palmolive Co. and Kellogg Co. all gave upbeat earnings reports and even stronger outlooks for next year on Thursday, a day that also saw the announcement that U.S. gross domestic product rose for the first time in a year.

No boom time for Big Oil, but production up again

NEW YORK (AP) -- Oil companies have begun to pump more petroleum and bring in more profits as they recover from an otherwise miserable year. None of the world's biggest producers, however, see a quick return to boom times of last year.

America's thirst for fossil fuels dropped considerably during the recession and it hasn't come close to recovering fully. Throughout most of 2009, storage houses have been crammed with oil and gas.

Exxon Mobil Corp. said Thursday that net income slumped 68 percent to $4.73 billion, or 98 cents per share, when compared with the same July-September period in 2008, the most lucrative ever for the oil industry.

Last year, crude spiked to near $150 a barrel, helping Exxon break its own profit records.

Crude prices near $80 again; retail gas up again

Oil prices rose sharply Thursday on new signs that the U.S. economy has rebounded, though crude levels globally continue to grow and there are few signs that actual demand for it has increased significantly.

The dollar fell once again, a factor throughout the year as crude hovers around $80 per barrel and a big reason why motorists have watched gasoline prices rise steadily for more than two weeks.

The average retail price for a gallon of gasoline is now less than a penny below highs reached during the U.S. driving season.

Benchmark crude for December delivery rose $2.41 to settle at $79.87 a barrel on the New York Mercantile Exchange.

Banks cut emergency borrowing from Federal Reserve

WASHINGTON (AP) -- Banks trimmed their borrowing from the Federal Reserve's emergency lending program over the past week, evidence that some credit problems are easing as the economy recovers.

The Fed said Thursday that commercial banks averaged $22.6 billion in daily borrowing over the week that ended Wednesday. That's down from $23.8 billion in the week ended Oct. 21, and much lower than $112 billion a year ago at the height of the financial crisis.

The identities of the financial institutions are not released. They pay just 0.50 percent in interest for the emergency, overnight loans.

Geithner: Legislation won't lead to more bailouts

WASHINGTON (AP) -- Treasury Secretary Timothy Geithner said Thursday that giving the government the power to dismantle mammoth financial firms like Lehman Brothers will prevent future bailouts.

In a House hearing, Geithner refuted angry claims by Republicans and at least one Democrat that the proposal would create a category of firms deemed so big and influential to the broader economy that they wouldn't be allowed to fail.

The Obama administration and Rep. Barney Frank, the panel's chairman, want legislation that would enable federal regulators to identify and monitor big financial firms and step in to wind them down before they collapse.

Motorola's shares surge with unexpected profit

NEW YORK (AP) -- The turnaround effort long sought at Motorola Inc. finally could be on track.

The maker of communications equipment reported an unexpected quarterly profit Thursday as losses in its mobile phone division narrowed. The company also forecast stronger-than-anticipated earnings for last three months of the year, sending its shares up 11 percent.

Though sales continued to fall, the results marked Motorola's second straight quarterly profit after heavy losses and shrinking market share in the cell phone business. Aggressive cost cutting, including 8,000 layoffs this year, have helped bolster earnings.

Receiver sets $1.5B target for Stanford investors

DALLAS (AP) -- The lawyer tracking down money lost in what authorities say was a massive Ponzi scheme run by R. Allen Stanford says he hopes to gain control of more than $1.5 billion that would be then returned to fleeced investors.

Court-appointed receiver Ralph Janvey filed a report in federal court in Dallas late Wednesday outlining his plan to go after the $1.5 billion and provide allegedly defrauded Stanford investors a return of as much as 20 cents on the dollar.

But John Little, a lawyer appointed to represent investors, said Janvey's recovery goal is "something of a fantasy" and that investors should prepare to get back as little as 2 cents on the dollar.

By The Associated Press

The Dow Jones industrial average rose 199.89, or 2.1 percent, to 9,962.58.

The broader Standard & Poor's 500 index rose 23.48, or 2.3 percent, to 1,066.11, while the Nasdaq composite index rose 37.94, or 1.8 percent, to 2,097.55.

Benchmark crude for December delivery rose $2.41 to settle at $79.87 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil rose 5.73 cents to settle at $2.0542 a gallon. Gasoline for November delivery added 3.26 cents to settle at $2.019 a gallon. Natural gas for December delivery gave up less than a penny to settle at $5.062 per 1,000 cubic feet.

In London, Brent crude for December delivery rose $2.18 to settle at $78.04 on the ICE Futures exchange.