AP
Business Highlights
Friday October 31, 6:35 pm ET

Evidence of a recession grows higher

WASHINGTON (AP) -- Consumer spending dropped in September by the largest amount in four years, while incomes suffered because of Hurricane Ike.

The Commerce Department reported Friday that personal spending fell by 0.3 percent last month, the biggest decline since June of 2004. That followed flat readings in both July and August, contributing to the worst quarterly performance in 28 years.

Incomes showed a 0.2 percent rise in September, just half of the August increase, a slowdown that partly reflected the adverse effects of Hurricane Ike along the Gulf Coast.

In a separate report, the Labor Department said the wages and benefits of U.S. workers rose by a modest 0.7 percent in the third quarter, the same as in the first and second quarters.

JPMorgan expanding mortgage-modification program

NEW YORK (AP) -- JPMorgan Chase & Co. on Friday became the latest major bank to beef up its mortgage modification efforts as the government also considers a plan to help homeowners avoid foreclosure.

JPMorgan's expanded program aims to help avoid foreclosures on an estimated $70 billion in loans, which could help as many as 400,000 customers. The New York-based banking giant has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007.

JPMorgan will not put any loans into foreclosure as it implements the expanded program over the next 90 days.

Stocks advance to add to week's large gains

NEW YORK (AP) -- The stock market closed out a horrendous October, its worst month in 21 years, with a big advance Friday as more investors took chances on stocks turned into bargains by waves of intense selling. The advance -- which gave the market its first back-to-back gains in more than a month -- fed hopes that Wall Street has indeed found a bottom.

The Dow Jones industrials rose 144 points on the day but ended the month down 14.1 percent, while the broader Standard & Poor's 500 index lost 16.9 percent during October as the stock market fell victim to investors' anguish over frozen credit markets and what looked like an inevitable recession.

But the month did end on a far more upbeat note than anyone might have expected at the height of investors' despair just weeks ago.

Chevron 3Q profit soars, yet caution prevails

HOUSTON (AP) -- Chevron on Friday reported the largest quarterly profit in its 129-year corporate history, joining other oil companies reporting stunning third-quarter earnings gains.

Yet like its peers, Chevron also disclosed its crude production waned and said it will keep a close eye on capital spending.

The company earned $7.89 billion in the third quarter, more than double the $3.72 billion profit of a year earlier. Revenue shot up 43 percent to $78.87 billion from $55.2 billion.

Bernanke explores options for housing finance

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke said Friday that the housing finance system being constructed following the collapse of the current system will need better safeguards to allow it to function during times of stress.

Whatever shape the new system takes should ensure that the institutions that support the financing of home mortgages do not pose a systemic risk to our financial markets and the economy, Bernanke said in a speech prepared for a housing conference in Berkeley, Calif.

He outlined a number of possible ways to structure housing finance in the future, but did not state his own preferences.

ArvinMeritor will cut 1,250 jobs to lower costs

NEW YORK (AP) -- Auto parts supplier ArvinMeritor Inc. said Friday it will cut 1,250 jobs in an effort to slash its costs as it faces weak economies and slumping demand both at home and overseas.

ArvinMeritor said the cuts, which include 450 salaried and 800 hourly positions, represent about 7 percent of its worldwide staff. Most of reductions have already been completed, while the rest are in process, ArvinMeritor said.

The Troy, Mich.-based company's moves come on the heels of hourly and salaried work force reductions at fellow auto suppliers Tenneco Inc., Visteon Corp. and TRW Automotive Holdings Inc., who also blamed steep drops in U.S. and European vehicle production.

Ex-health care CEO convicted in $1.9B fraud case

COLUMBUS, Ohio (AP) -- A federal jury on Friday convicted the former CEO of a failed health-care financing company in a $1.9 billion fraud case that prosecutors likened to the Enron or WorldCom scandals.

Lance Poulsen, 65, founder of National Century Financial Enterprises, was accused of fabricating data, moving money between accounts to hide shortfalls and misleading investors who funded his business model.

He had been on trial for the past month on charges of securities fraud and money laundering. He was convicted on all 20 counts.

Oil notches record monthly drop on US downturn

NEW YORK (AP) -- Oil prices ended the week with a modest rally Friday but couldn't erase one ugly October: Crude capped its biggest monthly drop since futures trading began 25 years ago, weighed down as a deflated U.S. economy crushes demand for fuel.

Oil's huge collapse -- prices fell 32 percent for the month -- has stunned oil-producing countries while giving cash-strapped U.S. consumers a rare dose of relief. Pump prices have fallen by half since their summer peak above $4 a gallon -- a drop that's expected to result in a staggering $100 billion in annual savings for American households.

After trading lower most of the day, oil prices staged a late-session surge on the back of a Wall Street rally.

Treasury bill rates fall even as stocks rebound

NEW YORK (AP) -- Major stock indexes shot up more than 10 percent this week, but yields on Treasury bills fell anyway -- suggesting demand is still high for the ultimate safe investment.

While investors are relieved that the credit markets are functioning better than they were a few weeks ago, they're not about to rush into risky assets just yet.

The three-month Treasury bill yielded 0.43 percent Friday, up from 0.37 percent Thursday but well below 0.87 percent last Friday. The discount rate was also 0.43 percent.

Part of the decline is due to the Federal Reserve's decision to reduce the key interest rate by a half-point to 1 percent -- the key rate indirectly affects T-bill rates. But normally, the 3-month T-bill should be just below the target rate, not half its level.

Justice Department investigating American Express

NEW YORK (AP) -- American Express has received a request from the U.S. Department of Justice for information regarding the credit card company's policies related to merchant surcharging, according to a regulatory filing Friday.

The company said it received a Civil Investigative Demand on Oct. 14 from the Justice Department's antitrust division. The department can issue CIDs to anyone it believes may have information related to an investigation, the filing said. Receipt of such a request does not mean that a formal complaint will be filed.

American Express said it intends to cooperate with the department's request for documents and other information regarding the company's policies related to merchant surcharging and its "anti-steering" policies that prohibit merchants from discriminating against the American Express card in favor of other forms of payment.

Burger King 1Q profit rises 2 percent

NEW YORK (AP) -- A boost in sales worldwide helped Burger King post a 2 percent increase in its fiscal first-quarter profit on Friday, but higher food costs and other expenses still took a bite out of its earnings.

The nation's No. 2 hamburger chain reported increases in commodity, remodeling and acquisition startup costs, leading the chain to miss Wall Street's profit estimates by a penny per share.

Higher commodity costs have been a problem for virtually all restaurant chains, with the price of beef, chicken, cheese and cooking oil all rising.

By The Associated Press

The Dow rose 144.32, or 1.57 percent, to 9,325.01 after rising as much as 274 and falling 62.

Broader stock indicators also advanced. The S&P 500 index rose 14.66, or 1.54 percent, to 968.75, while the Nasdaq composite index rose 22.43, or 1.32 percent, to 1,720.95.

Light, sweet crude for December delivery rose $1.85 to settle at $67.81 a barrel on the New York Mercantile Exchange, after earlier falling as low as $63.12.

In other Nymex trading, gasoline futures fell 2.57 cents to settle at $1.4413 a gallon, while heating oil rose 2.22 cents to settle at $2.0842 a gallon. Natural gas for December delivery rose 3.19 cents to settle at $7.053 per 1,000 cubic feet.

In London, Brent crude fell $1.61 to settle at $65.32 a barrel on the ICE Futures exchange.