Hints of inflation, but experts aren't worried
WASHINGTON (AP) -- The
economy flashed a warning sign of inflation Tuesday, but the recovery is so
fragile that experts say a doomsday scenario of runaway prices and higher
interest rates is a long way off, if it happens at all.
While the Federal Reserve
is all but certain to take up the prospect of inflation at its meeting this
week, no one expects policymakers to raise interest rates anytime soon to fight
the threat. Rates are at record lows to nudge the recovery along.
Even if the Fed did decide
to raise rates later, there would be risks: Borrowing money would be more
expensive, squeezing corporate profits, and stock prices could fall -- all of
it threatening to derail the recovery.
Spike in wholesale
inflation sends stocks lower
NEW YORK (AP) -- The stock
market fell for the first time in five days and Treasurys slipped after a jump
in inflation stoked concerns that the Federal Reserve would be forced to raise
interest rates.
Stocks extended their slide
late Tuesday after General Electric Co. forecast that revenue and earnings
would be largely flat in 2010. Major stocks indexes fell 0.5 percent from
14-month highs, including the Dow Jones industrial average, which lost 49
points to 10,452.00.
Trading was subdued as Fed
policymakers gathered for a two-day meeting on interest rates. The Fed isn't
expected to raise rates from their record low level, but the day's economic
reports brought reminders that the central bank could be forced to raise rates
sooner than expected to keep inflation at bay.
Best Buy 3Q profit up, but
co sees slimmer margins
NEW YORK (AP) -- Customers
snapping up electronics and gift cards for the holidays boosted Best Buy's
third-quarter profit, but the nation's largest electronics retailer said
Tuesday that shoppers are focused on prices, particularly of TVs and computers.
Best Buy predicted
consumers will stay that way in the fourth quarter, squeezing its profit
margin. Still, Best Buy Inc. raised its annual profit and revenue forecasts and
said both traffic and shoppers' average spending rose from a year ago.
Sales at Best Buy stores
that have been open at least one year -- a key retail measure -- rose more than
10 percent Thanksgiving weekend, CEO Brian Dunn said in a conference call with
analysts. Half the gain came from higher traffic and half from customers
spending more.
Judge tosses case against 2
former Broadcom execs
SANTA ANA, Calif. (AP) -- A
federal judge Tuesday dismissed fraud and conspiracy charges in the stock-option
backdating case against Broadcom Corp. co-founder Henry T. Nicholas III and
former Chief Financial Officer William Ruehle because of prosecutorial
misconduct.
U.S. District Judge Cormac
J. Carney also asked prosecutors to explain why a separate drug indictment
against Nicholas should not also be thrown out, and he dismissed a civil case
the Securities and Exchange Commission filed against four Broadcom executives.
The stunning move came
after Carney last week vacated a guilty plea by Broadcom co-founder Henry
Samueli in the same case after hearing him testify for two days as a defense
witness for Ruehle under a grant of immunity.
Boeing's 787 jetliner makes
first test flight
EVERETT, Wash. (AP) --
Boeing's new 787 jetliner finally got airborne Tuesday, the long-delayed
inaugural flight of the world's first commercial plane constructed with half
its components made from lightweight composite materials.
The sleek jet lifted off
from Everett's Paine Field on a flight over Washington state, beginning an
extensive testing program needed to obtain Federal Aviation Administration
certification.
The two-member crew
performed a variety of basic system checks before landing at Seattle's Boeing
Field about three hours later. Deteriorating weather brought the plane back to
earth about an hour earlier than planned, but company spokeswoman Lori Gunter
said the pilots managed to test the landing gear and flaps.
NYC hedge fund manager
indicted in trading case
NEW YORK (AP) -- A wealthy
hedge fund manager has been indicted in a massive insider trading case.
The indictment filed
Tuesday in Manhattan federal court charged billionaire Raj Rajaratnam and
another defendant with multiple counts of conspiracy to commit securities
fraud.
The Sri Lanka-born
Rajaratnam was arrested in October. A total of 20 people have been charged in
the $52 million insider trading case.
Rajaratnam remains free on
$100 million bail. His lawyer didn't immediately comment.
GE CEO: Company undergoing
rebuilding after crisis
General Electric CEO Jeffrey
Immelt said Tuesday the giant conglomerate is undergoing a renewal after what
has been one of the most difficult years in the company's 117-year history.
Immelt said in his annual
outlook session for analysts in New York that GE is focusing on sectors such as
energy and health care as it looks to its big industrial divisions to navigate
out of the deep recession. It also plans to rely much less on its lending arm,
GE Capital, for profits next year.
Yet despite the shift in
strategy, GE's forecast for 2010 shows that the effects of the recent economic
crisis will linger.
Adobe Systems posts 4Q
loss, weighed by charges
NEW YORK (AP) -- Adobe
Systems Inc. said Tuesday that although it took a loss in the fiscal fourth
quarter, consumer demand improved and allowed the maker of design and desktop
publishing software to post an optimistic outlook for the current period.
Adobe reported a net loss
of $32 million, or 6 cents per share, for the three months that ended Nov. 27,
compared with a profit of $245.9 million, or 46 cents per share, in the same
period a year earlier.
Stripping out special items
such as restructuring charges, and an income tax adjustment, Adobe earned 39
cents per share, surpassing Wall Street analysts' expectations.
FDA panel OKs Crestor cholesterol
pill's wider use
GAITHERSBURG, Md. (AP) --
Federal health advisers said Tuesday that expanded use of AstraZeneca's
cholesterol pill Crestor can benefit patients with healthy cholesterol levels
by preventing heart attack, stroke and death.
A Food and Drug
Administration panel of experts voted 12-4 with one abstention that Crestor's
benefits outweigh its risks in patients with normal cholesterol and no history
of heart disease, setting the stage for a dramatic expansion of a drug that is
already a blockbuster.
The FDA is not required to
follow the group's advice, though it usually does.
32 accused of $60M in
Medicare fraud in 3 states
FORT LAUDERDALE, Fla. (AP)
-- Federal agents arrested 26 suspects in three states Tuesday, including a
doctor and nurses, in a major crackdown on Medicare fraud totaling $61 million
in separate scams.
Arrests in Miami, Brooklyn
and Detroit included a Florida doctor accused of running a $40 million home
health care scheme that falsely listed patients as blind diabetics so that he
could bill for twice-daily nurse visits.
The U.S. Department of
Justice and U.S. Department of Health and Human Services said the total of 32
indicted suspects lined up bogus patients and otherwise billed Medicare for
unnecessary medical equipment, physical therapy and HIV infusions.
By The Associated Press
The Dow fell 49.05, or 0.5
percent, to 10,452.00. The S&P 500 index fell 6.18, or 0.6 percent, to
1,107.93, and the Nasdaq composite index fell 11.05, or 0.5 percent, to
2,201.05. The Dow and S&P 500 index closed Monday at their highest levels
since October 2008 as concerns eased about global debt problems.
Benchmark crude for January
delivery added $1.18 to settle at $70.69 a barrel on the New York Mercantile
Exchange.
In London, Brent crude for
January delivery rose 16 cents to settle at $72.05 a barrel on the ICE Futures
exchange.
In other Nymex trading in
January contracts, heating oil lost less than a penny to settle at $1.9033 a
gallon while gasoline added 1.84 cents to settle at $1.8451 a gallon. Natural
gas rose 19.1 cents to settle at $5.523 per 1,000 cubic feet.