AP

AP
Business Highlights
Monday July 7, 6:20 pm ET

Stocks fall on worries about financial sector

NEW YORK (AP) -- Wall Street lost more ground in extremely volatile trading Monday, as investors recoiled at a cautious economic outlook from a Federal Reserve official and the possibility of more financial troubles of Fannie Mae and Freddie Mac.

The market found only slight solace in retreating oil prices.

San Francisco Federal Reserve President Janet Yellen said in a speech that the financial markets remained fragile, and that it will take time for conditions to improve.

The comments added to concerns raised in a note by Lehman Brothers analysts that Fannie and Freddie may need to raise more capital as the credit crisis continues. Worries about the ailing financial sector deflated a stock rally early in the day that had been fueled by a $4-a-barrel pullback in oil prices.

The market managed, however, to rebound from its lows of the day, when the Dow Jones industrial average sank to its worst level since mid-August of 2006. Some investors bought back into the market to take advantage of the low prices.

Microsoft backs Icahn's bid to oust Yahoo board

SAN FRANCISCO (AP) -- Microsoft Corp. threw its weight behind investor Carl Icahn's effort to dump Yahoo Inc.'s board, saying Monday that a successful shareholder rebellion would encourage the software maker to renew its bid to buy Yahoo's Internet search engine or possibly the entire company.

The unexpected endorsement gives Icahn a carrot to dangle before Yahoo shareholders as he wages an acrimonious campaign to replace Yahoo's nine directors at the company's annual meeting Aug. 1.

It marks the first time that Microsoft has publicly sided with Icahn since the billionaire investor launched his attempted coup nearly eight weeks ago.

The two sides decided they could work together after Icahn held "frequent" discussions with Microsoft Chief Executive Steve Ballmer and some of his top lieutenants during the past week, according to a letter that Icahn sent Monday to Yahoo shareholders.

GM may try to shed brands, but market is tough

DETROIT (AP) -- General Motors Corp. is reviewing its brands and may try to jettison some to raise money as it burns through cash at an alarming rate.

But industry analysts say buyer interest in the brands most likely to be sold -- Buick, Hummer, Saab and Saturn -- may be low due to a U.S. sales downturn brought on by high gasoline prices and a slow economy.

Also, analysts say, there are individual problems with some of GM's weaker nameplates.

GM, which has eight brands, announced last month that it was reviewing Hummer for possible sale. The company on Monday denied that other nameplates are under review.

But a person familiar with GM's internal discussions says brands other than Hummer are being studied. The person wanted to remain anonymous because no decisions have been made.

Anheuser-Busch criticizes InBev board move

ST. LOUIS (AP) -- Anheuser-Busch Cos. says InBev's plan to remove its board is an attempt by the Belgian beer maker to buy the company at a price that is too low.

InBev said earlier it will file a preliminary consent solicitation asking Anheuser's board to consult shareholders about replacing Anheuser's board. The move is part of its hostile $46 billion bid for St. Louis-based Anheuser, which Anheuser rejected two weeks ago, saying it undervalued the company.

Shareholders have the right to sue Anheuser's board if they feel the directors are not acting in their best interest. A majority of shareholders would need to back InBev's plan.

Anheuser-Busch is asking its shareholders to take no action and not sign or return any consent they may receive in the future from InBev.

Oil drops sharply as supply worries subside

NEW YORK (AP) -- Oil prices tumbled nearly $4 a barrel Monday, erasing many of last week's record gains in a single session as concerns about potential supply disruptions eased.

Light, sweet crude for August delivery fell $3.92, or about 2.7 percent, to settle at $141.37 on the New York Mercantile Exchange. Earlier, the contract sank as low as $139.50, or $5.79 below Thursday's settlement price.

Traders drove prices sharply higher at the end of last week as they bet that conflict with Iran or some other event could cut supplies, and they didn't want to get caught unprepared over the long Independence Day weekend, analysts said. There was no floor trade Friday in the U.S. because of the July Fourth holiday.

As concerns about supply disruptions subsided, many traders on Monday sold off contracts they had bought as insurance last week.

Crisis wipes $1 trillion from financial stocks

NEW YORK -- U.S. financial companies have lost more than $1 trillion in value this year, and yet another decline on Monday shows concerns aren't going away soon.

Banks and brokerages began the week lower on the same fears that have been proven toxic since last summer in the ongoing credit crisis. The financial sector was hit with a confluence of troubles on Monday: cautious remarks from a Federal Reserve official and new capital concerns at Freddie Mac and Fannie Mae.

The drop in names like Lehman Brothers, Morgan Stanley and Merrill Lynch caused the financial section of the Standard & Poor's 500 index to lose almost $150 billion in value on Monday, according to the rating agency. That means S&P 500's 85 financial components have lost some $1.3 trillion since the sector reached a high last October.

Even more startling is that shares of 35 of the companies, which include insurers, have lost more than half their value so far this year. The financial sector used to be the index's main driver, and many economists believe that the broader market will rise or fall on their health.

McCain, Obama duel on economic fix-it plans

DENVER (AP) -- Barack Obama and John McCain agree on this much: The economy is staggering under the Bush administration, and Americans are hurting. But who's to blame and how best to fix it?

Well, they part ways on that, as they made clear in dueling economic speeches Monday on the issue that has taken center stage in their presidential contest.

Obama said that McCain offers a third term of President Bush's policies.

McCain has been forced into a more defensive crouch because his party has held the White House while jobs, home values, stock prices and consumer confidence have tumbled.

While calling Obama's plans expensive and unwise on Monday, he tried to distance himself from President Bush where he could.

US airlines report fewer delays in May

NEW YORK (AP) -- Domestic airlines improved their on-time arrival rates in May, although more than one in five flights still failed to get passengers to their destination as scheduled, according to government data released Monday.

A total of 21 percent of commercial flights in the U.S. arrived at least 15 minutes late, were canceled or diverted in May, according to the Transportation Department's Bureau of Transportation Statistics.

That is down from more than 22 percent of late flights in the same month last year and in April 2008. The previous month's figure was higher in part because AMR Corp.'s American Airlines, the nation's largest carrier, was forced to ground thousands of flights amid tighter government scrutiny of maintenance issues.

For the third month in a row, American ranked last in on-time service. Passengers on just over two-thirds of the Fort Worth, Texas-based carrier's flights -- 67.3 percent -- got to their destinations on time in May.

Despite economic uncertainties, many Americans still traveling

PORTLAND, Maine (AP) -- High gas prices may mean fewer families will be headed to the beach or the mountains this summer, but rising prices likely won't be keeping wealthy people from missing out on vacation.

Although their stock portfolios may be in decline, wealthy Americans who are less likely to feel the impact of a slowing economy and rising energy and food prices are largely going ahead with their vacation plans even though consumer confidence is at a 16-year low.

Households earning $100,000 or more have been taking a larger share of hotel rooms since 2000 and now account for about a third of hotel stays, according to D.K. Shifflet & Associates in McLean, Va.

"If you think about the high-income folks in the U.S., the CEOs and others who make a lot of money and have been doing well over the last eight years, they can afford to do that. And they're doing it while they can," said Doug Shifflet, chairman and CEO of the travel research firm.

By The Associated Press

The Dow fell 56.58, or 0.50 percent, to 11,231.96. Over the course of the day, the blue chips rallied, tumbled, rebounded, and then fell once more. The Dow fell as much as 167.80 to 11,120.74 -- its lowest trading level since Aug. 15, 2006 -- but was also up more than 100 in early trading.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 10.59, or 0.84 percent, to 1,252.31, and the Nasdaq composite index fell 2.06, or 0.09 percent, to 2,243.32.

In other Nymex trade, heating oil futures fell by 13.64 cents to settle at $3.9696 a gallon while gasoline futures sank 8.83 cents to settle at $3.4827 a gallon. Natural gas futures fell 60 cents to settle at 12.977 per 1,000 cubic feet.

In London, August Brent crude fell $2.55 to settle at $141.87 a barrel on the ICE Futures exchange.