AP
Business Highlights
Monday August 4, 6:24 pm ET

Rising prices stifle impact of stimulus payments

WASHINGTON (AP) -- Consumer spending, after adjusting for inflation, fell in June as shoppers were hit with the second biggest increase in prices in nearly three decades.

The Commerce Department reported Monday that consumer spending dipped by 0.2 percent in June, after removing the effects of higher prices, the poorest showing since a similar drop in February.

The higher prices reflected a big surge in gasoline costs and helped to drive an inflation gauge tied to consumer spending up by 0.8 percent in June, a monthly increase that has been exceeded only once since 1981.

Oil prices drop nearly $4 after storm threat eases

NEW YORK (AP) -- Oil prices plunged to a three-month low Monday, briefly tumbling below $120 a barrel in another huge sell-off after Tropical Storm Edouard seemed less likely to disrupt oil and natural gas output in the Gulf of Mexico.

Crude's steep drop -- prices fell more than $5 at one point during the day -- dragged down other commodities from corn to copper and mimicked the big nosedives of the past three weeks, adding to growing beliefs that the oil bubble is at least temporarily deflating.

Light, sweet crude for September delivery fell $3.69, or 2.9 percent, to settle at $121.41 a barrel on the New York Mercantile Exchange. It was crude's lowest settlement price since May 5.

ImClone hints at dim view of Bristol-Myers offer

NEW YORK (AP)-- ImClone Systems Inc.'s board of directors said Monday cancer drug partner Bristol-Myers Squibb Co.'s $4.5 billion buyout offer "substantially undervalues" the company, with Chairman Carl Icahn personally against the deal.

Despite calling the bid too low, ImClone stopped short of rejecting it and said its board formed a committee to weigh the offer. The board also said it is considering splitting the company into two units to focus on Erbitux and its developing pipeline separately.

The New York-based companies are partners on the colon- and head-and-neck-cancer treatment Erbitux. They are also currently developing the drug as a lung cancer therapy.

Stocks decline after oil falls sharply

NEW YORK (AP) -- Wall Street fell Monday in an erratic session dominated by worries about inflation -- which were somewhat soothed by a plunge in oil prices that took crude to its lowest level in three months.

Oil's retreat was welcome news to a stock market that initially sold off after the Commerce Department report fed investors' growing concerns about the impact of rising prices on consumers, whose spending is the lifeblood of the economy.

The Dow Jones industrial average fell 42.17, or 0.37 percent, to 11,284.15 as energy and materials stocks declined following a broad drop in commodities. The Dow had been down more than 100 points in early trading.

WCI Communities files for bankruptcy

MIAMI (AP) -- Carl Icahn's WCI Communities became the latest casualty of the housing market crisis Monday, filing for Chapter 11 bankruptcy protection after the home builder failed to get additional financing in the face of massive losses.

Icahn, chairman of WCI's board, said the filing was necessary because the Bonita Springs, Fla.-based developer's entire $1.8 billion debt may soon be in default. Icahn said this was confirmed when some holders of $125 million convertible notes insisted on being paid in cash in full on Tuesday.

WCI also fired Chief Executive Jerry L. Starkey and replaced him on an interim basis with David L. Fry.

Obama proposes tapping oil stockpiles

LANSING, Mich. (AP) -- Barack Obama put forward a broad energy plan Monday designed to end U.S. reliance on imported oil within 10 years and shore up his standing amid a tightening White House race and high-anxiety over gas prices.

Obama's proposal, though, includes two significant reversals of positions he has taken in the past: He had steadfastly fought the idea of limited new offshore drilling and was against tapping the nation's emergency oil stockpile to relieve pump prices that have stubbornly hovered around $4 a gallon.

Obama and McCain are emphasizing solutions to the country's energy woes as they seek an advantage in polling that shows the race competitive just weeks before their respective national nominating conventions and the final stretch of the campaign.

Motorola snares Qualcomm's Jha for handset unit

NEW YORK (AP) -- Motorola Inc. snagged Sanjay Jha, the chief operating officer of Qualcomm Inc. and a star of the wireless industry, to head its handset division as that unit prepares to become an independent company.

Jha will also be co-chief executive of the parent company, sharing the responsibility with incumbent Greg Brown until the spinoff next year. Brown will take responsibility for Motorola's other two divisions.

Jha, 45, has a doctorate in electronic and electrical engineering. In addition to being Qualcomm's chief operating officer, he was president of the Qualcomm division that made chips for cell phones.

NY appeals court green-lights remote storage DVR

NEW YORK (AP) -- In a decision sure to affect millions of cable television subscribers, a federal appeals court Monday gave a green light to Cablevision Systems Corp.'s rollout of a remote-storage digital video recorder system.

In overturning a lower court ruling that had blocked the service, the 2nd U.S. Circuit Court of Appeals in Manhattan said the judge wrongly concluded that Cablevision, rather than its customers, would be making copies of programs, thereby violating copyright laws.

The next-generation technology would let any cable subscriber with a digital cable box store TV shows on computer servers rather than on a hard drive in their home.

Kerviel's assistant handed preliminary charges

PARIS (AP) -- A 24-year-old former assistant to futures trader Jerome Kerviel has become the second person handed preliminary charges in the multibillion-dollar Societe Generale banking scandal, a French judicial official said Monday.

Thomas Mougard is being probed on suspicion on that he knowingly helped enter phony data into a computer system on behalf of Kerviel, who was trying to cover up his massive trades, the official said, speaking on condition of anonymity because the case is ongoing.

Societe Generale has accused Kerviel, 31, of betting tens of billions of euros of the bank's money without permission, which led to almost 5 billion euros (more than $7 billion) in losses once the bank unwound his positions in January.

HSBC reports 1H fall in profit

LONDON (AP) -- HSBC Holdings PLC, Europe's largest bank by market value, reported Monday its steepest fall in profit since 2001 as costs for bad U.S. mortgage loans mounted.

Net profit for the first half of the year plunged 29 percent to $7.7 billion from $10.9 billion in profit in the January to June period of last year.

The biggest losses came from the North American market, which HSBC depends on for a quarter of its revenue. Operations there posted a first-half loss of $2.9 billion, compared with profit of $2.4 billion a year ago.

By The Associated Press

The Dow Jones industrial average fell 42.17, or 0.37 percent, to 11,284.15.

Broader stock indicators showed steeper declnies. The Standard & Poor's 500 index fell 11.30, or 0.90 percent, to 1,249.01, and the Nasdaq composite index declined 25.40, or 1.10 percent, to 2,285.56.

Light, sweet crude for September delivery fell $3.69, or 2.9 percent, to settle at $121.41 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil futures fell 8.67 cents to settle at $3.3501 a gallon. In London, Brent crude for September delivery fell $3.50 cents to settle at $120.68 a barrel, after earlier falling to a contract-low of $118.80.