AP
Business Highlights
Tuesday August 5, 6:30 pm ET

Fed on hold amid worries about inflation, growth

WASHINGTON (AP) -- Fed Chairman Ben Bernanke and all but one of his central bank colleagues agreed Tuesday to leave its key rate alone at 2 percent for the second straight meeting.

In turn, the prime lending rate for millions of consumers and businesses remained at 5 percent. The prime rate applies to certain credit cards, home equity lines of credit and other lines.

Wall Street extends rally after Fed decision

NEW YORK (AP) -- An already soaring Wall Street extended its advance Tuesday after the Federal Reserve left interest rates unchanged and assuaged some of the market's fears about the economy.

The Dow Jones industrial average shot up more than 330 points, and all the major indexes had gains approaching 3 percent.

The market was enjoying a big rally before the Fed meeting as investors responded to a report that services sector activity fell less than expected last month and to another drop in oil prices that took crude as low as $118 a barrel.

Oil falls as low as $118 on demand concerns

NEW YORK (AP) -- Oil traders sent crude prices tumbling as low as $118 a barrel Tuesday on the growing belief that a U.S. economic slowdown and high energy costs are curbing consumer demand for gasoline and other petroleum products.

Crude oil finished the day just above $119 a barrel -- its lowest settlement price since early May.

Crude's decline is giving Americans more relief at the pump. A gallon of regular gasoline on average fell another penny overnight to $3.871, according to auto club AAA, the Oil Price Information Service and Wright Express.

Service sector contracts as new orders fall

NEW YORK (AP) -- The U.S. service sector contracted in July -- though less than expected -- as new orders decreased and prices rose, stifling growth for truckers, retailers and insurers.

The Institute for Supply Management, a trade group of purchasing executives, said Tuesday its reading of the service sector was 49.5 in July, up from 48.2 in June. It beat economists' prediction of a reading of 49.0, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR.

Procter & Gamble 4Q profit jumps 33 percent

CINCINNATI (AP) -- The Procter & Gamble Co. reported a 33 percent jump in fourth-quarter profit Tuesday as the consumer products maker battles soaring energy and commodity costs with higher prices and product improvements.

P&G said results were also helped by good growth in developing markets such as China and Russia, the weaker dollar, and cost-cutting efforts.

The maker of Tide detergent, Olay skin care and Pampers diapers said it earned $3.02 billion, or 92 cents per share, up from $2.27 billion, or 67 cents per share, a year earlier. Excluding tax benefits, P&G earned 80 cents per share.

Cisco earnings up 4 percent, beating forecasts

NEW YORK (AP) -- Cisco Systems Inc. reported a 4 percent increase in quarterly profit Tuesday, beating analysts' expectations by a penny per share, but signaled that the weak economy would affect results in the next few quarters.

The world's largest maker of computer networking gear said it earned $2.01 billion, or 33 cents per share, in the three months ended July 25, its fiscal fourth quarter. In the same period last year, Cisco earned $1.93 billion, or 31 cents per share.

Sales rose 10 percent to $10.4 billion.

Cablevision may spin off business units

NEW YORK (AP) -- Nine months after shareholders rejected the Dolan family's latest bid to take Cablevision Systems Corp. private, the cable operator said Tuesday it is considering several options to boost its stock price including spinning off some of its diverse holdings.

Chief Executive James Dolan, who has long argued the market undervalues Cablevision, said in a statement the company is "actively looking" at options to close the gap between the company's operating performance and the market value of its shares.

Cablevision said its board has also authorized it to explore making stock buybacks or pay quarterly dividends.

Sony to buy Bertelsmann's Sony BMG stake for $900M

LOS ANGELES (AP) -- Sony Corp. said Tuesday it is buying Bertelsmann AG out of their 50-50 music venture Sony BMG for $900 million, giving it full ownership of a roster of artists including Alicia Keys and the increased ability to leverage music over an array of electronic devices.

In a filing with the Securities and Exchange Commission, the Japanese electronics and entertainment giant said it would pay Bertelsmann $600 million and give it all of the $600 million in cash holdings of the joint venture.

Since privately owned Bertelsmann already owned $300 million of that sum, the deal is valued at $900 million.

News Corp 4Q profit jumps 27 percent

NEW YORK (AP) -- News Corp.'s fiscal fourth-quarter earnings jumped 27 percent on profit from the sale of assets and higher operating earnings in its film, cable networks and newspaper units.

The New York-based media conglomerate, which also owns Twentieth Century Fox, Fox News Channel and Dow Jones & Co., publisher of The Wall Street Journal, said net income in the quarter ended June 30 rose to $1.13 billion, or 43 cents per share, from $890 million, or 28 cents per share, a year ago.

11 charged in connection with credit card fraud

NEW YORK (AP) -- The Department of Justice announced Tuesday that it had charged 11 people in connection with the hacking of nine major U.S. retailers and the theft and sale of more than 41 million credit and debit card numbers.

It is believed to be the largest hacking and identity theft case ever prosecuted by the Department of Justice. The charges include conspiracy, computer intrusion, fraud and identity theft.

D.R. Horton posts smaller 3Q loss on lower charges

D.R. Horton Inc., the nation's largest homebuilder, said Tuesday its losses in the fiscal third-quarter narrowed as the value of its inventory of unsold homes and land holdings showed signs of stabilizing, but the results fell far short of Wall Street's expectations.

The Fort Worth, Texas-based company posted a loss of $339.3 million, or $1.26 a share, in the quarter that ended June 30. That's down from the loss of $823.8 million, or $2.62 a share, in the same period last year.

Whole Foods 3Q misses estimates, lowers outlook

Whole Foods Market Inc. said Tuesday that its third-quarter net income dropped more than 30 percent due largely to costs associated with its acquisition of Wild Oats and a tough economy that hurt consumer spending.

Its shares sank in after-hours trading as the company also drastically lowered its outlook for 2009, suspended its dividend and said it would open fewer stores next year.

By The Associated Press

The Dow rose 331.62, or 2.94 percent, to 11,615.77. It was up about 225 points shortly before the Fed's 2:15 p.m. EDT announcement.

Broader indexes also rose sharply. The Standard & Poor's 500 index added 35.87, or 2.87 percent, to 1,284.88, and the Nasdaq composite index rose 64.27, or 2.81 percent, to 2,349.83.

Light, sweet crude for September delivery fell $2.24 to settle at $119.17 a barrel on the New York Mercantile Exchange, the lowest close since May 2. During trading, the contract dipped to $118 -- nearly $30 below the trading high of $147.27 reached July 11.

Natural gas futures finished unchanged at $8.726 per 1,000 cubic feet, after swinging into positive and negative territory during trading. On Monday, natural gas plunged 66.3 cents, or 7 percent, to $8.726 per 1,000 cubic feet, its lowest level in nearly six months.

In other Nymex trading, heating oil futures fell 6.81 cents to settle at $3.2820 a gallon, while gasoline prices dropped 4.38 cents to settle at $2.9564 a gallon.

In London, September Brent crude fell $2.98 to settle at $117.70 a barrel.