AP
Business Highlights
Wednesday August 6, 5:58 pm ET

Wall Street advances after oil declines

NEW YORK (AP) -- Wall Street logged another winning day Wednesday as a drop in oil prices and a better-than-expected profit report from technology bellwether Cisco Systems Inc. helped corral the market's worries about the financial sector.

Oil extended its slide into a third day. Light, sweet crude settled down 59 cents at $118.58 a barrel on the New York Mercantile Exchange after the government reported a jump in domestic inventories; oil is now down about $30 from its record high of $147.27 reached on July 11.

Cisco posted earnings late Tuesday that narrowly topped Wall Street's forecast. The report helped buoy sentiment and lifted the technology-heavy Nasdaq composite index.

Oil prices close below $119 after inventory report

NEW YORK (AP) -- Oil prices briefly dropped below $118 a barrel Wednesday -- $30 below their record high -- after a jump in U.S. crude and other fuel supplies fed beliefs that high energy prices are eating into demand.

Light, sweet crude for September delivery finished the session down 59 cents at $118.58 a barrel on the New York Mercantile Exchange.

It was crude's lowest settlement price since May 2; prices earlier fell as low as $117.11, a $30, or 20 percent, drop from their trading high of $147.27, reached July 11. Some investors believe a 20 percent pullback signals the beginning of a bear market.

Freddie Mac swings to 2Q loss

NEW YORK (AP) -- Freddie Mac on Wednesday posted a second-quarter loss that was more than three times larger than Wall Street expected as a huge number of borrowers with good credit fell behind on their exotic and risky mortgages.

Freddie lost $821 million, or $1.63 a share, for the quarter that ended June 30, compared with a profit of $729 million, or 96 cents a share, in the year-ago period. Revenue fell to $1.69 billion from $2.34 billion.

Freddie's financial losses were concentrated in a handful of states -- notably California, Florida, Nevada, and Arizona -- where speculation was rampant, prices skyrocketed, and buyers stretched to the financial limit to afford a home.

Sprint Nextel reports 2Q loss, stock slides

KANSAS CITY, Mo. (AP) -- Sprint Nextel Corp.'s up-and-down road to recovery continued Wednesday as the company reported adjusted second-quarter results that beat Wall Street expectations as well as a slower loss of subscribers.

But the nation's third-largest wireless carrier also said it expected customer losses to ramp back up next quarter and said was selling $3 billion in convertible stock, partly to pay down debt.

Sprint lost $344 million, or 12 cents per share, versus earnings of $19 million, or 1 cent per share, during the same period a year ago.

Sprint's shares tumbled $1.21, or 14.2 percent, to close at $7.34.

Time Warner 2Q net drops 26 percent

NEW YORK (AP) -- Time Warner Inc.'s second-quarter earnings fell 26 percent on declining subscriber fees at its AOL online unit and lower ad revenue at the Time publishing business, the media conglomerate said Wednesday.

The company affirmed its full-year financial targets after revenue rose at its film, cable and networks segments.

Time Warner also took legal and tax steps that make it possible to split its AOL online business and sell it in parts.

The New York-based media conglomerate said net income fell to $792 million, or 22 cents per share, from $1.07 billion, or 28 cents per share, a year ago.

Miner Xstrata makes $10 billion bid for Lonmin

GENEVA (AP) -- A $10 billion takeover bid from Anglo-Swiss mining giant Xstrata PLC sent shares in rival Lonmin PLC soaring Wednesday, but the world's No. 3 platinum producer rejected the offer as too low.

The London-based company urged investors not to sell as its stock shot up 50 percent after Xstrata offered 33 pounds per share -- a 42 percent premium over Tuesday's closing price.

Lonmin shares eventually closed 47.7 percent higher Wednesday at 34.26 pounds on the London Stock Exchange, with Xstrata among those taking part in the buying-spree.

Conn. sues Countrywide over lending practices

HARTFORD, Conn. (AP) -- Connecticut sued Countrywide Financial Corp. on Wednesday, becoming the latest state to take the mortgage lender to court over its lending practices.

State Attorney General Richard Blumenthal alleged that Countrywide misled borrowers into taking on risky home loans they could not afford. California, Illinois, Florida and the city of San Diego have made similar claims in their own lawsuits against the company.

Countrywide, once the nation's largest mortgage originator before a jump in bad loans ravished its business, has been blamed for helping to cause the nation's mortgage meltdown.

CarMax to slow growth after seeing sales drop

RICHMOND, Va. (AP) -- Used vehicle retailer CarMax Inc. said Wednesday it is reducing staffing levels and will temporarily slow its store growth after seeing a sharp drop in car and truck sales because of high gas prices.

CarMax originally withdrew its fiscal-year sales and earnings guidance in June, after sales dropped beginning Memorial Day weekend. From the Memorial Day weekend through the end of May, CarMax said its same-store sales -- or sales at stores open at least a year -- fell 5 percent.

Those sales continued to fall in June and July, resulting in an average drop of 17 percent for the two months, the company said Wednesday.

Dubai buys fifth of circus troupe Cirque du Soleil

DUBAI, United Arab Emirates (AP) -- The government-controlled developer of palm-shaped islands off Dubai's coast and a related investment arm said Wednesday they have bought a 20 percent stake in international circus touring company Cirque du Soleil.

Property developer Nakheel and investment company Istithmar World Capital did not say how much they paid for their share of the group, which began performing in Quebec nearly a quarter century ago and is today a mainstay of theaters in Las Vegas and the Far East.

The agreement keeps control of the Montreal-based entertainment company in the hands of founder Guy Laliberte, putting to rest for now speculation that the troupe would be sold outright.

By The Associated Press

The Dow Jones industrial average rose 40.30, or 0.35 percent, to 11,656.07, after having been down nearly 100 points early in the session. The gain brought the Dow's two-day advance to about 370 points. The blue chips soared Tuesday on the drop in oil, and also in response to a reassuring economic statement from the Federal Reserve.

Broader stock indicators also advanced again Wednesday. The Standard & Poor's 500 index rose 4.31, or 0.34 percent, to 1,289.19, and the Nasdaq rose 28.54, or 1.21 percent, to 2,378.37.

Light, sweet crude for September delivery finished the session down 59 cents at $118.58 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil futures fell 4.41 cents to settle at $3.2379 a gallon, while gasoline prices fell 0.71 cent to settle at $2.9493 a gallon. Natural gas futures rose 4.7 cents to settle at $8.773 per 1,000 cubic feet.

In London, September Brent crude fell 70 cents to settle at $117 a barrel.