AP
Business Highlights
Friday August 8, 6:52 pm ET
Fannie Mae loses $2.3B in quarter
WASHINGTON
(AP) -- Fannie Mae is making bold cutbacks that will send shock waves through
the mortgage market, after posting a quarterly loss Friday that was three times
larger than Wall Street expected.
To
slow its financial decline, the mortgage finance giant slashed its dividend to
5 cents a share from 35 cents a share and said it will eliminate loans for
borrowers with solid credit scores but little proof of income or small or no
down payments.
The
company, which lost $2.3 billion for the quarter that ended June 30, also is
raising its mortgage fees, which will be passed on to borrowers as higher
interest rates or closing costs.
Oil
sinks on stronger dollar to $115 a barrel
NEW
YORK (AP) -- Oil prices dove to $115 a barrel on Friday, driven lower by a huge
jump in the U.S. dollar, signs of moderating demand around the world and the
burgeoning belief that commodities may have peaked.
Shrugging
off concerns about a sabotaged oil pipeline in Turkey, investors pulled their
money out of commodities and put it back into stocks, giving crude oil a weekly
loss of nearly $10 a barrel, and driving the Dow Jones industrial average up
more than 300 points.
Light,
sweet crude for September delivery slumped $4.82 to settle at $115.20 a barrel
on the New York Mercantile Exchange, its lowest settlement since May 1. During
trading, crude dipped as low as $114.90. Prices for gasoline, heating oil and
natural gas also dropped.
Stocks
jump as oil prices fall sharply
NEW
YORK (AP) -- Wall Street rebounded smartly Friday, shooting higher as a surge
in the dollar and another plunge in oil prices eased some of investors' worries
about losses at mortgage finance company Fannie Mae.
The
Dow Jones industrials soared more than 300 points, more than wiping out a big
loss from the previous session, and all the major indexes had their best weekly
gains since April.
The
session extended a streak of volatility that has seen the Dow making frequent
triple-digit moves as investors reacted feverishly to news about the financial
sector, corporate earnings and the economy.
The
Dow rose 302.89, or 2.65 percent, to 11,734.32.
Dollar
soars higher on euro zone woes
NEW
YORK (AP) -- The dollar soared Friday in what analysts are calling a
game-changing move as concerns about the deteriorating euro zone economy
gripped investors and commodities sold off.
In
late trading in New York, the euro came off its lows to $1.5013 from $1.5328
late Thursday. Earlier in the day, it sank as low as $1.5004. It is the highest
point for the dollar since late February, and a rapid recovery from July 15,
when the euro hit a record against the dollar at $1.6038.
The
euro also sank against the British pound and the Japanese yen -- both of which
are also weakening against the dollar.
Productivity
growth slowed in spring
WASHINGTON
(AP) -- The efficiency of America's workers grew at a slightly slower pace in
the spring as companies sought to produce more with leaner work forces.
Workers' compensation growth slowed, too.
The
Labor Department reported Friday that productivity -- the amount an employee
produces for every hour on the job -- grew at an annual rate of 2.2 percent
during the April-to-June quarter. That was down from a 2.6 percent growth rate
logged in the first three months of this year.
Economists
were forecasting productivity to pick up slightly to a 2.7 percent pace.
UBS
settles $18.6B auction-rate securities case
NEW
YORK (AP) -- Swiss banking giant UBS AG agreed Friday to buy back nearly $20
billion in auction-rate securities from investors, a day after Citigroup Inc.
reached a similar settlement with regulators for $7 billion as part of a
wide-ranging investigation into the collapse of the market for the bond-like
investments.
UBS
will repurchase all $18.6 billion of the securities it sold and pay a fine of
$150 million as part of an investigation led by New York Attorney General
Andrew Cuomo into whether banks misled customers about the safety of the
securities.
As
part of its settlement announced Thursday, Citigroup will also pay fines of
$100 million.
McDonald's
July same-store sales rise 8 percent
NEW
YORK (AP) -- Despite a tough U.S. economy, McDonald's Corp. posted an 8 percent
gain in July same-store sales on Friday as hungry consumers worldwide lined up
for breakfast items and the classic Big Mac sandwich.
Many
consumers have cut back on eating out amid economic weakness and rising
gasoline prices, but business at the Golden Arches held up well in July,
especially in the U.S.
Same-store
sales, or sales at stores open at least 13 months, grew 6.7 percent in the U.S.
Same-store sales are a key indicator of restaurant performance because the
measure growth at existing locations rather than newly opened ones.
European
banks post better-than-expected results
LONDON
(AP) -- The Royal Bank of Scotland posted first-half losses Friday that weren't
nearly as bad as some analysts had feared, rounding out what is shaping up to
be a relatively bright earnings season for Europe's biggest financial
institutions.
European
banks have been getting help from stronger business in emerging economies, and
have been reporting surprisingly resilient results in the face of global
economic turmoil and losses from the U.S. subprime mess.
Of
the major banks, only Switzerland's UBS has yet to post its results, which are
due Tuesday.
Insurance
weighs on Berkshire Hathaway's 2Q profit
OMAHA,
Neb. (AP) -- Berkshire Hathaway Inc. reported an 8 percent decline in
second-quarter profit Friday because it collected fewer insurance premiums and
recorded $1 billion in unrealized derivative losses.
Billionaire
Warren Buffett's company said it generated $2.9 billion in net income, or
$1,859 per share, during the quarter that ended June 30. That's down from the
$3.1 billion net income, or $2,018 per share, it reported in the same period a
year ago.
The
three analysts surveyed by Thomson Financial were expecting earnings per share
of $1,370.33 on average.
Beazer
Homes 3Q loss narrows
Beazer
Homes USA Inc. on Friday posted a narrower loss in its fiscal third quarter as
the builder slashed expenses in the face of a 42 percent drop in orders for new
homes.
There
was some positive news for home shoppers, however, as home prices continued to
decline. The average price of a Beazer home declined almost 9 percent in the
quarter to $257,400.
The
Atlanta-based company posted a loss of $109.8 million, or $2.85 a share, for
the quarter that ended June 30. That compares with a loss of $118.7 million, or
$3.09 a share, in the same period last year.
GM,
Deloitte to settle shareholder suit for $303M
NEW
YORK (AP) -- General Motors Corp. and its auditor have agreed to pay $303
million to settle claims that the automaker misled shareholders about its
finances.
Under
the settlement, GM would pay $277 million to investors, while its auditor,
Deloitte & Touche LLP, would pay $26 million, pending approval from U.S.
District Judge Gerald Rosen in Detroit.
The
two-year-old class-action lawsuit claimed that GM misstated and mischaracterized
its revenue, earnings and cash flow, artificially inflating the company's stock
price and debt securities.
Ohio
exec sentenced to 10 years in bribery case
COLUMBUS,
Ohio (AP) -- The founder of a failed health care financing company was sentenced
to 10 years in prison Friday for bribing a witness to testify at an upcoming
corporate fraud trial.
U.S.
District Court Judge Algenon Marbley also ordered Lance Poulsen, founder of
National Century Financial Enterprises, to pay a $17,500 fine.
Federal
prosecutors, who have likened the case to a privately held company's version of
the Enron or Worldcom scandals, pushed for a 35-year sentence for Poulsen
because of what they called the serious nature of his crime.
By
The Associated Press
The
Dow rose 302.89, or 2.65 percent, to 11,734.32.
Broader
indicators also rose sharply Friday. The Standard & Poor's 500 index
advanced 30.25, or 2.39 percent, to 1,296.32 and the Nasdaq composite index
advanced 58.37, or 2.48 percent, to 2,414.10.
Light,
sweet crude for September delivery slumped $4.82 to settle at $115.20 a barrel
on the New York Mercantile Exchange.
Heating
oil futures fell 10.56 cents to finish at $3.1280 a gallon on the Nymex, where
gasoline futures fell 11.53 cents to close at $2.8874 a gallon. Natural gas
futures fell 32.3 cents to settle at $8.248 per 1,000 cubic feet.
In
London, Brent crude for September delivery fell $4.53 to finish at $113.33 a
barrel.