AP
Business Highlights
Wednesday August 13, 6:34 pm ET

Retail sales drop for first time in 5 months

WASHINGTON (AP) -- Retail sales delivered the weakest performance in five months in July as shoppers shunned autos while they paid more for gas.

With the mass mailings of $92 billion in rebate checks now just a memory, there is concern the fragile economy could slow even more in the second half of this year.

The Commerce Department reported Wednesday that retail sales fell 0.1 percent last month, the first decline since a 0.5 percent tumble in February. It was a worse showing than the flat reading economists had been expecting and followed a revised but still weak 0.3 percent reading for June.

Oil rebounds after US gasoline supplies drop

NEW YORK (AP) -- Oil prices rebounded Wednesday, jumping back to $116 a barrel after the government reported a bigger-than-expected drop in U.S. gasoline supplies. But more signs of dwindling U.S. demand cast doubt on the rally's longevity.

At the pump, a gallon of regular gasoline shed on average another penny overnight to $3.787.

Light, sweet crude for September delivery rose $2.99 to settle at $116 a barrel on the New York Mercantile Exchange, after earlier falling as low as $112.87 and after dropping about $7 in the last three sessions. Oil's advance has for the time being stopped a monthlong slide that took crude $35 below its July 11 high of $147.27.

Stocks end an erratic day with lopsided loss

NEW YORK (AP) -- Wall Street ended an erratic session Wednesday with a lopsided loss as blue chips fell on investors' concerns over the health of financial companies and high-tech stocks fared better on news from the semiconductor sector.

The Dow fell 109.51, or 0.94 percent, to 11,532.96, but the other major indexes finished with single-digit losses.

The market was battling all the forces that have pummeled it in recent weeks: weak economic data, the price of oil and the credit crisis. Investors started the day disappointed by the government's retail sales report, and a jump in oil prices further dampened the mood; the financial sector was pulled lower by lingering uneasiness over the prospect of more credit-related losses at banks and brokerages.

Macy's says 2Q profit falls, cuts outlook for year

NEW YORK (AP) -- Macy's Inc. posted a lower second-quarter profit Wednesday and warned that its full-year earnings will be below expectations.

That, along with a pared-down outlook from a key supplier and a somber government report on retail sales in July, suggests a persistent slowdown for retailers as they face the critical back-to-school and holiday shopping seasons.

Companies reliant on clothing sales -- like Macy's and supplier Liz Claiborne Inc. -- are having an especially tough time as shoppers focus increasingly on necessities with some exceptions like iPhones.

Genentech rejects Roche's $43.7 billion bid

NEW YORK (AP) -- Biotechnology giant Genentech Inc. rejected a $43.7 billion buyout offer from its majority owner Roche on Wednesday but said it is open to a higher takeover bid.

The rejection comes nearly a month after Swiss drug developer Roche offered $89 per share for the rest of South San Francisco, Calif.-based Genentech. Roche already owns about 55.9 percent of the company.

The unanimous rejection by the special committee almost seemed like a foregone conclusion to the market, with investors and analysts immediately calling the offer of an 8.8 percent premium too low when it was made July 21. The stock has been trading above the offer since it was made, and approached a three-year high Wednesday, hitting $99.

Deere 3Q profits rise 7 pct but miss expectations

UNDATED (AP) -- Deere & Co., the world's largest of maker of farm machinery, reported third-quarter earnings that missed Wall Street expectations and said escalating raw material costs will erode its profits later this year, pushing shares down more than 3 percent on Wednesday.

Quarterly profit rose 7 percent as high crop prices spurred stronger sales of tractors and harvesting equipment, but lower sales of its consumer, construction and forestry equipment, coupled with higher costs of raw materials such as steel and rubber, hurt the company. It was the second straight quarter the Moline, Ill.-based company fell short of expectations.

Deere earned $575.2 million, or $1.32 per share, for the three months ended July 31, compared with $537.2 million, or $1.18 per share, during the same period last year.

Charges drag Tribune to $4.5 billion 2Q loss

NEW YORK (AP) -- Tribune Co. plunged to a $4.53 billion loss in the second quarter after taking a $3.84 billion charge to write down the book value of its newspaper brands.

The charge comes a day after E.W. Scripps Co. took a $874 million write-down as sharp declines in advertising revenue throughout the industry reduces the value of newspaper businesses.

Tribune, based in Chicago, earned $36.3 million in the year-ago second quarter. The company was taken private in an $8.2 billion buyout led by real estate mogul Sam Zell last December. It still reports results to comply with bondholder agreements because of its massive debt load.

Chrysler to invest $1.8B in Detroit factory

TRAVERSE CITY, Mich. (AP) -- Chrysler LLC Vice Chairman Tom LaSorda said Wednesday his company will invest $1.8 billion to expand a Detroit assembly plant and retool it to make a new car-based sport utility vehicle.

LaSorda said the money will go for tooling and a flexible body shop at the Jefferson North Assembly Plant. That plant now makes the Jeep Grand Cherokee.

Speaking at a weeklong industry meeting organized by the Center for Automotive Research, LaSorda said the investment will add 285,000 square feet to the plant and keep more than 400 jobs in Michigan.

Japanese economy posts second-quarter contraction

TOKYO (AP) -- Japan's economy shrank for the first time in a year in the second quarter, the government said Wednesday, but officials -- joined by many economists -- denied the downturn heralded a return of the "lost decade" economy of the 1990s.

Hit by faltering exports and wilting consumer demand, the world's No. 2 economy, which until now had managed to power forward, is beginning to succumb to the onslaught of rising commodities prices and global economic turmoil.

Whether Japan has indeed entered recessionary territory remains up for debate, but economists generally agree that the current downturn won't be as deep or as long as the economic malaise that crippled the country in the 1990s.

Toll sees sharp decline in 3Q homebuilding revenue

By The Associated Press

Toll Brothers Inc. said Wednesday the nation's housing woes continue to hammer the luxury builder's business, leading to a steep decline in new home contracts and sales.

The Horsham, Pa.-based company released its preliminary fiscal results for the three months ended July 31, and said there was little improvement in the dismal conditions that have wracked homebuilders across the nation.

Home-building revenue for the quarter plunged 34 percent to $796.5 million from $1.21 billion last year.

By The Associated Press

The Dow fell 109.51, or 0.94 percent, to 11,532.96.

The Standard & Poor's 500 index slipped 3.76, or 0.29 percent, to 1,285.83, while the tech-focused Nasdaq composite index fell 1.99, or 0.08 percent, to 2,428.62.

Light, sweet crude for September delivery rose $2.99 to settle at $116 a barrel on the New York Mercantile Exchange, after earlier falling as low as $112.87.

In other Nymex trading, heating oil futures rose 5.89 cents to settle at $3.1317 a gallon, while natural gas futures rose 12.6 cents to settle at $8.456 per 1,000 cubic feet.

In London, September Brent crude rose $2.32 to settle at $113.47 a barrel.