AP
Business Highlights
Tuesday August 19, 6:40 pm ET

Wholesale prices rising at fastest pace since 1981

WASHINGTON (AP) -- Wholesale inflation soared in July, leaving prices rising at the fastest pace in nearly three decades. While recent declines in oil and other commodity prices raise hopes inflation may have peaked, some economists worry about the widespread nature of the July price surge and caution it will take more time for that pressure to ease on Wall Street and Main Street.

The Labor Department reported Tuesday that wholesale prices shot up 1.2 percent in July. The increase marked the biggest annual increase since the 12 months ending in June 1981, a period when the Federal Reserve was driving interest rates to the highest levels since the Civil War in an effort to combat a decade-long bout of inflation.

Stocks fall on inflation data, financial worries

NEW YORK (AP) -- Wall Street fell sharply for a second straight session Tuesday after a hefty jump in wholesale inflation and a drop in new home construction gave investors more reason to believe an economic recovery is far off. The Dow Jones industrial average dropped 130 points to 11,348.55, after losing 180 points on Monday.

A rebound in oil prices added to investors' anxiety. Oil's retreat over the past month had given the stock market a brief rally. But aside from August's commodities drop, there have been few bright spots on Wall Street this summer; the banks are forecasting more losses, the credit markets are still tight, the housing market remains in a slump and the economy continues to lose jobs -- all of which gives investors little reason to buy stocks.

Oil rises above $114 after dollar weakens vs euro

NEW YORK (AP) -- Oil prices rebounded Tuesday, jumping back above $114 barrel after the dollar weakened against the euro and a rally in heating oil pulled new buyers into energy markets.

Light, sweet crude for September delivery rose $1.66 to settle at $114.53 on the New York Mercantile Exchange, after alternating between positive and negative territory earlier in the day. The September contract expires Wednesday, adding to the volatility.

At the pump, retail gas prices continued their decline, suggesting that cash-strapped Americans are still cutting back on their driving. A gallon of regular slipped another penny overnight to a new national average of $3.73, almost 10 percent lower than record prices of $4.114 a gallon reached July 17, according to auto club AAA, the Oil Price Information Service and Wright Express.

2Q profit reports from retailers show more strain

NEW YORK (AP) -- From affluent shoppers at Saks to bargain-hunters at Target, from Home Depot to office supplier Staples, consumers are pulling back and that's hurting retailers and raising more concerns about how they'll do the rest of the year.

The latest round of second-quarter reports show more signs of financial stress on shoppers, as Target's customers stick to necessities and have trouble making their credit card payments. Saks says it's now seeing its high-end designer consumer cut back, whereas previously it was only the aspirational customers who were the ones retrenching.

And while falling gas prices in recent weeks should provide some relief to consumers, economists say that won't be enough to offset all the other economic problems out there, from a housing slump and a weakening job market to soaring food prices and tighter credit.

GM offers employee discount to all on 2008 models

NEW YORK (AP) -- General Motors Corp. said Tuesday it will extend employee discounts to everyone on almost all of its 2008 and some of its 2009 models as it seeks to clear its remaining inventory of 2008 vehicles.

The Detroit automaker said it will offer employee prices on all 2008 vehicles except its medium-duty trucks. It will also extend the incentive on a handful of 2009 models.

Employee discounts generally are 10 percent below the invoice price but vary by model. The discount comes at a time when GM, the largest U.S. automaker, is struggling to boost its declining sales amid a weak economy and a rapid shift in demand away from its traditionally popular trucks and SUVs.

California home sales surged in July, prices fell

LOS ANGELES (AP) -- Home sales in California surged more than 12 percent in July from a year ago -- the biggest jump in sales in four years, a research firm said Tuesday.

A total of 39,507 new and preowned homes were sold statewide last month. That's up 12.3 percent from July 2007 and up 12.2 percent from June's total, MDA DataQuick said in its report.

Foreclosed homes accounted for 44.8 percent of all the homes sold last month. The surge in foreclosure sales and home depreciation, coupled with fewer sales of high-end homes, helped drive down the statewide median home price to $318,000, a decline of 33.5 percent from July 2007.

FDA warns General Electric over lax record keeping

WASHINGTON (AP) -- Federal regulators have warned General Electric Co. over lax quality control standards at a plant that makes computer software for medical imaging.

The warning letter from the Food and Drug Administration released Tuesday lists a dozen record-keeping violations uncovered at a GE facility in Barrington, Ill., between April and May.

FDA inspectors found that GE did not have procedures for reviewing customer complaints, product changes and other information about its Centricity Imaging software that it used to schedule, manage and archive medical images.

General Dynamics to buy Jet Aviation for 2.25B

WASHINGTON (AP) -- General Dynamics Corp. said Tuesday it will buy Jet Aviation for about $2.25 billion in cash, part of the defense contractor's push to expand its private civilian jet business and tap into robust demand for luxury planes overseas.

With the purchase, General Dynamics pairs its existing private aircraft maker, Gulfstream, with Jet Aviation's global network of maintenance and service centers that can fix planes and outfit them with custom features for wealthy customers or cash-rich governments.

While General Dynamics is perhaps best known for its tanks, ships, submarines and other military equipment, it has significantly expanded its aerospace unit in recent years and now expects its fleet of flying business jets to double in the next decade to roughly 30,000 planes.

Hewlett-Packard 3Q profit jumps 14 pct

SAN FRANCISCO (AP) -- Hewlett-Packard Co.'s fiscal third-quarter profit jumped 14 percent, beating Wall Street's expectations, as strong laptop sales and a robust international presence continued to lift the technology bellwether.

The Palo Alto, Calif.-based company's results, reported after the market closed Tuesday, signaled that HP continues to hold its ground as the world's No. 1 seller of personal computers even with stronger competition from Dell Inc. and Apple Inc. and aggressive price cuts.

But some investors have expressed fears that HP's growth might taper off as it digests its $13.9 billion acquisition of Electronic Data Systems Corp. The deal deepens HP's battle with IBM Corp. for the dollars that corporate customers spend to get guidance on setting up their computer networks.

Apple says battery problem caused iPod overheating

SEATTLE (AP) -- Apple Inc. said Tuesday that batteries from a single supplier are to blame for the meltdown of some models of its tiny iPod Nano digital music player.

The company's written statement came in response to a Japanese government report that two iPod Nanos overheated in Tokyo, scorching nearby paper and a woven straw mat.

Apple said the flaw affected first-generation Nanos, sold between September 2005 and December 2006, in very rare instances.

By The Associated Press

The Dow fell 130.84, or 1.14 percent, to 11,348.55.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 11.90, or 0.93 percent, to 1,266.70, and the Nasdaq composite index fell 32.62, or 1.35 percent, to 2,384.36.

Light, sweet crude for September delivery rose $1.66 to settle at $114.53 on the New York Mercantile Exchange.

In other Nymex trading, gasoline prices rose 4.87 cents to settle at $2.639 a gallon, while natural gas futures added 8.8 cents to settle at $7.976 per 1,000 cubic feet.

In London, October Brent crude rose $1.31 to settle at $113.25 a barrel.