AP
Business Highlights
Thursday August 21, 6:26 pm ET

Merrill, Goldman, Deutsche in deal with regulators

NEW YORK (AP) -- Merrill Lynch & Co., Goldman Sachs Group Inc. and Deutsche Bank on Thursday joined other major financial companies in settling with regulators over their roles in selling risky auction-rate securities to retail investors.

The agreements brings to eight the number of global banks that have settled the five-month probe into claims they misled customers into believing the investments were safe. New York Attorney General Andrew Cuomo, leading the investigation on behalf of state and federal authorities, has now reached deals to buy back $57 billion worth of auction-rate securities.

Cuomo said Thursday he is far from finished in examining both large and small players in the market, and said the investigation will intensify against Bank of America Corp. He also warned that the investigation might shift its attention to individual brokers and bank employees who sold the investments.

Economy remains stuck in low gear

NEW YORK -- A private sector measure of the economy's health showed the largest drop in a year, and while new jobless claims fell for the second straight week, they remain near the highest levels since 2002. The reports are the latest evidence the languishing American economy remains stuck in low gear.

The New York-based Conference Board said Thursday its monthly forecast of future economic activity fell 0.7 percent in July, far more than the consensus estimate of a 0.2 percent decline by Wall Street economists surveyed by Thomson/IFR.

The last time the index showed a drop this great was last August, when it fell by 1 percent.

The largest drag on the index was the decline in building permits, followed by dropping stock prices, rising unemployment claims, a tightened money supply and falling manufacturers' orders for consumer goods. The index has slipped 0.9 percent for the six months ending in July.

Stocks end mixed on rising oil, financial worries

NEW YORK (AP) -- Wall Street finished mixed Thursday after investors largely shrugged off a jump in oil prices and focused instead on a bullish call on Lehman Brothers Holdings Inc. that eased worries about the financial sector.

Stocks ended off their lows of the session after a Ladenburg Thalmann analyst raised his rating on Lehman to "buy," saying he believes the nation's fourth-biggest investment bank has become a hostile takeover candidate. That call helped ease concerns about that company as well as the financial sector, which has been hit by a spike in bad mortgage debt.

The Dow Jones industrial average rose 12.78, or 0.11 percent, to 11,430.21. It was the second straight session of moderate gains for the blue chips after heavy losses the first two days of the week.

Oil jumps $5 on US-Russia tensions, sliding dollar

NEW YORK (AP) -- Oil prices shot up more than $5 a barrel to settle at $121.18 Thursday, rising to the highest level in over two weeks as escalating tensions with Russia stoked fears of supply disruptions to the West.

Crude's rally mimicked the wild price swings seen last month and at least temporarily halted oil's slide back toward $100 a barrel. A weaker U.S. dollar and worries about tightening output from OPEC countries are also supporting prices.

After days of brushing off geopolitical flare-ups and a tropical storm, oil spiked above $122 a barrel as traders became rattled over increasingly hostile Russian rhetoric toward a U.S.-Poland deal to install a missile defense system in Eastern Europe -- a move Moscow views as a threat.

Oracle's Ellison grabs top spot on best-paid list

SAN FRANCISCO (AP) -- Oracle Corp. founder Larry Ellison, a longtime fixture on the list of the world's richest people, is now ensconced atop The Associated Press' rankings of the top-paid chief executives in the United States.

Never shy about flaunting his estimated $25 billion fortune, Ellison established himself as the best-paid CEO among major U.S. companies by persuading Oracle to award him a fiscal 2008 pay package valued at $84.6 million under the AP's calculations.

The total compensation, disclosed late Wednesday in a Securities and Exchange Commission filing, catapulted Ellison to the top of the AP's annual analysis of CEO pay. With a pay package valued at $83.1 million, Merrill Lynch CEO John Thain held that distinction in June when the AP released its 2008 analysis of executive compensation at more than 400 large companies.

Fannie, Freddie rescue plans leave many anxious

WASHINGTON (AP) -- A government rescue of Fannie Mae and Freddie Mac could be costly for scores of investment, banking and insurance companies that hold billions in preferred shares of the mortgage finance giants as assets.

Speculation has been building on Wall Street that a government investment to rescue Fannie and Freddie would come in the form of a cash infusion through the acquisition of preferred shares in the companies.

Those shares, which pay a bond-like yield, get preference over common shares in the event a company is liquidated. While existing common stockholders would likely see the value of their stakes reduced to zero, the outcome is less certain for preferred shareholders.

FDA: Irradiating spinach, lettuce OK to kill germs

WASHINGTON (AP) -- Consumers worried about salad safety may soon be able to buy fresh spinach and iceberg lettuce zapped with just enough radiation to kill E. coli and a few other germs.

The Food and Drug Administration on Friday will issue a regulation allowing spinach and lettuce sellers to take that extra step, a long-awaited move amid increasing outbreaks from raw produce.

It doesn't excuse dirty produce, warned Dr. Laura Tarantino, FDA's chief of food additive safety. Farms and processors still must follow standard rules to keep the greens as clean as possible -- and consumers, too, should wash the leaves before eating.

Lawmakers demand study data on Vytorin cancer risk

TRENTON, N.J. (AP) -- A congressional committee is demanding that the makers of controversial cholesterol drug Vytorin, Merck & Co. and Schering-Plough Corp., produce extensive data related to a clinical study indicating the drug might increase the risk of cancer.

Rep. John D. Dingell, chairman of the House Committee on Energy and Commerce, and Rep. Bart Stupak, chairman of its Oversight and Investigations Subcommittee, sent a letter Thursday to the chief executives of the drug company partners, giving them two weeks to supply detailed information about the study.

Late Thursday, the U.S. Food and Drug Administration said it is investigating "a potentially increased incidence of cancer" indicated by preliminary results of that study, called SEAS, that it recently received. The agency said it expectes a final report in about three months and would need another six months to fully evaluate the information, but that patients should not stop taking Vytorin or other cholesterol drugs in the meantime.

Heinz gains, Hormel hurts on high costs in quarter

MILWAUKEE (AP) -- Rising commodity costs kept weighing on food makers H.J. Heinz Co. and Hormel Foods Corp. in the most recent quarter, even as consumers continued to swallow price increases for their favorite foods.

Hormel Foods, the maker of Spam and Jennie-O Turkey, said Thursday that its fiscal third-quarter profit fell 9 percent as higher meat, fuel and other costs outweighed price increases and hurt margins. But revenue was up 10 percent, helped in part by the higher prices charged to customers.

H.J. Heinz's fiscal first-quarter profit rose 11 percent, fueled by double-digit sales growth in North America and Europe. The company, which is also facing higher commodity costs, raised prices an average of 5.2 percent across all its product lines, including Heinz Ketchup, Weight Watchers Smart Ones products and Ore-Ida potatoes, to try to keep profits strong.

By The Associated Press

The Dow Jones industrial average rose 12.78, or 0.11 percent, to 11,430.21.

Broader stock indicators ended mixed Thursday. The Standard & Poor's 500 index rose 3.18, or 0.25 percent, to 1,277.72, and the Nasdaq composite index fell 8.70, or 0.36 percent, to 2,380.38.

Light, sweet crude for October delivery jumped $5.62 to settle at $121.18 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil futures rose 13.71 cents to settle at $3.3006 a gallon, while gasoline prices gained 13.49 cents to settle at $3.0452 a gallon. Natural gas futures increased 17.5 cents to settle at $8.252 per 1,000 cubic feet.

In London, October Brent crude rose $5.80 to settle at $120.16 a barrel.