AP
Business Highlights
Friday August 29, 5:22 pm ET

Incomes drop sharply in July while spending slows

WASHINGTON (AP) -- Consumer spending slowed to a crawl and personal incomes plunged in July, reflecting the waning impact of $93 billion in economic stimulus payments.

The Commerce Department report Friday showed that consumer activity got off to a shaky start in the third quarter, raising new worries that the economy could falter in coming months due to rising unemployment, a continuing credit crisis and the deepest housing slump in decades.

Personal incomes fell by a bigger-than-expected 0.7 percent in July, the biggest drop in nearly three years, while consumer spending edged up a modest 0.2 percent, just one-third the 0.6 percent gain in June.

Stocks end lower on personal income data

NEW YORK (AP) -- Wall Street tumbled Friday after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed.

The Dow Jones industrial average more than 170 points, while a disappointing profit report from computer maker Dell Inc. weighed on the technology-heavy Nasdaq composite index.

Wall Street's retreat following the downbeat news about consumers also comes after several days of sizable gains in stocks and on the final session before the long Labor Day weekend. Pre-holiday trading is generally light and some pullback was to be expected.

Gas prices up as Gustav threatens Gulf refineries

NEW YORK (AP) -- Retail gas prices swung higher Friday -- the first increase in 43 days -- as analysts warned that a direct hit on U.S. energy infrastructure by Hurricane Gustav could send pump prices hurtling toward $5 a gallon.

Meanwhile, oil prices ended the day slightly lower, falling for a second straight session. But prices fluctuated sharply as some traders feared supply disruptions and others bet the government will release supplies from the Strategic Petroleum Reserve if Gustav wreaks havoc in the Gulf of Mexico area -- home to a quarter of U.S. crude supplies and 40 percent of refining capacity.

Gustav, which regained hurricane strength Friday, was spinning away from Jamaica on a course toward Gulf Coast states including Louisiana.

Union leadership rejects Boeing contract offer

SEATTLE (AP) -- Machinists union leadership has called for a strike after deciding Boeing's final contract offer isn't good enough.

Connie Kelliher, a spokeswoman for the International Association of Machinists and Aerospace Workers District Lodge 751, says the union plans a news conference at 6 p.m. ET to explain the union's objections.

Boeing presented its third and final contract proposal on Thursday, calling for an 11 percent raise and 3 percent cost-of-living adjustment.

Alitalia files for bankruptcy protection

ROME (AP) -- Alitalia said Friday it has sought bankruptcy protection, taking the first step in a plan to reshape Italy's unprofitable and debt-laden national carrier.

The company said in a statement that its board had asked the government to appoint an administrator and had declared insolvency to a Rome court.

Alitalia has been losing some $3 million a day -- hurt by labor unrest, competition from budget airlines and high fuel prices. Its shares have been suspended from trading since June.

GM recalling 944,000 vehicles

WASHINGTON (AP) -- General Motors Corp. said Friday it was recalling 944,000 vehicles because of a problem with a windshield wiper fluid system that could lead to a fire.

More than 850,000 sport utility vehicles, trucks and passenger cars in the United States and nearly 100,000 vehicles in Canada, Mexico and the Middle East are involved in the recall, the company said.

Ala. governor in talks over county debt crisis

BIRMINGHAM, Ala. (AP) -- Gov. Bob Riley negotiated with creditors Friday over whether Alabama's largest county should seek a deal on its $3.2 billion sewer debt or file the largest bankruptcy in U.S. history.

The meeting -- held at the Capitol in Montgomery between the Republican governor, a county attorney and creditors -- came as the county was due to make an interest payment of some $2 million.

The county had the cash, but Commissioner Jim Carns said officials must decide whether to continue making payments indefinitely or file for bankruptcy since its obligations far outstrip revenues from the sewer system.

European Union opens probe into 3 airline alliance

BRUSSELS, Belgium (AP) -- The European Commission has opened an antitrust probe into a revenue-sharing deal between British Airways PLC, American Airlines and Spain's Iberia SA, a spokesman said Friday.

EU spokesman Jonathan Todd said the investigation -- to see whether the pact among the three airlines violates competition rules -- had been opened by regulators and did not arise from any complaints filed.

FAA outage reveals odd computing practices

WASHINGTON (AP) -- When a computer glitch at a Federal Aviation Administration center caused widespread airline delays this week, it served as a reminder that the U.S. flight system is waiting for a modernizing overhaul.

But it also appears the FAA's management of its existing technologies falls short of standards in other vital sectors.

By using computing practices that would be considered poor in credit card networks or power plant operators, for example, the FAA was vulnerable to a problem caused when new software was loaded at the Atlanta center that distributes flight plans.

By The Associated Press

The Dow Jones industrial average fell 171.22, or 1.46 percent, to 11,543.96. The blue chips began trading Friday having logged a three-day advance of nearly 330 points.

Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 17.85, or 1.37 percent, to 1,282.83. The Nasdaq fell 44.12, or 1.83 percent, to 2,367.52.

Light, sweet crude for October delivery fell 13 cents to settle $115.46 a barrel on the New York Mercantile Exchange, after earlier rising as high as $118.76. On Thursday, prices fell $2.56 at $115.59 a barrel, the first time this week it closed lower.

In other Nymex trading, heating oil lost 0.07 cent to settle at $3.1819 a gallon, while gasoline fell 1.15 cents to settle at $3.0099 a gallon. Natural gas fell 10.7 cents to settle at $7.943 per 1,000 cubic feet.

In London, October Brent crude fell 12 cents to settle at $114.05 a barrel.