AP
Business Highlights
Monday September 22, 6:42 pm ET

Oil spikes $25 on bailout anxiety, short covering

NEW YORK (AP) -- Oil prices briefly spiked more than $25 a barrel Monday, shattering the record for the biggest one-day gain as unease about the government's $700 billion bailout plan pummeled the dollar and spurred investors to buy safe-haven assets. An expiring crude contract added fuel to the frenzied rally.

Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back to settle at $120.92, up $16.37.

The contract expired at the end of the day, adding to the volatility as traders rushed to cover positions.

Markets remain on edge as investors seek safety

NEW YORK (AP) -- Volatility again swept the financial markets Monday as investors grew nervous about an amorphous government plan to buy $700 billion in banks' mortgage debt.

Stocks fell sharply, taking the Dow Jones industrials down more than 370 points, while investors sought safety in hard assets such as gold and oil, which at one point shot up more than $25 a barrel.

The dollar skidded lower, contributing to oil's surge, while the credit markets were still uneasy but not showing the frantic trading they saw last week.

Congress, Bush team agree on some bailout terms

WASHINGTON (AP) -- Scrambling for a quick accord on the $700 billion bailout, the Bush administration and leading lawmakers have agreed to include mortgage aid and strong congressional oversight along with unprecedented help for failing financial institutions, a key lawmaker said Monday.

Unimpressed, investors sent stocks plummeting anew, pushed oil up $16 a barrel and propelled gold prices ever higher as they searched for a safe place to park their money.

President Bush prodded Congress to pass the administration's rescue plan quickly.

Morgan Stanley to sell 20 pct stake in itself

NEW YORK (AP) -- Investment bank Morgan Stanley said Monday it signed a letter of intent to sell up to 20 percent of the company to Mitsubishi UFJ Financial Group Inc.

Financial terms of the deal were not disclosed. If the deal is completed, the price would be based on Morgan Stanley's book value after Japan's largest bank completes a due diligence review. The letter of intent signed by both banks is nonbinding.

Based on the number of shares Morgan Stanley had outstanding as of June 30 and its midday trading price Monday, Morgan Stanley would raise more than $8 billion by selling new stock equal to 20 percent of shares that would be outstanding after including Mitsubishi's stake.

Credit markets ease only slightly on bailout plans

NEW YORK (AP) -- A few corners of the frozen credit markets thawed a bit Monday on news of the U.S. government's bank bailout plans, but business was hardly back to normal.

Last week, the credit markets -- where the world buys and sells debt -- were thrown into a tumult after a cascade of troubling events, from the bankruptcy of Lehman Brothers Holdings Inc. to the bailout of insurer American International Group. Over the weekend, the U.S. government said it would buy $700 billion in mortgage debt and asset-backed commercial paper from the nation's struggling banks.

Although several credit market indicators improved Monday compared to last week, they did not show restored confidence.

Microsoft to issue debt, buy back $40B in stock

SEATTLE (AP) -- Chaos in the money markets gave Microsoft Corp. an opening Monday to announce it would take on debt for the first time, launch a new $40 billion stock buyback plan and raise its dividend.

The company said Monday its board approved a $2 billion commercial paper program, as part of a bigger $6 billion, open-ended allowance for debt financing.

Microsoft also raised its quarterly dividend to 13 cents from 11 cents, payable Dec. 11 to shareholders of record on Nov. 20.

CarMax earnings fall on weak sales, finance losses

RICHMOND, Va. (AP) -- Auto retailer CarMax Inc. said Monday its second-quarter earnings plunged 78 percent due to a weak economy, high gasoline prices and losses in its financing arm. The results were worse than analysts expected and the company's shares fell 8 percent.

The Richmond, Va.-based company said earnings for the quarter ended Aug. 31 fell to $14 million, or 6 cents per share, from $65 million, or 29 cents per share, in the same quarter last year.

Total sales fell 13 percent to $1.84 billion from $2.12 billion a year ago. CarMax said same-store sales, or sales at stores open at least a year, tumbled 17 percent during the quarter.

French company EDF makes offer for Constellation

A French nuclear power company is upping the ante for Constellation Energy Group Inc., offering to pay $35 per share for the Baltimore-based wholesale power supplier in hopes of unseating a deal Constellation made last week to be sold to MidAmerican Energy Holdings Co., a unit of Warren Buffett's Berkshire Hathaway Inc.

The offer from Electricite de France SA, which the French company made on Friday and disclosed in a statement on Monday, is $8.50 per share higher than the $26.50 per share price that Constellation agreed to last week.

EDF, which already owns 9.5 percent of Constellation, said it was making the offer in conjunction with private equity firms Kohlberg Kravis Roberts & Co. and TPG Capital.

By The Associated Press

The Dow Jones industrial average fell 372.75, or 3.27 percent, to 11,015.69. The retreat follows the Dow's best two-day point gain since March 2000 so some retrenchment, especially amid the anxiety on the Street, wasn't unexpected. But the decline erased a gain of nearly 370 points from Friday.

Broader stock indicators also tumbled. The Standard & Poor's 500 index fell 47.99, or 3.82 percent, to 1,207.09, and the Nasdaq composite index fell 94.92, or 4.17 percent, to 2,178.98.

Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back to settle at $120.92, up $16.37.

In other Nymex trading, heating oil futures rose 14.52 cents to settle at $3.043 a gallon, while gasoline futures rose 10.41 cents to settle at $2.7038 a gallon. Natural gas futures rose 9.5 cents to settle at $7.943 per 1,000 cubic feet.

In London, November Brent crude rose $6.43 to settle at $106.04 a barrel on the ICE Futures exchange.