AP
Business Highlights
Tuesday September 30, 6:41 pm ET

Stocks surge higher; credit worries persist

NEW YORK (AP) -- Wall Street snapped back Tuesday after its biggest sell-off in years amid growing expectations that lawmakers will salvage a $700 billion rescue plan for the financial sector. But the seized-up credit markets where businesses turn to raise money showed no sign of relief.

One day after the biggest point drop in its history, the Dow rose 485.21, or 4.68 percent, to 10,850.66. It was third-biggest point gain in the Dow's history and the biggest percentage climb in the Dow in six years.

The recovery in stocks wasn't unexpected as carnage on Wall Street often attracts bargain hunters, though questions remain about how investors will proceed.

Bailout revival sought; better deposit safety seen

WASHINGTON (AP) -- Congressional leaders, President Bush and the two rivals to succeed him rummaged through ideas new and old Tuesday, desperately seeking to change a dozen House members' votes and pass a multibillion-dollar economic rescue plan. At the top of the list: Raise confidence in the banking system by increasing the government's insurance.

In addition, there was talk of making it easier for financial institutions to hold questionable long-term assets, an idea embraced by some of the House Republicans who slapped down the bailout bill and sent stocks tumbling on Monday.

With banks in miser mode, credit markets stay taut

NEW YORK (AP) -- Stocks are rebounding and a new bailout package could be coming soon, but the credit markets -- where day-to-day borrowing occurs to keep the gears of the economy turning -- are still stuck.

Bank-to-bank lending rates jumped Tuesday and Treasury bill demand remained high. The key bank-to-bank lending rate, the London Interbank Offered Rate, or LIBOR, rose to 4.05 percent Tuesday from 3.88 percent for 3-month dollar loans, and to 6.88 percent from 2.57 percent for overnight dollar loans -- the highest level since the British Bankers Association began tracking that rate in 2001.

S&P: Home prices post 16 pct annual drop in July

NEW YORK (AP) -- A closely watched index released Tuesday showed home prices tumbling by the sharpest annual rate ever in July, and though the monthly rate of decline is slowing, there is no turnaround in sight.

The Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3 percent in July from the year-ago month, the largest drop since its inception in 2000. The 10-city index plunged 17.5 percent, its biggest decline in its 21-year history.

Prices in the 20-city index have plummeted nearly 20 percent since peaking in July 2006. The 10-city index has fallen more than 21 percent since its peak in June 2006.

Consumer confidence unexpectedly improves in Sept.

NEW YORK (AP) -- Americans' confidence in the economy unexpectedly improved in September, but it still hovers near a 16-year low as they wrestle with a weak job market, higher food and fuel prices, and the worst financial crisis in decades.

The Conference Board said Tuesday that its Consumer Confidence Index is now at 59.8, up from a revised 58.5 in August. Economists surveyed by Thomson/IFR expected a reading of 55.5.

The survey, which is based on a sample of 5,000 U.S. households, aims at measuring how much faith people have in the job market and in the economy now and over the next six months. Consumer spending represents about two-thirds of all economic activity.

Oil prices rebound above $100 after huge sell-off

NEW YORK (AP) -- Oil prices swung back above $100 a barrel Tuesday following a precipitous plunge a day earlier, with a growing consensus among investors that Congress will resurrect a failed U.S. financial bailout plan.

Light, sweet crude for November delivery rose $4.27 to settle at $100.64 a barrel on the New York Mercantile Exchange, after earlier rising as high as $101.40.

Crude has fallen about $20, or 17 percent, in the last eight days. Some recovery was to be expected following Monday's fall, and analysts said prices will likely remain in a holding pattern until the fate of the financial rescue plan is determined.

Pfizer shifts focus to cancer and biotech drugs

TRENTON, N.J. (AP) -- Pfizer Inc. is shifting its research focus to diseases that have high potential for big profits and for treatment improvements, such as cancer and Alzheimer's disease.

The world's biggest drugmaker also is ending new research on conditions from obesity to heart disease, but research on drugs already in late-stage human testing will continue, spokeswoman Liz Power said Tuesday.

Experts said such tweaking of research strategy is standard in the pharmaceutical industry -- and needed periodically as new competition and other factors affect revenue.

German unemployment edges lower to 7.4 percent

FRANKFURT, Germany (AP) -- Germany's unemployment rate fell in September for a second consecutive month, the government said Tuesday.

The unemployment rate in Europe's biggest economy was 7.4 percent, down 0.2 percent from August when the rate stood at 7.6 percent, the federal employment office said.

The number of people unemployed stood at just over 3 million in September, a reduction of 115,000 people compared to a year ago. The decline is part of a larger drop in Germany's unemployment rate, which fell below 8 percent in May for the first time since 1992.

Judge holds Hexion to Huntsman buyout proposal

DOVER, Del. (AP) -- A Delaware judge has refused to allow Hexion Specialty Chemicals to walk away from a $6.5 billion buyout of chemicals maker Huntsman Corp.

In a ruling late Monday, Vice Chancellor Stephen Lamb ordered Hexion, an affiliate of private equity firm Apollo Management LP, to use its best efforts to complete the deal and said he would extend the termination date if necessary.

Lamb also denied Hexion's claim that Huntsman was not entitled to a $325 million break up fee if the deal does not go through.

GAO: FAA cannot auction flight slots

WASHINGTON (AP) -- U.S. aviation officials have no legal authority to auction off takeoff and landing slots at airports, a scheme the government devised to try to curb crippling traffic jams at major airports, congressional investigators say.

The letter from the Government Accountability Office comes amid a legal fight among airlines, airport operators and the Federal Aviation Administration over the Bush administration's plan to trim flight delays by auctioning off slots at New York City-area airports.

The legal opinion is another blow to Bush administration officials who hoped to get their air traffic experiment off the ground before they leave office in four months.

Schlumberger says Gustav, Ike cut into profits

HOUSTON (AP) -- Disruptions from back-to-back hurricanes in the Gulf of Mexico are expected to crimp third-quarter earnings for Schlumberger Ltd., but the chief of the world's biggest oilfield services company said Tuesday increased global exploration and other factors bode well for long-term business.

During an investor conference in Houston, Schlumberger Chairman and Chief Executive Andrew Gould acknowledged it was impossible to predict how the ongoing financial crisis will affect energy demand, but predicted robust business for global companies seeking new supplies of hydrocarbons.

By The Associated Press

The Dow rose 485.21, or 4.68 percent, to 10,850.66.

Broader stock indicators also bounced higher. The Standard & Poor's 500 index recovered 58.35, or 5.27 percent, to 1,164.74, and the Nasdaq composite index rose 98.60, or 4.97 percent, to 2,082.33.

The S&P fell 8.79 percent Monday, while the Nasdaq lost 9.14 percent.

Light, sweet crude for November delivery rose $4.27 to settle at $100.64 a barrel on the New York Mercantile Exchange, after earlier rising as high as $101.40.

In other Nymex trading, heating oil futures rose 10.62 cents to settle at $2.8947 a gallon, while gasoline prices rose 8.77 cents to settle at $2.49 a gallon. Natural gas futures rose 21.7 cents to settle at $7.438 per 1,000 cubic feet.

In London, November Brent crude rose $4.19 to settle at $98.17 a barrel on the ICE Futures exchange.