BC-Business News Digest


Associated Press

Posted on May 23, 2013 at 3:00 PM

Updated Thursday, May 23 at 3:00 PM

Business News at 5:30 p.m.

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WASHINGTON — Investors are jittery about when the Federal Reserve will start scaling back its drive to speed the U.S. economic recovery — a date that may come sooner than some had expected. Yet all but forgotten by investors is that whenever the Fed slows its efforts to keep interest rates at record lows, it will be cause for applause: It would mean policymakers think the economy is finally healthy enough to sustain solid growth with less support from the Fed. "We should be hoping for higher interest rates," says Kevin Logan, chief U.S. economist at HSBC. By Paul Wiseman.



NEW YORK — Investors recover their poise after an early sell-off sent stocks sharply lower. U.S. markets fell immediately after the opening bell following a global slump prompted in part by an unexpectedly weak report on manufacturing in China. The dip gave investors who had missed this year's rally in stocks an opportunity to get into the market, and by midday stocks had recouped most of their early losses. The market even climbed into positive territory by midday, before ending the day marginally lower. By Steve Rothwell.

AP photos.



TOKYO — Japan's financial markets gyrate wildly, underscoring the vulnerability of its economy to a loss of investor confidence as Prime Minister Shinzo Abe attempts shock monetary easing to end two decades of stagnation. A spike in interest rates on government bonds, which came despite the Bank of Japan's aggressive efforts to keep borrowing costs down, is unnerving some investors. The bond gyrations, along with fresh data showing China's recovery is faltering, led to a 7.3 percent tumble in the benchmark Nikkei 225 stock index. By Elaine Kurtenbach.

AP photos.


WASHINGTON — The economy is recovering, the White House is dealing with multiple controversies, and President Barack Obama appears generally unaffected either way. Several recent polls show the president sustaining an overall approval rating around 50 percent, with no major uptick from gains in housing, jobs and the stock market, and no downtick from the recent storms over the terror attack in Benghazi, Libya, the targeting of conservative groups by the IRS and a leak investigations that has swept up the phone records of Associated Press journalists. By Jim Kuhnhenn.

AP photo.

— PRITZKER-COMMERCE — President Barack Obama's nominee for commerce secretary, Chicago billionaire business executive and philanthropist Penny Pritzker, was questioned briefly about her ties to a subprime mortgage lender that failed in 2001 and her role as a beneficiary of family offshore trusts in the Bahamas, but those were minor bumps in an otherwise smooth Senate confirmation hearing.


Sears Holdings Corp. reports a steeper-than-expected loss for its first quarter with the beleaguered retailer blaming a cooler spring for falling sales. The operator of Sears and Kmart stores also said it's considering strategic options for its service-agreement business, such as selling it off, to raise cash. Service agreements are when customers pay an extra fee when buying an appliance and the company agrees to fix or replace it if it breaks within a certain time. The steep loss drove Sears' shares down more than 11 percent in after-hours trading. By Anne D'Innocenzio.

AP photo.


After years of struggling, Gap is back in style. Gap Inc., which owns the Gap, Old Navy and Banana Republic clothing chains, reports a 43 percent increase in its fiscal first-quarter net income, as the company continues to reap benefits from the turnaround plan that it began early last year. The company, based in San Francisco, also reiterated its full-year earnings outlook. The latest results are welcome news for customers and investors who've watched Gap over the years flounder from an industry darling to a has-been. Gap's performance shows that efforts by the chain to attract customers with brightly colored fashions and lively ads are helping to boost sales continue to take hold. By Anne D'Innocenzio.


TOKYO — Keeping the meltdown-stricken Fukushima nuclear plant in northeastern Japan in stable condition requires a cast of thousands. Increasingly the plant's operator is struggling to find enough workers, a trend that many expect to worsen and hamper progress in the decades-long effort to safely decommission it. Tokyo Electric Power Co., the utility that runs the Fukushima Dai-ichi plant that melted down in March 2011 after being hit by a tsunami, is finding that it can barely meet the headcount of workers required to keep the three broken reactors cool while fighting power outages and leaks of tons of radiated water, said current and former nuclear plant workers and others familiar with the situation at Fukushima. By Yuri Kageyama.

AP photos.


DENVER — In the most prominent challenge of its kind, Hobby Lobby Stores Inc. is asking a federal appeals court for an exemption from part of the federal health care law that requires it to offer employees health coverage that includes access to the morning-after pill.

AP photos.


LOS ANGELES — Google's new music service offers a lot of eye candy to go along with the tunes, and for a discounted $8 a month for early birds, it's worth a try. The song selection of around 18 million tracks is comparable to popular services such as Spotify and Rhapsody, and myriad playlists curated along different genres provides a big playground for music lovers. Some of the touch features require a pixie-like dexterity though, which is pretty much the only downside in this solid entrant to the world of music streaming. By Ryan Nakashima.

AP photo.



WASHINGTON — The number of Americans applying for unemployment benefits fell 23,000 last week to a seasonally adjusted 340,000, a level consistent with solid job growth. The less volatile four-week average ticked down just 500 to 339,500, the Labor Department said. That's close to the five-year low of 338,000 reached during the first week of May. The four-week average is 9 percent lower than in November. By Paul Wiseman.

AP photo.


WASHINGTON — Sales of new homes rose in April to the second highest level since the summer of 2008 while the median price for a new home hit a record high, further signs that housing is recovering. New-home sales rose to a seasonally adjusted annual rate of 454,000 in April, the Commerce Department said Thursday. That was up 2.3 percent from March and just slightly below January's 458,000. By Martin Crutsinger.

AP photo.


WASHINGTON — Average rates on fixed mortgage rose for the third straight week, hitting their highest levels since mid-March. The average rate for the 30-year loan increased to 3.59 percent, while the average on the 15-year loan jumped to 2.77 percent. Still, mortgage rates remained close to historic lows, a trend that should help sustain the housing recovery. By Marcy Gordon.


WASHINGTON — New census estimates show that most of the nation's largest cities further enhanced their allure last year, posting strong population growth for a second straight year.

AP photo.


WASHINGTON — Dismissing a veto threat from President Barack Obama, lawmakers in the Republican-led House approved legislation that links student loan rates to the ups and downs of the financial markets. The Republican-backed bill would allow students to dodge a scheduled rate hike for students with new subsidized Stafford loans next month, but rates could rise in coming years. Democrats largely opposed the measure By Philip Elliott.

— OIL PRICES —An afternoon recovery in U.S. stock markets helps oil reverse early losses to close down just 3 cents at $94.25 a barrel.



DETROIT — The marketing people at Chevrolet make no secret of the goal for the new diesel version of the Chevrolet Cruze: Take sales from Volkswagen. In fact, they're rolling out the car in 13 markets where VW sells the most diesel versions of its Jetta, another compact. By Tom Krisher.


TRENTON, N.J. — State investigators say at least one bar in New Jersey was mixing food dye with rubbing alcohol and serving it as scotch. That's one of the details released Thursday about an investigation dubbed "Operation Swill." Twenty-nine bars and restaurants in the state are accused of putting cheap booze in premium brand liquor bottles and selling it to patrons who thought they were buying the good stuff.


NEW BRUNSWICK, N.J. — Johnson & Johnson is developing what could eventually be game-changing treatments for depression and pain, and is aiming to apply for approval of 11 new medicines by 2017, executives tell analysts during a daylong review of the health care giant's medicine business. By Linda A. Johnson.


SYDNEY — Ford Motor Co. said it will close its two Australian auto plants, ending production in the country in 2016, amid soaring manufacturing costs and plummeting sales. The closure of the U.S. automaker's plants in the state of Victoria will mean the loss of 1,200 jobs and will transform the company into an import-only brand in Australia. Ford began making cars in Australia in 1925 and is the third largest auto manufacturer in the country. By Kristen Gelineau.

— TRUMP-CHICAGO LAWSUIT — An 87-year-old grandmother took on billionaire Donald Trump, and lost. Jurors sided with the real estate mogul-turned-TV showman in a weeklong civil trial focused on Jacqueline Goldberg's claim that Trump cheated her in a condo bait-and-switch scheme.

— MARATHON OIL-SALE— Marathon Oil says talks related to the potential sale of part of its stake in the Athabasca Oil Project in Canada have ended. The company was in talks with a possible buyer for a portion of its 20 percent interest in the project, but a deal was not reached. The company says it still plans to sell between $1.5 billion and $3 billion in assets through 2013.

— MCDONALD'S-NUTRITION — McDonald's once again faces criticism that it's a purveyor of junk food that markets to children at its annual shareholder meeting.

— CAMPBELL SOUP-PLUM ORGANICS — Campbell Soup says it's buying Plum Organics, which makes food for babies and kids, for an undisclosed amount as it looks to move into faster-growing categories.



NEW YORK — Some of the country's largest retailers, including Target Corp. and Macy's Inc., on Thursday filed a lawsuit against MasterCard and Visa, rejecting a settlement reached last year over alleged fee-fixing.


NEW YORK — Ralph Lauren Corp. is reporting a 35 percent increase in fourth-quarter profit, but economic challenges here and abroad and certain strategic initiatives cut into sales. By Anne D'Innocenzio.

— RUE21-ACQUSITION — Clothing and accessories company Rue21 has agreed to be taken private in nearly $1 billion deal with private equity firm Apax Partners.



DALLAS — A solar-powered plane has landed in Texas, completing the second leg of a trip across the United States. The Solar Impulse is making the first attempt by a solar airplane capable of flying day and night without fuel to fly across the U.S.

AP photos.


BEIJING — Computer maker Lenovo Group's latest quarterly profit rose 90 percent as sales of smartphones and mobile computing technology expanded. Lenovo said it earned $127 million, or 1.22 cents per share, in the three months ending March 31. By Joe McDonald.

— GOOGLE-GALAPAGOS STREET VIEW — Google sent crews armed with backpack-mounted cameras and underwater gear to the volcanic islands of the Galapagos archipelago that remain closed to tourists. AP Photos.



PARIS — International Monetary Fund chief Christine Lagarde is facing questions at a special Paris court over a controversial financial deal that she oversaw as French finance minister. The 2008 arbitrage deal handed about 400 million euros ($520 million) to magnate Bernard Tapie to settle a dispute with state-owned bank Credit Lyonnais over the botched sale of Adidas in the 1990s.

AP photos


DHAKA, Bangladesh — The defects and errors that led to the world's deadliest garment-industry accident extend from the swampy ground the doomed Rana Plaza was built on, to "extremely poor quality" construction materials, to the massive, vibrating equipment operating when the eight-story building collapsed, a committee appointed by Bangladesh's government concluded. By Farid Hossain.

—EUROPE-FINANCIAL CRISIS — A top European Central Bank official says an agency with powers to restructure and wind down busted banks is "indispensable" to strengthening the continent's banking system against future turmoil.

— EU-OLIVE OIL — The EU has something important to say about its proposal to regulate olive oil on restaurant tables: Uh, never mind. The European Commission says it is withdrawing the proposal because not enough member nations had supported it.

— CHINA-MANUFACTURING — A survey shows China's manufacturing contracted this month, adding to signs a fragile recovery in the world's No. 2 economy is slowing.

— SPAIN-FINANCIAL CRISIS — Spain has had to pay higher interest rates to auction off 4 billion euros ($5.2 billion) in governments bonds as financial markets were unnerved by a sharp drop in global stock markets.

— INDIA-POWER PROTESTS — A blistering heat wave has swept across most parts of north and western India, causing massive electricity cuts and leading angry residents to protest and even attack power company officials and property.

— NEW ZEALAND-CHINA — New Zealand authorities say exports of frozen lamb, beef and mutton to China should resume next week after a paperwork problem resulted in hundreds of tons of meat getting stranded at Chinese docks.

— VIETNAM-MASSIVE BLACKOUT — One mistake by a clumsy crane operator caused a 10-hour blackout over about a third of Vietnam, exposing the fragility of the nation's power grid.



Municipal bonds continue to provide a reliable refuge from stock market volatility and a steady source of tax-free income. But investors have been pulling money out of muni bond funds. Why the investor anxiety? Muni investors' eyes are on Washington, as the White House and Congress chip away at the nation's fiscal problems. Investors, particularly those in the top tax brackets, fear a budget proposal by President Obama that would cap the amount of muni bond income that an individual can claim as exempt from federal taxes. A Q&A interview with Jim Colby, a muni strategist with money manager Van Eck Global. By Mark Jewell.


Whether you frequently monitor your 401(k) or rarely give it a thought, watching the major stock indexes post more than 20 percent gains over the past 12 months may be tempting you to make some changes. Experts say some periodic tweaks to 401(k) plans can be good, but there are downsides to trying to time the market with a retirement plan. Here are eight ways to efficiently manage your 401(k) plan. By Alex Veiga.


NEW YORK — Baz Luhrmann's big screen adaption of "The Great Gatsby" is shining a spotlight on the Roaring Twenties glam fashions, from drop-waist dresses and head scarves to crisp bow ties and spectator shoes. But you don't Jay Gatsby's wallet to get the look. Here are strategies to get the look of the roaring '20s without crashing your finances. By Anne D'Innocenzio.

AP photos.


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Pay for performance?

CEO pay has never been higher. The head of a typical large public company made $9.7 million in 2012. That marks a 6.5 percent increase from a year earlier, according to an analysis by The Associated Press using data from Equilar, an executive pay research firm. A look at the 10 highest earners and the performance of their company's stock in 2012.


Personal triumph

Reports of the death of the personal computer may have been premature, but revenues at Hewlett-Packard are hemorrhaging. CEO Meg Whitman says the turnaround story at HP is on track and raised the company's outlook for the year, sending shares to a 52-week high.