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Adds: MADOFF-FINANCIAL INSTITUTION CLAIMS, FRACKING-GROUNDWATER POLLUTION
Updates: WALL STREET, EUROPE-FINANCIAL CRISIS, EARNS-ORACLE
NEW YORK — For investors, there was no place to go. A day after the Federal Reserve roiled U.S financial markets when it said it could step back from its aggressive economic stimulus program later this year, financial markets around the world plunge. A slowdown in Chinese manufacturing and reports of a credit squeeze in the world's second-largest economy heighten worries. The Dow Jones industrial average falls 353 points, wiping out six week of gains. But the damage isn't just in stocks. Bond prices fall, and the yield on the benchmark 10-year note rises to its highest level since August 2011. Oil and gold also fall. By Business Writer Steve Rothwell.
3 REASONS NOT TO PANIC — YET
NEW YORK — Six weeks of stock gains vanish in one day. The biggest drop in the Dow in 1 ½ years. There's plenty of reason to feel like pulling out of the market. But there's a good case for calm, too. For starters, stocks seem reasonably priced and the economy is improving. A rundown of hopeful signs for investors. By Business Writer Bernard Condon
WASHINGTON — Just by talking about its plans to shrink a bond-buying program, the Federal Reserve has triggered a rise in long-term borrowing rates. That means homebuyers are paying more for a mortgage and business loans will get more expensive. Savers, meanwhile, might earn slightly more. Once the Fed actually begins scaling back on bond purchases, these trends could accelerate. By Economics Writer Christopher S. Rugaber.
WASHINGTON —Wall Street investors wanted clarity from Federal Reserve Chairman Ben Bernanke. They didn't like it when they got it. Bernanke set the record straight Wednesday about the Fed's bond-buying program. He said the Fed expects to scale back bond purchases later this year and end it entirely by mid-2014 if the economy continues to improve. In response, investors dump stocks and bonds in anticipation of rising interest rates. By Economics Writer Paul Wiseman and Martin Crutsinger.
NEW YORK — Facebook is adding a video service to its popular photo-sharing app Instagram, following on the heels of Twitter's growing video-sharing app, Vine. Instagram co-founder Kevin Systrom says users will be able to record 15-second clips by tapping a video icon on the app. If users like it, Facebook's move could propel mobile video sharing into the mainstream. By Technology Writer Barbara Ortutay.
LE BOURGET, France — Airbus beat its rival Boeing in the orders stakes at the Paris Air Show but both aircraft manufacturers were encouraged that their lucrative wide-body planes were finding new customers — a sign that the global economy is on the mend. The show at Le Bourget, which alternates with the Farnborough Air Show each year, is a platform for the sales race between the world's two major aircraft makers. By Lori Hinnant.
WASHINGTON — The House rejects a five year, half-trillion-dollar farm bill that would have cut $2 billion annually from food stamps and let states impose broad new work requirements on those who receive them. Those cuts weren't deep enough for many Republicans who objected to the cost of the nearly $80 billion-a-year program, which has doubled in the past five years. The vote was 234-195 against the bill, with 62 Republicans voting against it. By Mary Clare Jalonick.
AP photo, graphic, interactive.
— FARM BILL-GLANCE — Comparing the House and Senate bills.
NEW YORK — Celebrity chef Paula Deen, the queen of comfort food, brushed aside the bad publicity when it was revealed she had diabetes at the same time she was whipping up fatty favorites on TV. Will her audience be able to look past new admissions that she used racial slurs? By Television Writer David Bauder.
MEXICO CITY — Mexico wants China to loosen up and have a little tequila. Actually, lots of it. Since China President Xi Jinping and Mexico's Enrique Pena Nieto broke a diplomatic and economic chill and agreed to boost trade, tequila producers have been gearing up to make the world's most populous country their second-biggest market, after the margarita-loving United States. By E. Eduardo Castillo.
MARKETS & ECONOMY:
WASHINGTON — U.S. unemployment benefit applications rose by 18,000 last week to a seasonally adjusted 354,000. Despite the gain, the level remains consistent with moderate job growth. The Labor Department said that the less volatile four-week average increased by 2,500 to 348,250. Applications are a proxy for layoffs. Since January, they have fallen 6 percent. That suggests companies are cutting fewer jobs. By Economics Writer Christopher S. Rugaber.
WASHINGTON — U.S. sales of previously occupied homes surpassed the 5 million mark in May, the first time that's happened in 3 ½ years. The gain shows the housing recovery is strengthening. The National Association of Realtors says that home re-sales rose 4.2 percent in May to a seasonally adjusted annual rate of 5.18 million. That's up from April's pace of 4.97 million. Sales last exceeded 5 million in November 2009. During that month and October 2009, a home-buying tax credit briefly inflated the sales pace. Prior to that, sales hadn't been above 5 million since July 2007. By Economics Writer Martin Crutsinger.
— LEADING INDICATORS — A private forecast of economic activity rose for the sixth straight month in September, a sign the economy will keep growing early next year despite rising unemployment.
— CONFERENCE BOARD-DATA LEAKS — Conference Board suspects its economic data is being diverted early to computer systems.
WASHINGTON — U.S. mortgage rates fell for the first time in seven weeks, keeping the average on the 30-year fixed loan just under 4 percent. But rates are expected to surge next week, as markets respond to Chairman Ben Bernanke's comments that the Federal Reserve will likely reduce its bond purchases later this year. By Business Writer Marcy Gordon.
MADOFF-FINANCIAL INSTITUTION CLAIMS
NEW YORK — A federal appeals court deals the trustee working to recover money for Bernard Madoff's investors a setback, ruling that he doesn't have legal standing to make claims against major financial institutions that Madoff's burned customers could make themselves. By Tom Hays.
— NYS-JAPANESE BANK PENALTY — New York regulators say the Bank of Tokyo Mitsubishi-UFJ Ltd. will pay $250 million to the state for laundering billions of dollars in transactions that violated economic sanctions against countries including Iran, Sudan, and Myanmar.
— STUDENT LOANS — Congress ratchets up pressure on the White House to take a more active role in negotiations to prevent student loan interest rates from doubling on July 1. Education Secretary Arne Duncan and White House economic adviser Gene Sperling meet with Senate Democrats.
— HEALTH INSURANCE REBATES — Those health insurance rebates that some consumers got last year will total much less for 2013, but the Obama administration says that's a good thing.
— OIL PRICES — Oil has its biggest one-day price drop since November, falling nearly 3 percent to $95.40 a barrel, after the U.S. Federal Reserve says it could end its economic stimulus program sooner than many traders expected.
NEW YORK — Kroger says its customers are doing more of their shopping at its supermarkets, helped in part by the popularity of its store brands. The country's largest traditional supermarket operator raises its profit outlook for the year after reporting a higher quarterly net income that beat Wall Street expectations, although overall sales were shy of forecasts. By Food Industry Writer Candice Choi.
LONDON — British regulators are ordering some of the country's biggest banks to bolster their balance sheets by 27. 1 billion pounds ($42.1 billion) to prevent a repeat of the 2008 banking crisis. By Danica Kirka.
— BRITAIN-LIBOR — A British court has ruled that a former Citibank and UBS trader will face trial on conspiracy charges in the rigging of a key loan rate.
— FRACKING-GROUNDWATER POLLUTION — APNewsBreak: EPA drops plan to confirm fracking linked to Wyoming pollution; state takes over.
— SUPREME COURT-ARBITRATION — The Supreme Court has ruled against merchants who object to having to accept American Express debit and credit cards along with the company's iconic charge card.
— DELTA-VIRGIN ATLANTIC — Delta has gotten key approvals from antitrust regulators for its deal to buy almost half of Virgin Atlantic.
—KODAK-BANKRUPTCY — Kodak says it's secured as much as $895 million to fund its operations after it emerges from bankruptcy protection.
— NETHERLANDS-ABN AMRO — The chief executive of ABN Amro says the Dutch bank is ready to be privatized. It was nationalized in 2008 to avoid a meltdown of the Dutch financial system.
— NORWAY-ARCTIC OIL — Norway's Parliament has opened up a new area on the fringe of the Arctic Ocean to offshore oil drilling despite protests from opponents who fear catastrophic oil spills in the remote and icy region. AP photos.
— PTC THERAPEUTICS-IPO MOVER — Shares of PTC Therapeutics Inc. climb in morning trading after the drug developer completes its initial public offering.
— EXPRESS SCRIPTS-EXPANSION — Express Scripts plans to add 1,500 jobs over the next five years as part of a $56 million expansion of its sprawling headquarters near the University of Missouri-St. Louis.
TECHNOLOGY & MEDIA:
SAN FRANCISCO — Oracle is still having trouble closing enough business software deals to keep Wall Street happy. Its quarterly results could escalate investors' fears about Oracle's ability to adapt to the changing demands of its customers. By Technology Writer Michael Liedtke.
PARIS — France is giving Google three months to be more upfront about the data it collects from users — or be fined. The legal action accelerates a Europe-wide fight against Google over its use of personal data. While the fines threatened are small by the standards of one of the world's richest companies, the move puts new pressure on Google as it smarts from recent criticism over providing customer data to U.S. government surveillance efforts. By Thomas Adamson and Angela Charlton
TOKYO — Sony Corp. needs more time to study a key proposal from a U.S. hedge fund to spin off a part of its entertainment unit as a way to propel its fledgling revival, the chief executive tells shareholders. By Business Writer Yuri Kageyama.
NEW YORK — The Associated Press has bought a minority stake in the live video service Bambuser, boosting its ability to acquire and distribute video collected by people who have witnessed news events. Financial terms were not disclosed. As part of the deal, Sandy MacIntyre, AP's director of global video news, will join Bambuser's board as a director.
— WHITE HOUSE-TWITTER EXEC — Twitter exec Nicole Wong joining White House tech office to focus on privacy, Internet policy.
— YAHOO-TUMBLR — Yahoo has completed its $1.1 billion acquisition of online blogging forum Tumblr. The move represents Yahoo CEO Marissa Mayer's boldest move since she left Google a little less than a year ago to lead Yahoo's comeback.
— ELECTRONIC BOOKS-ANTITRUST LAWSUIT —A Justice Department lawyer says the government has proven that Apple Inc. conspired with publishers in 2010 to raise electronic book prices.
— FIFA-3-D BROADCASTS — FIFA is considering scrapping 3-D broadcasts of the next World Cup, describing ESPN's decision to abandon the format as another setback for the technology. AP photos.
—SWEDEN-HACKING — A founder of the popular file-sharing website Pirate Bay who was arrested in Cambodia under an international warrant is convicted in Sweden of hacking and fraud and given a two-year prison sentence. AP photo.
HONG KONG — Manufacturing in China contracted this month at a faster pace as demand weakened, according to a private survey, adding to fears about a fragile recovery in the world's second-biggest economy.
LUXEMBOURG — European finance ministers agree on broad guidelines on how to use the bloc's permanent bailout fund to rescue banks from failure, a long-promised goal to stabilize the bloc's financial system. By Juergen Baetz.
— GERMANY-WORLD BANK — The head of the World Bank is pledging to ensure that financing for developing countries doesn't suffer when central banks in rich nations wind down monetary stimulus programs and raise interest rates.
— SKOREA-NUCLEAR SCANDAL — South Korea's sole nuclear power plant operator said that investigators raided its offices, a sign that a probe into faulty nuclear plant cables is widening. AP photo.
— MYANMAR-ILO — Myanmar hopes a decision by the International Labor Organization to lift all remaining restrictions on the formerly isolated nation will help accelerate trade and foreign investment.
— DUBAI-QURAN PARK — Dubai has added a new item to its top ambitions such as building the world's largest Ferris wheel and bidding for an Angry Birds theme park — a site honoring the Quran.
— GHANA-COCKTAIL COMEBACK — Ghana's traditional liquor akpeteshie tastes like fire to the uninitiated, burning all the way down the throat to a nervous stomach. But at The Republic, a bar in the nation's capital, it comes garnished with mint and brown sugar for young professionals just getting off work. AP photos.
OF MUTUAL INTEREST-FLOATING RATE FUNDS
NEW YORK — For most bond mutual funds, rising interest rates are kryptonite. Higher rates on newly issued bonds make the lower yields on older bonds in their portfolios less attractive, and the price of those bonds declines. Many investors are beginning to think about interest rates again because the yield on the 10-year Treasury note has been edging up; rising to 2.35 percent Wednesday, its highest level in 15 months. But not all bond funds are equally vulnerable. There is an exception: mutual funds that hold floating-rate debt. By Business Writer Stan Choe
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Building with BRICS
Stocks in the BRICS economies are sinking. The major market indexes of Brazil, Russia, India, China and South Africa are all down this year. By contrast, the U.S. stock market is up 16 percent. Even so, there are several reasons why BRICS are still a good buy to many investors who think the slump is temporary and not a long-term trend.
Rite Aid in sharp selloff
Investors in Rite Aid, the nation's third-largest drugstore chain, sold shares in a big way on Thursday. Although the company reported its third consecutive quarterly profit, management lowered its fiscal 2014 earnings forecast.