AP
Business Highlights
Wednesday March 18, 6:00 pm ET

Fed to buy up to $300B long-term Treasury bonds

WASHINGTON (AP) -- The Federal Reserve announced Wednesday that it will inject about $1 trillion into the economy in a bold effort to help the battered housing market and lift the country out of recession.

At the same time, the Fed left a key short-term bank lending rate at a record low of between zero and 0.25 percent. Economists predict the Fed will hold the rate in that zone for the rest of this year and for most -- if not all -- of next year.

In a new program, the Fed said it will buy up to $300 billion of long-term bonds, a move that should boost Treasury prices and drive down their rates.

AIG employees starting to return bonuses, CEO says

WASHINGTON (AP) -- The head of battered insurance giant AIG told Congress on Wednesday that "we've heard the American people loudly and clearly" in their rage over executive bonuses, and he appealed to employees to return at least half the money.

Testifying under oath at a congressional hearing as intense as any in recent memory, Edward Liddy said some workers already have stepped forward to give money back.

The company became the target of a political firestorm after the disclosure over the weekend that it had paid $165 million in "retention bonuses" to its employees at the same time it was accepting bailout funds from U.S. taxpayers. Some of the payments were made to the same traders and executives whose risky financial behavior caused the company's near collapse.

Stocks jump after Fed says it will buy Treasurys

NEW YORK (AP) -- The Federal Reserve is keeping Wall Street's big rally alive -- and giving the Treasury market a boost as well.

The Fed said Wednesday it will pump about $1 trillion into the economy, including the purchase of up to $300 billion of long-term Treasury securities over the next six months, as it works to revive the housing market and halt a punishing recession.

The decision sent both government bonds and stocks soaring as investors expected the move to drive down borrowing costs for everything from mortgages to credit cards. The Dow Jones industrial average reversed early losses to end up 91 points at 7,486.58, while the yield of the benchmark 10-year Treasury note plunged.

Prosecutors charge Madoff's accountant with fraud

NEW YORK (AP) -- Bernard Madoff's longtime accountant was arrested on fraud charges Wednesday as authorities blamed him for failing to make the most basic auditing checks that would have exposed an epic fraud that cost investors billions of dollars.

David Friehling is the first person to be arrested in the scandal since Madoff turned himself in, and his prosecution signals that the government is intent on bringing Madoff's associates to justice as they try to figure out who helped him carry out the fraud.

Prosecutors say the 49-year-old Friehling essentially rubber-stamped Madoff's books for 17 years, serving as Madoff's auditor from 1991 through 2008 while operating from a discreet building in suburban New York.

Judge: Merrill Lynch bonus info must be disclosed

CHARLOTTE, N.C. (AP) -- A New York state judge on Wednesday ordered Bank of America Corp. to disclose information about bonuses given to employees at Merrill Lynch & Co. just before the bank bought the brokerage company.

New York Attorney General Andrew Cuomo and Bank of America have been sparring over the release of the information for weeks. Cuomo is investigating whether Bank of America and Merrill failed to provide proper disclosures to shareholders about the bonuses.

New York State Supreme Court Justice Bernard Fried ruled that the compensation figures didn't constitute a trade secret, as BofA had claimed.

Consumer prices rise 0.4 percent in February

WASHINGTON (AP) -- Consumer prices rose in February by the largest amount in seven months as gasoline prices surged again and clothing costs jumped the most in nearly two decades.

But the increase appeared to ease many economists' concerns about dangerous price movements in either direction. The recession is expected to dampen any inflation pressures for at least the rest of this year, while the slight uptick in prices over the last two months also has made the possibility of deflation more remote.

The Labor Department reported Wednesday that consumer inflation rose 0.4 percent in February, the biggest one-month jump since a 0.7 percent rise in July.

AP Source: IBM in talks to buy Sun Microsystems

UNDATED (AP) -- IBM Corp. is in talks to buy Sun Microsystems Inc. for at least $6.5 billion in cash, a deal that would shake up Silicon Valley and the corporate computing market, The Associated Press has learned.

A person familiar with the situation told the AP of the negotiations, confirming an earlier report Wednesday in The Wall Street Journal. This person spoke on condition of anonymity because the talks are ongoing.

The Journal cited unnamed people familiar with the matter and said the deal could occur as early as this week.

General Mills 3Q profit falls on higher costs

MILWAUKEE (AP) -- High costs weighed down General Mills' third-quarter profit even as sales of top brands like Cheerios, Pillsbury and Gold Medal flour grew as more consumers ate at home.

But with ingredient costs expected to fall and more marketing driving sales, General Mills Inc. gave a brighter outlook for its fiscal year.

Still, the company's shares fell more than 11 percent to their lowest point in more than three years, as the 33 percent drop in profit was worse than analysts expected.

Oracle profit dips slightly, but tops estimates

SAN FRANCISCO (AP) -- Oracle Corp. says its profit and the sale of new software licenses dipped in the latest quarter. But the results were better than Wall Street anticipated.

The Redwood Shores, Calif.-based company says it earned $1.33 billion, or 26 cents per share, versus $1.34 billion, also 26 cents per share, during the same period a year ago.

Excluding one-time charges, Oracle earned 35 cents per share. On that basis, analysts surveyed by Thomson Reuters expected 32 cents per share. Total revenue was $5.45 billion, a 2 percent increase over last year. Analysts predicted $5.42 billion.

China rejects Coke bid for juice maker

BEIJING (AP) -- China denied Coca-Cola Co.'s closely watched $2.5 billion bid to buy a major Chinese juice producer Wednesday, highlighting Beijing's rejection of foreign control over its top companies even as they step up acquisitions abroad.

The refusal to allow the foreign acquisition in a non-strategic business such as fruit juice could backfire abroad as state-owned Chinese companies pursue investments in mining and other sensitive industries.

Coca-Cola's acquisition of Huiyuan Juice Group Ltd. was rejected because it would reduce competition and raise prices, the Commerce Ministry said. But the bid also provoked an outcry from nationalists who opposed letting a successful Chinese brand fall into foreign hands.

By The Associated Press

The Dow Jones industrial average rose 90.88, or 1.2 percent, to 7,486.58.

Broader stock indicators jumped, too. The Standard & Poor's 500 index added 16.23, or 2.1 percent, to 794.35, and the Nasdaq composite index rose 29.11, or 2 percent, to 1,491.22.

Benchmark crude for April delivery fell $1.02 to settle at $48.14 a barrel on the New York Mercantile Exchange.

In other Nymex trading, gasoline for April delivery tumbled 5.81 cents to settle at $1.3657 a gallon, while heating oil dropped 1.07 cents to settle at $1.240 a gallon. Natural gas for April delivery fell 12.8 cents to settle at $3.684 per 1,000 cubic feet.