WASHINGTON (AP) -- The
Federal Reserve signaled Wednesday that the weak economy likely will keep
prices in check despite growing concerns that the trillions it's pumping into
the financial system will ignite inflation.
Fed Chairman Ben Bernanke
and his colleagues held a key bank lending rate at a record low of between zero
and 0.25 percent. And they pledged again to keep it there for "an extended
period" to help brace the economy.
Fed policymakers also
dropped language they had used in the statement at their last meeting in April
that the weak economy could trigger deflation -- a destabilizing and prolonged
bout of falling prices and wages.
Recession may be near
bottom, new data suggest
WASHINGTON (AP) -- New
signals the recession could be nearing a bottom emerged Wednesday in figures
showing that orders to U.S. factories surged last month for everything from
computers to aircraft and that a gauge of business investment rose by the most
in nearly five years.
Still, an unexpected drop in
new-home sales in May made clear that any rebound in the housing market, and
the broader economy, likely will be long and slow.
Economists said the two
reports showed an economy no longer in free-fall but still unable to mount a
sustained recovery from the longest recession since World War II.
Stocks end mostly higher
after Fed assessment
NEW YORK (AP) -- Stocks
ended mixed but mostly higher after the Fed said the economy was on the mend.
However, bond prices fell after the Fed said it wouldn't step up its spending
to purchase Treasurys and other debt to pry interest rates lower.
The central bank's decision
Wednesday to leave its key lending rate at a low of zero to 0.25 percent wasn't
a surprise but some investors have been hoping the central bank would do more
to revive the economy. Others wanted it to more clearly lay out how it will
keep inflation in check.
The Dow Jones industrial
average fell 23.05, or 0.3 percent, to 8,299.86.
Citi boosting salaries to
offset lower bonuses
NEW YORK (AP) -- Citigroup
Inc. is increasing the base salaries of many employees -- reportedly by as much
as 50 percent for some workers -- as it restructures their compensation amid
government restrictions on bonuses.
The higher salaries are not
the equivalent of annual raises because bonuses are being lowered, according to
a person familiar with the matter who requested anonymity because the plans
have not been made public.
Employee compensation at
financial companies, particularly in the form of bonuses, has brought criticism
from members of Congress and the public after the government gave the banks
hundreds of billions in bailout dollars. Citi and the other companies who still
hold bailout funds face limits on bonuses as part of a new government
compensation oversight plan.
SEC pitches tightened rules
for money-market funds
WASHINGTON (AP) -- Federal
regulators on Wednesday proposed tightened rules for money-market mutual funds
that will require them to hold a reserve of assets that could be easily sold
and to invest only in the highest quality securities.
The Securities and Exchange
Commission action came after a $60 billion money fund "broke the
buck," exposing investors to losses that could ultimately reach about 8
cents on the dollar. The value of the Primary Reserve Fund's assets in
September fell to 97 cents per investor dollar -- below the dollar-for-dollar
level needed for full repayment.
The SEC voted, 5-0, to issue
the rule changes for the popular money-market funds, which hold about $3.8
trillion in assets, for public comment. The new rules could be approved
sometime after that 60-day period.
Energy prices drop with
gasoline supplies surging
NEW YORK (AP) -- Energy
prices fell Wednesday after the government reported that unused gasoline in
storage grew for the third-straight week, another signal that consumer demand
for energy is waning.
Benchmark crude for August
delivery lost 57 cents to settle at $68.67 a barrel on the New York Mercantile
Exchange.
At the pump, retail gas
prices continued to decline this week after peaking Sunday at $2.693 a gallon.
The national average for a gallon of gas shed another 0.7 cents overnight to
$2.676 a gallon, according to auto club AAA, Wright Express and Oil Price
Information Service.
Even though pump prices have
risen more than a quarter over the past month, prices at this time last year
were above $4 per gallon.
China's Sinopec makes $7.2B
grab for Addax
TORONTO (AP) -- China's
Sinopec will acquire oil explorer Addax Petroleum for $7.2 billion, again flexing
the country's economic clout in what would be the largest overseas takeover
ever by a Chinese company.
China has been aggressively
pursuing major acquisitions or investments in commodity companies and the
push-back from other countries has just as forceful.
Four years ago, China
National Offshore Oil Company Ltd. withdrew an $18.5 billion bid for the Unocal
Oil Company because of a tremendous backlash in Washington.
Rite Aid pares 1Q loss and
reduces spending
NEW YORK (AP) -- Drugstore
operator Rite Aid Corp. said Wednesday it narrowed its fiscal first-quarter
loss by closing stores and trimming costs, and making progress as it works to
eliminate $6 billion in debt.
The loss of $98.4 million,
or 11 cents per share, came in under Wall Street estimates of 13 cents per
share. A year ago, Rite Aid posted a loss of $156.6 million, or 20 cents per
share. While the company now expects a slightly larger loss in fiscal 2010,
Rite Aid was able to refinance loans that were due to expire, improving its
financial position.
The Camp Hill, Pa., said
store closings drove down its revenue 1 percent to $6.53 billion from $6.61
billion. Thomson Reuters says analysts expected $6.55 billion, on average.
Global recession nearing
bottom, OECD says
PARIS (AP) -- The deepest
global recession in over 60 years is close to bottoming out, but recovery will
be weak unless governments do more to remove uncertainty over banks' balance
sheets, the Organization for Economic Cooperation and Development (OECD) said
Wednesday.
In its half-yearly economic
outlook, the Paris-based organization said it expects its member countries'
economies to shrink by 4.1 percent this year, with only government rescue
measures heading off an even worse decline.
That is a slight improvement
from the OECD's last forecast in March of a 4.3 percent decline this year and
is the group's first upward revision to its forecasts in two years, Secretary
General Angel Gurria said at a news conference in Paris.
Senator: Use of faulty
insurance data 'pervasive'
WASHINGTON (AP) --
Congressional investigators said Wednesday two-thirds of the U.S. health
insurance industry used a faulty database that overcharged patients for seeing
doctors outside their insurance network, costing Americans billions of dollars
in inflated medical bills.
The flawed database is
operated by Ingenix, a subsidiary of health insurer UnitedHealth Group, which
agreed in January to pay $350 million to settle allegations that it
deliberately kept rates low to underpay doctors, driving up expenses for patients.
An investigation by Sen.
John Rockefeller, D-W.Va., shows that nearly 20 regional and national insurers
also used Ingenix data. An ongoing probe by New York Attorney General Andrew
Cuomo previously focused on the use of Ingenix data by only a handful of top
insurers.
By The Associated Press
The Dow Jones industrial
average fell 23.05, or 0.3 percent, to 8,299.86.
The Standard & Poor's
500 index rose 5.84, or 0.7 percent, to 900.94, and the Nasdaq composite index
rose 27.42, or 1.6 percent, to 1,792.34.
Benchmark crude for August
delivery lost 57 cents to settle at $68.67 a barrel on the New York Mercantile
Exchange. In London, Brent prices fell 47 cents to settle at $68.33 a barrel on
the ICE Futures exchange.
In other Nymex trading,
gasoline for July delivery fell 5.07 cents to settle at $1.8425 a gallon and
heating oil dropped 3.09 cents to settle at $1.7381. Natural gas for July
delivery lost 11.8 cents to settle at $3.761 per 1,000 cubic feet.