Bank of America loses $2.24B as loan losses rise
CHARLOTTE, N.C. (AP) -- Bank
of America Corp. said Friday it lost more than $2.2 billion in the third
quarter as loan losses kept rising, providing more evidence that consumers are
still struggling to pay their bills.
The nation's second-largest
bank said it wrote down loans on its books by almost $10 billion during the
July-September period, up almost $1 billion from the second quarter. The bank
also added $2.1 billion to its reserves to cover bad loans, bringing its
provision for credit losses to $11.7 billion. The bank's total allowance for
loan and lease losses now totals $35.83 billion.
Finance arm pushes down
General Electric 3Q profit
General Electric Co.'s
troubled financial unit dragged down third-quarter earnings 44 percent,
overshadowing gains in divisions that make power plant turbines and household
appliances.
The results from one of the
world's largest companies show the spotty strength of the global economy. While
"signs of life" are emerging -- profits are up for some industrial
goods and services -- consumers and businesses are still reeling from large
numbers of defaults in credit cards and mortgages.
GE's quarterly profit fell
to $2.4 billion, or 23 cents per share, hurt by sharply lower earnings at its
GE Capital arm, which loans money for businesses ranging from credit cards to
shopping centers. A year earlier, the company earned $4.3 billion, or 43 cents
a share.
Bank of America, GE results
push stocks lower
NEW YORK (AP) -- Stocks
ended a strong week with a flash of selling after Bank of America Corp. and
General Electric Co. signaled that businesses and consumers are still
struggling to pay off their debts.
The market slid Friday as
quarterly results from the companies dented hopes that earnings would show
strong signs of improvement in the July-September period. A rise in oil also
helped the market end well off its lows, repeating a pattern seen earlier in
the week.
The Dow Jones industrial
average fell 67 points to finish just below the 10,000 mark, which it had
broken through on Wednesday for the first time in a year. Despite the drop,
stocks still posted big gains for the week.
Federal deficit hits
all-time high of $1.42 trillion
WASHINGTON (AP) -- The
federal budget deficit has surged to an all-time high of $1.42 trillion as the
recession caused tax revenues to plunge while the government was spending
massive amounts to stabilize the U.S. financial system and jump-start the
economy.
The imbalance for the budget
year ended Sept. 30 more than tripled last year's record. The Obama
administration projects deficits will total $9.1 trillion over the next decade
unless corrective action is taken.
As a portion of the economy,
the budget deficit stood at 10 percent, the highest since World War II,
according to government data released Friday.
Billionaire among 6 nabbed
in inside trading case
NEW YORK (AP) -- One of
America's wealthiest men was among six hedge fund managers and corporate
executives arrested Friday in a hedge fund insider trading case that
prosecutors say generated more than $25 million in illegal profits and should
be a wake-up call for Wall Street.
Raj Rajaratnam, a partner in
Galleon Management and a portfolio manager for Galleon Group, a hedge fund with
up to $7 billion in assets under management, was accused of conspiring with
others to trade based on insider information about several publicly traded
companies, including Google Inc.
U.S. Attorney Preet Bharara
told a news conference it was the largest hedge fund case ever prosecuted and
marked the first use of court-authorized wiretaps to capture conversations by
suspects in an insider trading case.
Wal-Mart and Amazon.com
trade price cuts on books
CHICAGO (AP) -- Taking a
page from its original playbook, Wal-Mart Stores Inc. launched a full-fledged
price war with Amazon.com Inc. and a nation of book retailers, lowering online
prices on certain highly anticipated hardback titles to $9.
The volley of discounts,
which began Thursday when the retailer listed prices for some upcoming hardcover
releases such as Dean Koontz' "Breathless" and Stephen King's
"Under the Dome" at $10, was answered with a similar price cut by
Amazon, the largest online bookseller. Then the two competitors lowered the
prices even further to $9.
The book discounts, the
latest in a series of aggressive online maneuvers by the world's largest
retailer, could position the company to do to the online marketplace what
Walmart stores did to local merchants decades ago.
Industrial output up more
than expected in Sept.
WASHINGTON (AP) -- Output at
America's factories, mines and utilities rises for the third straight month,
but some economists say the manufacturing growth that has helped lead the
nascent economic recovery may slow as federal stimulus programs are phased out.
Higher output of motor
vehicles and parts spurred much of the September increase, due in part to the
government's "Cash for Clunkers" auto buying program. But steel and
other sectors also posted gains, and General Electric reported separately Friday
that its industrial businesses grew in the third quarter.
The Federal Reserve said
industrial production rose 0.7 percent last month. That beat the 0.2 percent
increase that Wall Street economists expected, according to a survey by Thomson
Reuters.
Ala. court rejects $274M
verdicts in drug cases
MONTGOMERY, Ala. (AP) -- The
Alabama Supreme Court on Friday threw out jury decisions awarding the state
more than $274 million from three pharmaceutical companies, ruling they did not
defraud the state in pricing Medicaid prescription drugs.
The court overturned jury
verdicts against the drug companies AstraZeneca, Novartis and GlaxoSmithKline,
accused by the state of fraudulently manipulating prices of drugs for Medicaid
recipients.
The court ruled 8-1 that the
state did not have to rely on the drug companies' information in deciding what
prices to pay pharmacists for prescription drugs for Medicaid recipients. The
justices said state officials could have done their own research and determined
the correct price.
Crude rallies again and pump
prices follow
NEW YORK (AP) -- Oil prices
finished above $78 per barrel for the first time in a year, marking the largest
weekly percentage increase in the cost of crude since the height of the summer
driving season. Retail gas prices have begun to tag along.
Friday, for the first time
in almost three weeks, the national average price for a gallon of gasoline
crept above $2.50.
An Energy Department report
sent a ripple through the markets midweek when it revealed a huge and
unexpected drawdown in gasoline supplies. Energy prices surged Friday, even
though the country continues to sit on an enormous supply of petroleum.
Foreign demand rises for
long-term US assets
WASHINGTON (AP) -- Foreign
demand for long-term U.S. financial assets rose in August even though China
trimmed its holdings of Treasury securities.
Foreigners purchased $28.6
billion more in assets than they sold in August, according to Treasury data
released Friday. That followed a net increase of $15.3 billion in July, and $90.2
billion in June.
The Treasury Department is
auctioning record amounts of debt to cover a deficit estimated to have hit
$1.41 trillion for the budget year that ended in September. Some economists
worry that if overseas buyers don't keep buying U.S. debt, interest rates could
rise. Inflation eats away at the purchasing power of a currency.
By The Associated Press
The Dow fell 67.03, or 0.7
percent, to 9,995.91 after being down as much as 123 points at its low of the
day.
The broader S&P 500
index fell 8.88, or 0.8 percent, to 1,087.68, and the Nasdaq composite index
fell 16.49, or 0.8 percent, to 2,156.80.
Benchmark crude added 95
cents to settle at $78.53 a barrel on the New York Mercantile Exchange.
In London, Brent crude for
December delivery climbed 76 cents to settle at $76.99 on the ICE Futures
exchange.
In other Nymex trading,
heating oil added 1.16 cents to settle at $2.0297 a gallon, while gasoline for
November delivery added 3.44 cents to settle at $1.9793 a gallon. Natural gas
for November delivery rose 29.9 cents to settle at $4.781 per 1,000 cubic feet.