AP
Business Highlights
Tuesday October 28, 6:35 pm ET

NEW YORK (AP) -- Wall Street had another astounding advance Tuesday, with the Dow Jones industrials soaring nearly 900 points in their second-largest point gain ever as late-day bargain hunters stormed into the market. The Dow and the Standard & Poor's 500 index each shot up nearly 11 percent.

 

There didn't appear to be any one catalyst for the surge that saw the Dow nearly double its gain in the last hour of trading. Many analysts said investors were grabbing up stocks in the belief that Wall Street had fallen too far in recent sessions; the Dow had dropped 500 points in two days. Some said buying early in the day came from anticipation of an interest rate cut Wednesday by the Federal Reserve, and the market just followed its recent pattern of building on its gains or losses in the last minutes of the session.

White House to banks: Start lending now

WASHINGTON (AP) -- An impatient White House prodded banks and other financial companies Tuesday to quit hoarding billions of dollars flowing into their vaults from Washington and start making more loans.

Hoping to thaw the credit freeze that has chilled the economy, the Bush administration sent banks an unmistakable message to put aside fears and open up loan windows for cash-starved businesses and consumers who have pulled back on spending.

While there are limits to Washington's power to affect banks' behavior, the White House decided it was time to use its bully pulpit.

Consumer confidence plunges to lowest on record

WASHINGTON (AP) -- Layoffs, plunging home prices and tumbling investments have pushed consumer pessimism to record levels in October, a private research group said Tuesday. Wall Street surged nearly 900 points, though, focusing instead on higher global markets amid optimism the Federal Reserve will ease interest rates further.

The Conference Board said the consumer confidence index fell to 38, down from a revised 61.4 in September and significantly below analysts' expectations of 52.

That's the lowest level for the index since the Conference Board began tracking consumer sentiment in 1967, and the third-steepest drop. A year ago, the index stood at 95.2.

Automakers seek gov't aid beyond bailout and loans

WASHINGTON (AP) -- Beleaguered U.S. automakers are seeking federal help beyond the money that Congress has made available for them as part of a financial industry bailout and a measure to retool their assembly plants for more fuel-efficient cars, the White House said Tuesday.

White House spokeswoman Dana Perino said the auto industry has talked to the Bush administration about funding on a much broader scale than the two programs approved by Congress earlier this fall.

General Motors Corp. is pursuing about $5 billion to $10 billion in aid from the government.

The requests have come as General Motors and Chrysler LLC are discussing a potential merger amid an economic downturn, weak auto sales and hardships for the companies.

Oil company profits rise, but outlook is cautious

HOUSTON (AP) -- Record crude prices this summer are translating into huge profits, as BP and Occidental Petroleum showed Tuesday, but some energy companies are bracing for tougher times, keeping a closer tab on cash and cutting spending.

Oil producers are coming off a quarter during which crude prices reached an all-time high of $147.27. But prices have since tumbled more than 50 percent, and the global economic malaise has raised questions about energy demand at least into 2009.

Despite a 71 percent jump in third-quarter profit, Occidental Petroleum said Tuesday it likely would not increase capital spending next year from its current $4.7 billion level. Refiner Valero Energy Corp., which also reported July-September results Tuesday, said it was scaling back spending by 33 percent this year and cutting its 2009 budget.

Whirlpool to cut 5,000 jobs by end of 2009

GRAND RAPIDS, Mich. (AP) -- Whirlpool Corp. said Tuesday it is eliminating about 5,000 jobs this year and next, due in large part to the long downturn in the U.S. housing market.

The nation's largest home appliance maker also reported that its earnings fell 7 percent during the third quarter on lower global unit volumes and higher material costs. Whirlpool lowered its earnings outlook for the year and announced price increases.

Company officials received more sobering news Tuesday upon learning that consumer confidence had plunged to its lowest level on record.

Whirlpool said the drop in profit reflects significantly higher material and oil-related costs and lower industry demand.

Union votes Saturday on Boeing strike settlement

SEATTLE (AP) -- Boeing Co.'s Machinist union said it will vote on a tentative four-year labor pact on Saturday, a process that could end an eight-week strike against the airplane maker.

The strike, now in its 53rd day, has shut Boeing's commercial jet factories, cut into profits and delayed airplane deliveries.

Boeing spokesman Tim Healy on Tuesday said company and union officials would meet soon to set a schedule for workers to return to their jobs if the contract is ratified.

Oil falls below $63 before US inventory report

DENVER (AP) -- Oil prices fell Tuesday a day before the government releases its weekly crude inventory report that recently has shown in stark numbers how much Americans are cutting back on energy costs.

Although oil prices typically decline in the fall, analysts expect the prices to continue falling, perhaps as low as $50 a barrel, before they hit bottom.

U.S. crude stockpile increases have been greater than expected every week in October, which has led to rapid selloffs in the oil markets.

Oil prices have shadowed the direction of Dow Jones industrial average for weeks, but that was not the case Tuesday.

Treasury predicts huge government borrowing needs

WASHINGTON (AP) -- The financial rescue operation will force the federal government to borrow an unprecedented amount of money as the budget deficit climbs to record heights, a top Treasury Department official said Tuesday.

Anthony Ryan, Treasury's acting undersecretary for domestic finance, said the administration back in July was forecasting that the deficit for the current budget year, which began on Oct. 1, would hit a record $482 billion. He said that forecast did not include all the government's efforts since then to deal with the worst financial crisis since the 1930s.

Ryan said those borrowing efforts will need to address numerous government initiatives.

Wal-Mart scales back expansion in tough economy

NEW YORK (AP) -- Wal-Mart Stores Inc. is navigating the global economic slowdown by scaling back its store growth and capital expenditures while focusing on remodeling existing locations and creating smaller outposts.

The goal, Chief Financial Officer Tom Schoewe told analysts on its second day of the company's annual meeting with Wall Street analysts, is to continue to increase its cash flow to invest in its business, while delivering returns to shareholders through dividends and share buybacks.

Wal-Mart, the world's largest retailer, plans to open a total of 212 stores in the U.S. in fiscal 2009, which ends in January, and from 157 to 177 stores in fiscal 2010. That compares with 243 stores opened in the prior year.

By The Associated Press

The Dow rose 889.35, or 10.88 percent, to 9,065.12. That was its second-largest point gain, coming after the 936 points the Dow jumped on Oct. 13.

The Dow was up 456 points at 3 p.m., an hour before the close, and rose as much as 906.31 before edging back.

Broader stock indicators also surged Tuesday. The Standard & Poor's 500 index rose 91.59, or 10.79 percent, to 940.51, and the Nasdaq composite index rose 143.57, or 9.53 percent, to 1,649.47.

Light, sweet crude for December delivery fell 49 cents to settle at $62.73 a barrel on the New York Mercantile Exchange, the lowest closing price since May 15, 2007.

In other Nymex trading, gasoline futures fell 2.14 cents to settle at $1.455 a gallon and heating oil slipped to $1.91 a gallon. Natural gas for November delivery added 6.5 cents to settle at $6.18 per 1,000 cubic feet.

In London, December Brent crude lost $1.12 to settle at $60.29 a barrel on the ICE Futures exchange.