AP
Business Highlights
Wednesday October 29, 6:28 pm ET

Fed cuts key interest rate half-point to 1 percent

WASHINGTON (AP) -- The Federal Reserve has slashed a key interest rate by half a percentage point as it seeks to revive an economy hit by a long list of maladies stemming from the most severe financial crisis in decades.

The central bank on Wednesday reduced its target for the federal funds rate, the interest banks charge on overnight loans, to 1 percent, a low last seen in 2003-2004. The funds rate has not been lower since 1958, when Dwight Eisenhower was president.

The cut marked the second half-point reduction in the funds rate this month. The Fed slashed the rate by that amount in a coordinated move with foreign central banks on Oct. 8.

Delta completes deal to acquire Northwest Airlines

NEW YORK (AP) -- Delta Air Lines has completed its $2.8 billion deal to acquire Northwest Airlines, creating the world's biggest carrier.

The announcement late Wednesday marked a swift conclusion to the deal. Earlier in the day, the Justice Department granted antitrust approval, and a lawyer for 28 air travelers who had sued to block the deal said the parties had settled the case.

The new Delta will be headquartered in Atlanta, and Delta chief Richard Anderson will head the combined carrier, which will integrate over the next 18 months.

Sources: Gov't prepares loan modification plan

WASHINGTON (AP) -- The government is considering a plan that would help around 3 million homeowners avoid foreclosure, sources briefed on the matter said.

A final deal had not been reached as of Wednesday afternoon and negotiations could still fall apart, but government agencies were contemplating using around $50 billion from the recently passed bailout of the financial industry to guarantee about $500 billion in mortgages.

The plan could include loan modifications that would lower interest rates for a five-year period, according to two people briefed on the plan, who asked not to be identified because details were still being worked out and the plan was not yet public.

The plan would be the most aggressive effort yet to limit damages from the U.S. housing recession, which has shaken global credit markets.

Stocks end mixed in late slide after Fed rate cut

NEW YORK (AP) -- Wall Street received the interest rate cut it wanted, but still turned in a baffling late-day performance Wednesday, shooting higher and then skidding lower in the very last minutes of trading as some investors rushed to cash in profits after the previous session's big advance.

The major indexes ended the day mixed, with the Dow Jones industrials falling 74 points -- only the third time in October that the blue chips had just a double-digit close.

Analysts were divided over why the market turned around so abruptly.

AP sources: Issues resolved in GM-Chrysler talks

DETROIT (AP) -- Some issues standing in the way of General Motors Corp. acquiring Chrysler LLC have been resolved, but others remain including the biggest: How to finance the deal, according to two people who have been briefed on the talks.

Both people said GM's management, including CEO Rick Wagoner, would remain in place should a deal come to pass, because GM would run the combined company. Neither wanted to be identified because the talks are confidential. One said the deal isn't close yet.

Talks between Chrysler's owner, Cerberus Capital Management LP, are still under way. The combined Nissan Motor Co.-Renault SA also is involved, but Cerberus reportedly would prefer to have GM take on Chrysler.

Sept. durable goods rise by largest since June

WASHINGTON (AP) -- Orders to U.S. factories for big-ticket manufactured goods posted an unexpectedly strong showing in September -- the largest gain in three months -- government data showed Wednesday.

The Commerce Department reported Wednesday that orders for durable goods rose by 0.8 percent, surprising economists who had expected a decline. Orders had fallen by 5.5 percent in August, which was the biggest setback in nearly two years.

The September increase was the largest gain since a 1.4 percent rise in June, but all the strength came in the transportation sector.

NY attorney general asks banks for bonus info

NEW YORK (AP) -- The New York attorney general has asked nine banks that are getting a piece of the Wall Street bailout to turn over information about how they are spending money on executive bonuses.

Andrew Cuomo said Wednesday that the bailout has essentially made taxpayers shareholders in these companies, and they have a duty to be upfront with the public about huge bonuses.

Cuomo's office is among several agencies that are investigating banks about their role in the Wall Street meltdown.

GM 3Q global sales drop 11 percent, trail Toyota

NEW YORK (AP) -- General Motors Corp. said Wednesday that reduced demand in the U.S. and Western Europe pushed the company's third-quarter worldwide sales down 11 percent, as GM fell further behind Toyota Motor Corp. for this year's No. 1 global sales spot.

GM sold 2.11 million vehicles in the third quarter, while Toyota's sales for the period fell 4 percent to 2.24 million. The results bring GM's total sales for January-September to 6.66 million vehicles compared with Toyota's 7.05 million.

GM said sales declines in the United States and Western Europe offset strong demand from emerging markets. Sales outside of the U.S. grew by 164,000 vehicles in the first nine months of the year.

IMF creates loan program for developing nations

WASHINGTON (AP) -- The International Monetary Fund said Wednesday it is creating a new program to quickly get money to developing countries with strong economies that are facing cash crunches in the global financial crisis.

The IMF's executive board approved a new short-term loan program, called a liquidity facility, to speed funds to the countries. The so-called Group of 24 poorer countries, including nations from Latin America, Asia and Africa, had asked for such a program earlier this month.

IMF officials said a maximum of around $100 billion would be available under the emergency loan program.

Dollar loses ground and pumps up oil prices

COLUMBUS, Ohio (AP) -- Oil prices rebounded from 17-month lows as stock markets rallied across the globe Wednesday.

Oil traders began placing bets that falling demand for crude may have already driven oil prices as low as they will go.

Light, sweet crude for December delivery rose $4.77 to $67.50 a barrel on the New York Mercantile Exchange. The contract settled at $62.73 Tuesday, the lowest closing price since May 2007.

Qwest 3Q profit down; will cut 1,200 jobs

NEW YORK (AP) -- Qwest Communications International Inc. posted a profit for its third quarter Wednesday, but said the continued slide of its traditional phone business is forcing it to cut 1,200 jobs, 3 percent of its work force.

The cuts will come before the end of the year, which will leave the company with 33,500 employees, 9 percent fewer than at the end of last year. That's about the same rate at which customers are canceling their phone service to go wireless or sign up with the cable company.

The Denver-based phone company, the country's third-largest, earned $151 million, or 9 cents per share, in the three months that ended Sept. 30. That was down 93 percent from $2.06 billion, or $1.08 per share, a year ago, but those 2007 results were boosted by a $2.1 billion tax benefit.

By The Associated Press

The Dow was up as much as 298 points in the last quarter hour of the session, giving it a two-day gain of more than 1,187 points, when it began to slide. It closed down 74.16, or 0.82 percent, at 8,990.96.

Broader stock indicators were mixed. The S&P 500 index fell 10.42, or 1.11 percent, to 930.09, and the technology-heavy Nasdaq composite index advanced 7.74, or 0.47 percent, to 1,657.21.

Light, sweet crude for December delivery rose $4.77 to $67.50 a barrel on the New York Mercantile Exchange. The contract settled at $62.73 Tuesday, the lowest closing price since May 2007.

In other Nymex trading, gasoline futures rose 8 cents to settle at $1.53 a gallon, while heating oil gained 9 cents to settle at $2 a gallon. Natural gas for November delivery increased by 28 cents to settle at $6.47 per 1,000 cubic feet.

In London, December Brent crude rose $5.18 to settle at $65.47 a barrel on the ICE Futures exchange.