AP
Business Highlights
Wednesday November 5, 6:37 pm ET

Stocks plunge anew as recession worries resurface

NEW YORK (AP) -- A case of postelection nerves sent Wall Street plunging Wednesday as investors absorbed a stream of bad economic news and wondered how a Barack Obama presidency will help the country weather a possibly severe recession. Volatility returned to the market, with all the major indexes tumbling and the Dow Jones industrials falling more than 5 percent, or 486.01, to 9,139.27.

Service sector shrinks as new orders drop

NEW YORK (AP) -- Hotels, construction firms and retailers saw business shrink in October as slower spending and declining employment sent the service sector into contraction, another gloomy sign for the economy.

The Institute for Supply Management, a trade group of purchasing executives, said Wednesday its service sector index suffered a sharper-than-expected drop to 44.4 in October from 50.2 in September. Wall Street economists surveyed by Thomson Reuters expected a reading of 47.5. A reading below 50 signals contraction.

Government details plans to borrow $550B

WASHINGTON (AP) -- One day after Barack Obama was elected the next U.S. president, the outgoing Bush administration detailed its plans to borrow a record $550 billion through the end of the year to back the financial bailout.

The Federal Reserve, meanwhile, said it will boost interest payments to banks as authorities battle the worst financial crisis in decades.

The Treasury Department said Wednesday it will sell $55 billion in bonds next week, part of a massive borrowing effort to cover the $700 billion bailout and a budget deficit that's expected to hit a record of nearly $1 trillion next year.

Yahoo's fate unclear as Google abandons ad deal

WASHINGTON (AP) -- Google Inc. has scrapped its Internet advertising partnership with struggling rival Yahoo Inc., abandoning attempts to overcome the objections of antitrust regulators and customers who believed the alliance would give Google too much power over online commerce.

The retreat announced Wednesday represented another setback for Yahoo, which had been counting on the Google deal to boost its finances and placate shareholders still incensed by management's decision to reject a $47.5 billion takeover bid from Microsoft Corp. six months ago.

GMAC 3Q loss widens, blames economic woes

NEW YORK (AP) -- GMAC Financial Services said Wednesday its third-quarter loss widened to $2.52 billion, as the ongoing woes of the global credit industry resulted in steep losses at its mortgage division.

For the year-earlier period, GMAC had a loss of $1.6 billion. Revenue tumbled 24 percent in the latest quarter to $1.72 billion from $2.25 billion.

The New York-based company said economic and market conditions made things tough for the lending industry overall during the quarter.

GlaxoSmithKline trimming US sales force by 1,000

TRENTON, N.J. (AP) -- British drugmaker GlaxoSmithKline PLC is restructuring its U.S. operations, starting with reducing its U.S. sales force by 1,000, following many of its top competitors in eliminating sales jobs.

The world's No. 2 drugmaker by revenue also will switch from having dual U.S. headquarters, in Philadelphia and in Research Triangle Park, N.C., to operating just the North Carolina headquarters.

Oil falls below $66 as demand continues to ebb

HOUSTON (AP) -- Oil prices dipped Wednesday as investor sentiment once again seemed to shift to the growing global economic malaise and its potential impact on energy demand. Light, sweet crude for December delivery fell $5.23 to settle at $65.30 a barrel on the New York Mercantile Exchange, while gasoline prices continued to tumble.

A day after oil staged an Election Day rally, even indications that OPEC was acting on an earlier pledge to pull 1.5 million barrels of crude a day from the market failed to support prices.

Time Warner 3Q profits beat expectations, AOL weak

NEW YORK (AP) -- Time Warner Inc. reported third-quarter profits Wednesday that beat Wall Street expectations, even as its AOL online unit continued to weigh down the company with a 6 percent decline in advertising revenue.

The media conglomerate saw growth in its cable-access and cable-network businesses.

Overall, Time Warner reported net income of $1.07 billion, or 30 cents a share, roughly in line with the $1.09 billion, or 29 cents per share, it earned in the year-ago period.

Cisco warns of demand shortfall; earnings flat

NEW YORK (AP) -- Cisco Systems Inc., the world's largest maker of computer networking gear, warned Wednesday that orders fell off abruptly in October and projected a large fall in sales in the current quarter. Its shares slid in after-hours trading.

On a conference call with investors after Cisco reported flat earnings for the previous quarter, Chief Executive John Chambers said he expects revenue to fall 5 percent to 10 percent in the current quarter, which began Oct. 26. That would mean revenue between $8.85 billion and $9.34 billion, far below the $10.4 billion expected by analysts polled by Thomson Reuters.

Senators probe J&J payments to physicians

WASHINGTON (AP) -- A pair of powerful senators have asked Johnson & Johnson to turn over information about its payments to physicians as part of a widening investigation into drugmakers' influence over medical professionals.

The health care conglomerate said Sens. Charles Grassley, R-Iowa, and Herb Kohl, D-Wis., are investigating its relationship with psychiatrists. J&J markets Risperdal, a blockbuster medication prescribed to patients with schizophrenia and bipolar disorder.

By The Associated Press

The Dow fell 486.01, or 5.05 percent, to 9,139.27.

The S&P 500 index fell 52.98, or 5.27 percent, to 952.77. The Nasdaq composite index fell 98.48, or 5.53 percent, to 1,681.64, while the Russell 2000 index of smaller companies fell 31.33, or 5.74 percent, to 514.64.

Light, sweet crude for December delivery fell $5.23 to settle at $65.30 a barrel on the New York Mercantile Exchange.

In other Nymex trading, gasoline futures fell 10.83 cents to settle at $1.4244 a gallon, heating oil plunged 10.69 cents to settle at $2.0547 a gallon and natural gas for December delivery rose 4.4 cents to settle at $7.491 per 1,000 cubic feet.

In London, December Brent crude fell $4.57 to settle at $61.87 on the ICE Futures exchange.