Reports on GDP and consumers signal modest rebound
WASHINGTON (AP) -- The
economy is growing modestly, with consumers too wary about spending to
invigorate the recovery.
That's the picture that
emerged from reports Tuesday on the economy and the confidence of consumers,
who power 70 percent of it. Unemployment and tight credit have sapped shoppers'
willingness and ability to spend freely as retailers enter their crucial
holiday season. And Americans are expected to grow more cautious about spending
next year. That would make for a plodding recovery.
The economy grew at a 2.8
percent rate last quarter. Forecasts for the current quarter are for similarly
lackluster growth before a drop-off next year.
Fed: super-low rates could
fuel speculative bubble
WASHINGTON (AP) -- The
Federal Reserve doesn't expect the recovery will be strong enough to quickly
drive down the jobless rate, and acknowledged its efforts to keep the rebound
going could feed a new speculative bubble.
Record-low interest rates
"could lead to excessive risk-taking in financial markets," according
to documents released Tuesday of the Fed's closed-door meeting earlier this
month. It also could cause consumers, investors and businesses to worry about
inflation taking off.
Although Fed officials saw
the current likelihood of that as "relatively low," they pledged to
"remain alert to these risks."
At the Nov. 3-4 meeting, Fed
Chairman Ben Bernanke and his colleagues kept the target range for its bank
lending rate at zero to 0.25 percent.
Saab likely to close as GM
fails to sell car brand
DETROIT (AP) -- A deal for
General Motors Co. to sell Saab to a specialty carmaker has collapsed, leaving
the storied Swedish brand born from jets in 1947 close to extinction.
Koenigsegg Group AB, a
consortium formed by Swedish luxury sports car maker Koenigsegg Automotive AB,
said Tuesday it pulled out of the deal in part because it was unable to agree
with investors on how best to move the brand from mass-market to premium.
For GM, it was the third
time this year that a deal to shed one of its brands fell apart as it tries to
recover from a stay in bankruptcy protection by focusing on a core of four:
Chevrolet, Buick, GMC and Cadillac.
Banks earn $2.8B in 3Q; FDIC
says dangers persist
WASHINGTON (AP) -- The
apparent end of the recession and stabilizing financial markets have not cured
the banking industry, as souring and past-due loans have reached the highest
levels in 26 years, the Federal Deposit Insurance Corp. said Tuesday.
Banks earned $2.8 billion in
the third quarter, but nearly 40 percent of that was from a one-time accounting
trick. Loan balances plummeted and the fund that insures their deposits was
$8.2 billion in the red.
The number of banks on the
FDIC's "problem list" rose to 552 from 416 on June 30, the highest
level in 16 years. Fifty banks failed during the quarter -- the largest number
since the second quarter of 1990.
Reports on consumer
confidence, GDP tug at stocks
NEW YORK (AP) -- A
disappointing report on consumer confidence and a more sober read on the
economy pulled stocks from 13-month highs Tuesday.
Major indexes posted modest
losses in light trading as drops in financial and industrial stocks were
tempered by gains in health care companies. The Dow Jones industrial average
fell 17 points to to 10,433.71, a day after jumping by 133.
Stocks pulled off their lows
of the day after the Federal Reserve released minutes from its latest
rate-setting meeting, during which it pledged to keep rates low for the
foreseeable future and said inflation remained at bay. The Fed raised its
expectations for economic growth during the second half of this year, but said
unemployment will remain high.
Top 2 booksellers report
losses, their shares fall
NEW YORK (AP) -- Barnes
& Noble Inc. and Borders Group Inc., the nation's two largest
brick-and-mortar book sellers, both posted quarterly losses Thursday and
forecast a difficult holiday season, saying competition from discount chains
and online retailers is stiffening.
Barnes & Noble, the
larger of the two, also cut its forecast for annual profit, and shares of both
retailers fell.
Even with online presence,
traditional bookstores have had a rough time facing off against online sellers
like Amazon.com as they also compete with low-price brick-and-mortar stores
including Wal-Mart Stores and Target and cope with consumers cutting
discretionary purchases amid tough economic times.
Heinz 2Q profit falls 16
percent
PORTLAND, Ore. (AP) -- H.J.
Heinz Co.'s says its business is thriving in emerging markets but the recession
continued to drag down its U.S. and European sales during the second quarter as
shoppers limited spending or chose lower-priced products.
"Even though the global
recession appears to be abating, there's no question that consumers and
customers remain intensely focused on value, which they are more often defining
as price," said Heinz CEO Bill Johnson "Consumers in particular are
looking for bargains wherever they shop for food and household items."
The food maker reported
Tuesday that its quarterly profit fell 16 percent from last year, when the company's
results were boosted by currency shifts. But it boosted its full-year guidance,
saying it will invest heavily in market to spur growth in its sluggish markets.
CPSC chief pledges swift
action after crib recall
WASHINGTON (AP) -- The head
of the Consumer Product Safety Commission on Tuesday promised swift action to
get dangerous products off the market, acknowledging that the agency didn't
move quickly enough on a record recall of more than 2 million cribs linked to
four deaths.
At issue are some 2.1 million
drop-side cribs made by Stork Craft Manufacturing of Canada. Four infants
suffocated in the cribs.
CPSC said the recall
involves 1.2 million cribs in the United States and almost 1 million in Canada.
Sales of the cribs being recalled date back to 1993 and nearly 150,000 of the
cribs carry the Fisher-Price logo.
Green Mountain sweetens bid
for Diedrich Coffee
WATERBURY, Vt. (AP) -- Green
Mountain Coffee Roasters sweetened its offer for Diedrich Coffee by $2 per
share on Tuesday, matching a rival bid from Peet's Coffee & Tea.
Tuesday's bid comes two days
after Peet's raised its own offer for Diedrich, hoping to get a foothold in the
wholesaler's popular and growing single-serve coffee pod business.
Green Mountain's all-cash
proposal of $32 per share has a total value of $265 million. Peet's second
offer -- a cash-and-stock bid submitted Sunday evening -- is also valued at
$265 million.
Green Mountain said its
revised offer provides Diedrich shareholders with a substantial all-cash
premium and greater value.
Facebook creates dual-class
stock structure
NEW YORK (AP) -- Facebook
has created a dual-class stock structure designed to give founder Mark
Zuckerberg and other existing shareholders control over the company.
The social network said
Tuesday it had no plans to go public "at this time." But the move may
well be seen as laying the groundwork for it.
The dual-class structure is
what Google Inc.'s founders, Larry Page and Sergey Brin, created to keep voting
control over that company before it went public in 2004. Google's Class B
shares, owned by Page, Brin, CEO Eric Schmidt and some directors, hold 10 times
the voting power as its regular, Class A stock.
By The Associated Press
The Dow fell 17.24, or 0.2
percent, to 10,433.71.
The Standard & Poor's
500 index fell 0.59, or 0.1 percent, to 1,105.65, while the Nasdaq composite
index fell 6.83, or 0.3 percent, to 2,169.18.
Benchmark crude for December
delivery fell $1.54 to settle at $76.02 a barrel on the New York Mercantile
Exchange.
In other Nymex trading, heating
oil fell less than a penny to settle at $1.9497 a gallon. Gasoline for December
delivery fell almost 4.04 cents to settle at $1.939 a gallon. Natural gas for
December delivery rose 1.3 cents to settle at $4.486 per 1,000 cubic feet.
In London, Brent crude
dropped $1 to settle at $76.46 on the ICE Futures exchange.