Business Highlights

AP News
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Posted: Nov 19, 2009 6:06 PM

Foreclosures hitting more people with good credit

WASHINGTON (AP) _ The foreclosure crisis likely will persist well into next year as high unemployment pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.

The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That's a shift from last year, when riskier subprime loans drove the housing crisis.

The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.

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Stronger dollar, weak economic data pummels stocks

NEW YORK (AP) _ Signs of a subdued economic recovery sent investors out of stocks Thursday and in search of safer assets like the dollar.

Major indexes tumbled about 1 percent, including the Dow Jones industrial average, which lost 94 points but ended well off its low. Energy and material stocks logged some of the biggest losses as a jump in the dollar sent commodity prices tumbling. Meanwhile, an analyst's downgrade of the chip industry pulled technology shares sharply lower.

As stocks fell, investors flocked to the dollar and Treasurys. The yield on the three-month T-bill, considered one of the safest investments, tumbled to its lowest level since December.

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Weak jobless claims, future economic activity data

WASHINGTON (AP) _ A gauge of future economic activity and a report on unemployment benefits signaled Thursday that the recovery likely will remain weak in the coming months.

The Conference Board's index of leading economic indicators rose less in October than analysts had expected. The index forecasts activity by measuring consumer expectations, building permits and other data.

And the number of newly laid-off workers seeking unemployment benefits, unchanged last week, remains above the level that would indicate the economy is adding jobs.

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AOL offers buyouts to over a third of work force

SAN FRANCISCO (AP) _ The struggling Internet company AOL plans to shed up to 2,500 jobs _ more than a third of its work force _ as it prepares to separate from Time Warner and finally sever their ill-fated marriage.

Major job cuts had been expected and seemed certain after Time Warner said last week that AOL would take $200 million in charges for severance and other restructuring-related costs. But the magnitude was not known until Thursday.

AOL, which has already pared thousands of workers in recent years and now employs about 6,900, is asking for volunteers to accept buyouts. If it falls short of the 2,500 target, it plans layoffs to reach a payroll cut of up to 2,300 positions, a third of its current total.

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Glitch snarls air traffic in latest woes for FAA

ATLANTA (AP) _ For the second time in a little more than a year, a glitch at one of the two centers that handle flight plans for the nation's air travel system set off delays and cancellations for passengers around the country.

The snarl Thursday _ traced to something as simple as a single circuit board _ prompted calls for more money and manpower at the Federal Aviation Administration, which has struggled without success for years to overhaul the air traffic system.

The circuit board, at an FAA center in Salt Lake City, is part of a multibillion-dollar nationwide communications network that the agency has spent years installing as part of plans to modernize air traffic control.

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Treasury to sell warrants as 3 banks exit bailouts

WASHINGTON (AP) _ The Treasury Department said Thursday it will auction off warrants for three banks that it acquired as part of last fall's financial bailout. It's the latest government effort to reel in its emergency financial programs.

Treasury will auction warrants for New York-based JPMorgan Chase & Co., Capital One Financial Corp. and TCF Financial Corp. over the next month. The three banks received government money totaling $28.9 billion, which they have since repaid.

Warrants are financial instruments that allow the holder to buy stuck in the future at a fixed price.

Treasury got the warrants as a deal-sweetener when it injected capital into the banks. They allow taxpayers to benefit from the upside of a financial recovery supported by billions of their dollars.

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Geithner: some bailout funds to help lower debt

WASHINGTON (AP) _ Treasury Secretary Timothy Geithner said Thursday the government's $700 billion bailout program will end "as soon as we can," and that part of it will be used to lower the soaring federal debt.

During a sometimes contentious Joint Economic Committee hearing that included one lawmaker calling on him to resign, Geithner was pressed to disclose the administration's plan for dealing with the unpopular financial rescue program.

"We are winding it down and will close it as soon as we can," Geithner said of the $700 billion bailout fund, known as the Troubled Assets Relief Program. Congress approved TARP at the height of the financial crisis in October 2008 as a way to supply banks with fresh capital.

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Sears narrows 3Q loss on cost-cutting efforts

CHICAGO (AP) _ Shoppers increased their spending at Kmart stores for the first time in at least seven years this fall, picking up cheap toys, shoes and items for their homes.

The boost in sales at Kmart stores open at least a year was tiny _ less than 1 percent. But it helped its parent company, Sears Holdings Inc., post a smaller quarterly loss and was a milestone, marking the first time since at least January 2002 that the important measure climbed at the discount store.

It was also a minor victory for the retailer, owned by Sears Holdings Corp. and led by financier Edward Lampert, which has seen the long-deteriorating Kmart business begin to show signs of life during the recession.

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General Growth, lenders agree on mall debt rework

LOS ANGELES (AP) _ Mall operator General Growth Properties Inc., which filed the largest U.S. real estate bankruptcy case in history earlier this year, said Thursday its lenders have agreed to restructure some $8.9 billion in shopping mall mortgage loans.

The agreements, which cover loans on more than 70 malls, could enable some of the shopping centers to exit bankruptcy before the end of this year, the company said.

Thomas Nolan, Jr., General Growth's president and chief operating officer, said he hoped the deals announced Thursday would lay the groundwork for restructuring another $6 billion in mortgage loans on other shopping malls.

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GM analyst predicts solid November US sales

DETROIT (AP) _ GM's top sales analyst says U.S. auto sales in November could top an annual rate of 10.8 million for the first time year besides this summer, which was helped by the Cash for Clunkers rebates.

General Motors Co. Executive Director of Market Analysis Mike DiGiovanni says the auto industry is having a solid sales month through the first 19 days of November. He says it's another sign that the economy is beginning a slow recovery.

The Edmunds.com automotive Web site forecasts an annual light vehicle sales rate of 10.3 million for the month and J.D. Power and Associates predicts 10.2 million.

By The Associated Press

The Dow fell 93.87, or 0.9 percent, to 10,332.44, after being down as much as 170. It was the Dow's biggest point drop since Oct. 30.

The broader Standard & Poor's 500 index fell 14.90, or 1.3 percent, to 1,094.90, while the Nasdaq composite index fell 36.32, or 1.7 percent, to 2,156.82.

The Russell 2000 index of smaller companies fell 14.47, or 2.4 percent, to 585.68.

Benchmark crude for December delivery gave up $2.12 to settle at $77.46 a barrel with one day remaining until the futures contract expires on the New York Mercantile Exchange. Most of the trading already moved to the January contract, which lost $2.05 to settle at $78.05.

In other Nymex trading, heating oil fell 5.22 cents to settle at $1.9964 a gallon. Gasoline for December delivery lost 4.19 cents to settle at $1.9695 a gallon. Natural gas for December delivery added 8.8 cents to settle at $4.342 per 1,000 cubic feet.

In London, Brent crude for January delivery gave up $1.83 to settle at $77.64 on the ICE Futures exchange.