Business Highlights

AP News
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Posted: Oct 21, 2010 6:02 PM
Business Highlights

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Toyota recalling 1.5 million cars as woes go on

DETROIT (AP) _ Just when Toyota thought its safety problems were over, they flare up all over again.

Less than a year after it was tarnished by reports of runaway cars, the automaker recalled 1.5 million vehicles Thursday to address brake-fluid and fuel-pump troubles, drawing new attention to safety issues that have festered inside the company for years.

The world's No. 1 carmaker said there were no accidents or injuries connected to the latest recall, which covers some Lexus and Toyota models from the 2004 to 2006 model years, mostly in the U.S. and Japan.

For Toyota, the latest recalls hurt the company's image just as it tries to clear up old problems, said Jean-Pierre Dube, a marketing professor at the University of Chicago.

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US shuns some big public works projects

NEWARK, N.J. (AP) _ New Jersey's governor wants to kill a $9 billion-plus train tunnel to New York City because of runaway costs. Six thousand miles away, Hawaii's outgoing governor is having second thoughts about a proposed $5.5 billion rail line in Honolulu.

In many of the 48 states in between, infrastructure projects are languishing on the drawing board, awaiting the right mix of creative financing, political arm-twisting and timing to move forward. And a struggling economy and a surge of political candidates opposed to big spending could make it a long wait.

Has the nation that built the Hoover Dam, brought electricity to the rural South and engineered the interstate highway system lost its appetite for big public works projects? At a time when other countries are pouring money into steel and concrete, is the U.S. unwilling to think long-term?

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Tab for Fannie, Freddie could soar to $259B

WASHINGTON (AP) _ The government spelled out Thursday just how much the most expensive rescue of the financial crisis will end up costing taxpayers _ as much as $259 billion for mortgage buyers Fannie Mae and Freddie Mac.

That figure would be nearly twice the amount Fannie and Freddie have received so far. To date, the two companies have received $135 billion from taxpayers and have repaid $13 billion to the Treasury Department as dividends.

By contrast, the combined bailouts of financial companies and the auto industry have cost taxpayers roughly $50 billion, according to Treasury's latest projections. And the bailouts of Wall Street banks alone, which sparked public fury, have so far brought taxpayers a $16 billion return.

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Stocks up modestly after early gains

NEW YORK (AP) _ Stocks finished with modest gains in Thursday trading after pulling back from a rally that pushed share prices near their highest levels of the year.

In early trading the Dow Jones industrial average had been up as much as 105 points after index components Caterpillar Inc., Travelers Cos. and McDonald's Corp. all beat earnings expectations and AT&T Inc. matched forecasts. The index briefly turned negative in the afternoon but finished up 39 points.

The Labor Department said first-time claims for unemployment benefits fell last week. But the decline was essentially offset by a surprisingly sharp upward revision to the previous week's claims. First-time claims remain stuck at levels that indicate companies are not hiring many workers, even though they aren't cutting many jobs either.

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Jobless claims fall to 452K, but remain elevated

WASHINGTON (AP) _ Fewer people applied for unemployment benefits last week, but the drop wasn't enough to reverse a big increase the previous week.

Applications for jobless benefits fell by 23,000 to a seasonally adjusted 452,000, the Labor Department said Thursday.

The decline comes after the department substantially revised the previous week's figure to show a rise of 26,000. That was double the increase initially reported.

Even with last week's decline, applications remain stuck near the 450,000 level. They have fluctuated around that point for most of this year.

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Return of travelers boosts airline profits

MINNEAPOLIS (AP) _ United Continental, Southwest, and JetBlue all reported strong third-quarter profits on Thursday as more people flew, and paid more to do it.

Because of that, airlines are restoring some of the flights they cut during the recession. The trick will be to resist adding so many flights it kills their profits. They want to meet rising demand without offering so many seats they have to resort to discounts to fill them.

United Continental Holdings Inc., for instance, said capacity will grow 3 percent to 4 percent during the fourth quarter. It said most of that will be restoring flights cut a year ago. Its capacity should grow no more than 2 percent next year.

JetBlue said fourth-quarter capacity will rise as much as 10 percent as it continues to add flights in Boston and the Caribbean. Delta Air Lines Inc. said on Wednesday that fourth-quarter capacity will rise 5 percent to 7 percent, mostly on international flights, which it reduced sharply a year ago.

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Caterpillar predicts slow economic growth in 2011

OMAHA, Neb. (AP) _ Caterpillar posted another impressive jump in quarterly profits Thursday and predicted more sales growth next year, but the world's largest maker of mining and construction equipment also offered a tepid forecast for global economic growth.

The company said net income soared 96 percent to $792 million, or $1.22 per share, in the third quarter thanks to strong sales in developing nations. Revenue jumped 53 percent to $11.13 billion.

Caterpillar's results are considered a strong indicator of global economic health because its machinery is used all over the world. The company said it expects the global economy to grow by about 3.5 percent in 2011, with higher growth rates in developing regions than in the more established economies of the United States, Europe and Japan.

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AT&T adds record number of iPhones, posts tax gain

NEW YORK (AP) _ AT&T Inc. sold a record number of iPhones in the latest quarter, continuing to siphon subscribers from other wireless carriers in a tightening industry.

The country's largest telecommunications company on Thursday said it activated 5.2 million units of Apple Inc.'s phone, roughly 400,000 more than analysts had expected.

The iPhone 4 went on sale on June 24, just before the start of the quarter. Apple's worldwide sales figures, reported Monday, had already shown the device to be a blockbuster hit, despite early complaints about reception problems.

AT&T is the exclusive U.S. carrier for the iPhone, but news reports have said Verizon Wireless is getting it early next year. The companies haven't confirmed that. If that is the case, AT&T is in the last quarters of loading up on high-paying iPhone customers before it has to share the phone.

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Smoothies push McDonald's 3Q earnings higher

NEW YORK (AP) _ McDonald's frappes, smoothies and dollar menu drew in the highest customer count in more than two decades to push the world's largest burger chain's net income up 10 percent in the third quarter.

Results beat estimates and shares rose early Thursday to an all-time high of $79.48.

The quarter continues a long streak of outperforming competitors such as Wendy's and Burger King with rollouts of new products, including Angus snack wraps, smoothies and frappes, which McDonald's introduced this summer. The new menu items have kept diners returning and spending as the economic downturn dampens their appetite for meals out. Investors like what they see, sending shares up some 26 percent so far this year.

CEO Jim Skinner said those smoothies and frappes helped the company achieve its highest customer count in more than 20 years, though he didn't provide specifics. The chain plans to come out with new products next year, including oatmeal available all day.

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By The Associated Press

The Dow Jones industrial average rose 38.60, or 0.4 percent, to close at 11,146.57. It briefly eclipsed its highest closing level of 2010, which it reached on April 26.

The Standard & Poor's 500 index rose 2.09, or 0.2 percent, to 1,180.26, while the Nasdaq rose 2.28, or 0.1 percent, to 2,459.67.

Natural gas prices on Thursday fell to a new low for the year at $3.346 per 1,000 cubic feet after the government reported that U.S. supplies grew more than expected last week. The November contract settled slightly higher, down 17.1 cents at $3.368 per 1,000 cubic feet on the New York Mercantile Exchange.

Benchmark crude oil for December delivery gave up $1.98 to settle at $80.56 a barrel on the Nymex. Oil prices are well above the 52-week low of $68.01 set on May 20.

In other Nymex trading in November contracts, heating oil fell 4.03 cents to settle at $2.2145 a gallon and gasoline dropped 4.16 cents to settle at $2.0410 a gallon.

In London, Brent crude lost $1.77 to settle at $81.83 a barrel on the ICE Futures exchange.