Consumer spending and incomes both rise in March
WASHINGTON (AP) _ Americans earned and spent more in March, but much of the extra money went to pay for gas.
Personal incomes rose 0.5 percent last month and consumer spending increased 0.6 percent, the Commerce Department reported Friday. But after adjusting for inflation, spending rose only 0.2 percent and after-tax incomes were essentially flat.
Consumer spending had been expected to post solid gains this year, helped by stronger employment growth and a 2 percentage-point cut in Social Security payroll taxes. But Americans are paying more for gas, prompting economists to scale back their growth forecasts.
The national average at the pump on Friday was $3.90 a gallon _ 31 cents higher than a month ago and more than $1 than what consumers paid a year ago.
Caterpillar's 1Q profit soars, boosts forecast
ST. LOUIS (AP) _ Heavy equipment maker Caterpillar Inc. said Friday its first-quarter profit soared more than fivefold and raised its financial outlook for the year as a growing economic recovery boosted demand for its mining and construction equipment.
The results blew past analysts' expectations.
Caterpillar's earnings are a bellwether for the global economy, as it sells the kind of kind of expensive, heavy machinery used for construction, mining and logging.
Chevron profit rises 36 percent on high oil prices
Chevron Corp. said Friday its first-quarter net income rose 36 percent, the latest strong earnings report from a major oil company.
Chevron earned higher prices for its oil around the globe. In the U.S., Chevron sold its oil for an average price of $89 per barrel in the last quarter, compared with $71 a year ago. Internationally, Chevron sold oil for an average price of $95 per barrel, compared with $70 a year earlier.
These higher prices led to a $1.25 billion increase in profit from exploring for and producing oil and gas. Refining profits more than doubled, to $622 million.
Merck Q1 net income triples on lower costs
WHITEHOUSE STATION, N.J. _ Merck & Co. on Friday said its first-quarter profit more than tripled as strong sales of key drugs and lower costs from integrating its Schering-Plough acquisition offset competition from generic drugs that slashed sales of two heart drugs.
The results beat Wall Street expectations and suggest drug sales and cost savings from acquiring Schering-Plough Inc. are starting to pay off.
D.R. Horton posts surprise 2nd-quarter profit
LOS ANGELES (AP) _ Homebuilder D.R. Horton Inc. surprised Wall Street on Friday, reporting its profit more than doubled in the first three months of the year thanks to a large tax gain.
What wasn't surprising was the builder saying its new home orders and closings fell sharply versus the same quarter last year, reflecting the absence of federal tax credits that helped boost home sales a year ago.
New home orders fell 23 percent, while closings fell 17 percent. The trends echoed declines reported this week by other homebuilders that failed to eclipse their year-ago home-order numbers for the January-March period.
Beijing turns to currency to cool inflation
Surging inflation that helped trigger protests in Shanghai is prompting China's leaders to turn to a tool they long resisted: Speeding up the rise of the country's tightly controlled currency.
Rising prices are a political threat to China's communist leaders and they have declared taming inflation their priority. But they suffered a setback in March, when a double-digit jump in food costs pushed inflation to a 32-month high of 5.4 percent. That was despite four interest rate hikes since October, curbs on bank lending and government orders to producers to hold down price increases.
How fast to let the yuan gain is a high-stakes balancing act. A stronger yuan could help ease inflation by making oil and other imports cheaper. But Beijing also worries that a rising yuan might hurt exports and lead to job losses and unrest, so any gains will likely still be too small for Washington and other critics that say an undervalued yuan is swelling China's trade surplus.
At a Cabinet meeting this month, Premier Wen Jiabao said the government would "increase the flexibility of the yuan's exchange rate" to ease price pressures, the official Xinhua News Agency reported.
Bernanke: Recession hit lower-income people most
WASHINGTON (AP) _ Federal Reserve Chairman Ben Bernanke on Friday called for more lending to people and small businesses in lower-income neighborhoods, saying they've been disproportionately hurt by the recession.
Many of the nation's poorest communities were struggling before the downturn, Bernanke said at a Fed conference on community development in Arlington, Va.
The recession officially ended two years ago. Bernanke said the national economy is growing at a moderate pace and that job creation is gradually improving, repeating comments he made earlier this week at a news conference after the Fed's policy meeting.
Geithner gives some companies pass on new rules
WASHINGTON (AP) _ Treasury Secretary Timothy Geithner has decided to let companies continue to trade certain contracts used to guard against swings in currency values outside regulators' view.
New rules require that many such trades happen more transparently, on exchanges where regulators can see them. But Geithner is exempting certain contracts used by companies to hedge currency rates.
The new financial overhaul law authorized Geithner to carve out such an exemption to stricter regulation.
Business groups argue that tighter oversight of such contracts would be costly and unnecessary. But critics, including some regulators, counter that the whole market for financial contracts called over-the-counter derivatives should face stricter supervision.
EU targets 16 major banks in swaps market probes
BRUSSELS (AP) _ The European Union's competition watchdog is investigating the practices of some of the world's largest banks, as well as a clearing house and a financial data firm, in the market for credit default swaps.
The two probes home in on a market that has come under fire for lacking transparency and allegedly worsening market turmoil during the financial crisis.
While the investigations focus on competition issues, they accompany a wider regulatory crackdown in Europe and the United States on credit default swaps and other derivatives and could have implications for the broader functioning of the market. In that market, several companies control trillions of dollars of financial instruments.
United, Continental pushing fares up again
DALLAS (AP) _ United and Continental are raising airfares on many U.S. routes by up to $20 per round-trip ticket. It's the latest effort to cover spiraling fuel costs across the airline industry.
The two airlines raised prices Thursday night. Spokesman Mike Trevino says fares went up $3 each way on flights longer than 500 miles, and $10 each way for first-class tickets.
U.S. airlines have raised prices more than a half-dozen times this year. Most still lost money in the first quarter due to higher fuel costs.
By The Associated Press(equals)
The Dow Jones industrial average rose 47.23 points Friday, or 0.4 percent, to close at 12,810.54. The Nasdaq composite added 1.01 point to 2,873.54. The Standard & Poor's 500 index rose 3.13 points, or 0.2 percent, to close at 1,363.61. The Russell rose 3.74 points, or 0.4 percent, to 865.29 Friday.
Benchmark crude for June delivery rose $1.07 to settle at $113.93 a barrel on the New York Mercantile Exchange.
In other futures trading, heating oil rose 2.99 cents to settle at $3.2758 per gallon, gasoline futures gained 2.88 cents to settle at $3.3984 per gallon and natural gas rose 12.8 cents to settle at $4.761 on the Nymex.
In London, Brent crude rose 87 cents to settle at $125.89 on the ICE Futures exchange.