Business Highlights

AP News
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Posted: May 05, 2011 6:11 PM

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Commodities fall puts financial markets on edge

NEW YORK (AP) _ A free-fall in commodities and an unexpected jump in unemployment claims put financial markets on edge Thursday, dragging the stock market lower.

Oil prices fell nearly $10, or 9 percent, to close below $100 a barrel for the first time since mid-March. Silver lost 8 percent to settle at $34.41; the metal already had its biggest one-day drop in three decades on Tuesday and is nearly $16 off its high of $50 reached last week. And gold fell 2.3 percent to $1,474.90 an ounce.

Commodities like oil and cotton had risen by more than 25 percent over the past year. Some, like silver, remain up nearly 100 percent over this time last year, despite Thursday's decline. Thursday's pullback indicated that some speculators were locking in their gains and that other investors were protecting profits because of concerns that Friday's jobs reports may be worse than originally thought, say experts. That could lead to weaker demand from consumers.

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Rise in layoffs, gas prices cloud hiring outlook

WASHINGTON (AP) _ A renewed rise in layoffs is the latest sign that higher fuel prices may be slowing the economy.

A 23 percent spike in applications for unemployment benefits over the past month suggests that hiring may look weaker when the government issues the April jobs report Friday.

Most analysts agree the economy has strengthened enough to keep growing this year. But gas prices have risen for 44 straight days. Consumers are spending more to fill the tanks, leaving them with less to spend elsewhere. As a result, many companies are feeling less certain about the economy's health and could delay hiring plans.

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GM earns $3.2 billion in 1Q on higher sales

DETROIT (AP) _ General Motors Co. reported its highest quarterly profit in more than a decade, helped by demand for fuel-efficient cars and a big gain from selling its stake in its former auto parts business.

The biggest U.S. automaker said Thursday that it earned $3.2 billion, or $1.77 per share, in the first quarter. It was a great start considering the spike in U.S. gasoline prices, a trend that would have sunk the company just a few years ago when it relied on gas-guzzling pickups and SUVs for profits.

GM's results follow strong earnings reports at crosstown rivals Ford Motor Co. and Chrysler Group LLC, a sign that the U.S. auto industry is recovering well from the recession and bankruptcies.

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Retailers post strong April but fret over future

NEW YORK (AP) _ Retail revenue surged in April helped by a late Easter holiday. The gains build on a trend that began late last year, but higher gas prices threaten to cut into consumers' spending power.

Overall, revenue at major retailers was 8.5 percent higher than last April, according to the International Council of Shopping Centers' tally of 28 retailers' results. That was better than the 5 percent to 6 percent increase projected by the trade group's chief economist, Mike Niemira.

The figures are based on revenue at stores open at least a year. That is considered a key indicator of a retailer's health because it excludes results from stores opened or closed during the year.

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Oil drops below $100 on worry of weaker US demand

NEW YORK (AP) _ Oil plunged nearly 9 percent to settle below $100 per barrel. Investors who had ridden a months-long rally fled the market Thursday because of concerns about weakening demand for fuel in the U.S.

The decline of $9.44 per barrel, or 8.6 percent, brings the week's loss for oil to $14.13, or 12.4 percent. Other commodities like silver and cotton have plunged as well.

Oil rose 35 percent from mid-February through the end of April. As it climbed above $100, economists warned that high fuel prices were taking a toll on the U.S. economy. Gasoline demand starting falling in March as motorists paid more at the pump; that trend was reinforced by industry and government studies released this week. On Thursday, worries about the job market ahead of Friday's key employment report added to concerns about fuel demand.

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Productivity growth slowed in January-March period

WASHINGTON (AP) _ U.S. companies squeezed more work out of their staffs in the first three months of the year, but the gain in productivity was much slower than the previous three months.

Productivity rose at an annual rate of 1.6 percent in the January-March period compared to a 2.9 percent increase in the previous quarter, the Labor Department reported Thursday. Labor costs rose at a 1 percent annual rate in the January-March period after falling 1 percent in the previous three months.

A slowdown in productivity growth is bad for the economy if it persists for a long period. But it can be good in the short term when unemployment is high because it signals companies must hire more workers in order to make further gains.

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Kraft Foods 1Q income down on acquisition costs

NORTHFIELD, Ill. (AP) _ Kraft Foods Inc.'s first-quarter net income dropped sharply on costs related to its acquisition of candy maker Cadbury, but its adjusted profit rose and beat expectations.

The company, based in Northfield, Ill., earned $799 million, or 45 cents per share, for the quarter. That's down from $1.89 billion, or $1.16 per share, a year earlier.

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Visa posts 24 pct jump in 2Q profit, tops views

NEW YORK (AP) _ Visa Inc. on Thursday said that its fiscal second-quarter profit leaped 24 percent, as consumers used their credit and debit cards more often in the U.S. and abroad.

The San Francisco-based payment processing company reported net income of $881 million, or $1.23 per share, for the three months ended March 31. That compared with earnings of $713 million, or 96 cents per share, for the year-earlier period.

Revenue rose 15 percent to $2.25 billion, from $1.96 billion a year ago.

The results exceeded Wall Street expectations. Analysts, on average, had forecast profit of $1.20 per share, on $2.23 billion in revenue, according to data provided by FactSet.

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Religious groups question Goldman on pay

NEW YORK (AP) _ When Goldman Sachs Group Inc. executives and shareholders gather Friday morning for the company's annual meeting, the room might look a little like a house of worship.

A coalition of religious groups headed by a nun, a priest and the CEO of a Jewish organization will be there to press Goldman Sachs Group Inc. to evaluate whether it's paying executives too much. Goldman CEO Lloyd Blankfein will have no choice but to listen. The group has won a coveted spot on the annual meeting agenda.

The religious contingent also wants the investment bank to evaluate the pay discrepancy between high-paid workers and those at the bottom. And they're asking the company to explain something many shareholders want to know: why compensation for Goldman's top five executives rose to $69.6 million in 2010 even as profits and revenues have declined.

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Rate on 30-year fixed mortgage falls to 4.71 pct.

NEW YORK (AP) _ Fixed mortgage rates dipped to the lowest level of the year this week. The third straight weekly decline comes at the start of the peak buying season.

Freddie Mac said Thursday the average rate on the 30-year loan fell to 4.71 percent from 4.78 percent the previous week. That matched this year's low reached in January. But it is above the 40-year low of 4.17 percent hit in November.

The average rate on the 15-year fixed mortgage slipped to 3.89 percent from 3.97 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

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Wal-Mart remains atop Fortune 500 list

NEW YORK (AP) _ Wal-Mart Stores Inc. remains atop the Fortune 500 list even as it struggled to keep its U.S. customers coming in the door.

The world's largest retailer held onto the top spot for the second year in a row thanks to gains at its international stores. The company's U.S. division has had seven straight quarters of declines in revenue at stores open at least a year compared with the same periods the year before.

Fortune Magazine, which ranked companies based on revenue for 2010, released its annual list on Thursday. It was filled with examples of how rising fuel prices are affecting the economy. Wal-Mart was followed by the three largest American oil companies: Exxon Mobil Corp., Chevron Corp. and ConocoPhillips.

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By The Associated Press(equals)

The Dow Jones industrial average lost 139.41 points, or 1.1 percent, to 12,584.17. The S&P 500 dropped 12.22, or 0.9 percent, to 1,335.10. The Nasdaq composite fell 13.51, or 0.5 percent, to 2,814.72.

Benchmark West Texas Intermediate crude for June settled at $99.80 per barrel on the New York Mercantile Exchange. That's the lowest settlement since March 16.

Other energy futures fell sharply as well. Heating oil fell 25.61 cents to settle at $2.8869 per gallon and gasoline futures lost 22.71 cents to settle at $3.0954 per gallon. Natural gas gave up 31.3 cents to settle at $4.331 per 1,000 cubic feet.

In London, Brent crude lost $10.39 to settle at $110.80 per barrel on the ICE Futures exchange.