Bernanke: Default on debt would increase deficit
WASHINGTON (AP) _ Federal Reserve Chairman Ben Bernanke warned U.S. lawmakers Thursday that they would deliver a "self-inflicted" wound to the nation's economy by holding up efforts to raise the government's borrowing limit.
The Fed chief also said the central bank had no immediate plans to introduce new stimulus measures, elaborating on remarks he made a day earlier that the Fed stood ready to take additional steps to boost the economy if conditions worsened.
His comments ended an early rally on Wall Street. Traders had interpreted Wednesday's comments to mean the Fed was about to embark on another round of bond purchases, analysts said.
The government hit its $14.3 trillion borrowing limit in May. Republicans have held up increasing the limit because of concerns that excessive government spending has widened the federal deficits. The Treasury Department said it will default on its debt if the limit is not raised by Aug. 2.
Bernanke told a Senate panel that a default on the debt would lead to even greater federal deficits. Interest rates would rise, and the government would be forced to pay higher rates on its debt. At the same time, higher rates would slow the economy and an already weak job market. That in turn would curtail tax revenue.
U-Turn: Murdochs to be questioned by UK parliament
LONDON (AP) _ Rupert Murdoch and his son James first refused, then agreed Thursday to appear before U.K. lawmakers investigating phone hacking and police bribery. In the U.S. the FBI opened an investigation into allegations the Murdoch media empire sought to hack into the phones of Sept. 11 victims.
Those two developments _ and the arrest of another former editor of a Murdoch tabloid _ deepened the crisis for News Corp., which has seen its stock price sink as investors ask whether the scandal could drag down the whole company.
Murdoch defended News Corp.'s handling of the scandal, saying it will recover from any damage caused by the phone-hacking and police bribery allegations. The 80-year-old Murdoch told The Wall Street Journal _ which is owned by News Corp. _ that he is "just getting annoyed" at all the recent negative press.
He also dismissed reports he would sell his U.K. newspapers to stem the scandal, calling the suggestion "total rubbish."
A law enforcement official in New York said the FBI was investigating allegations that employees of News Corp. tried to hack into the telephones of victims of the Sept. 11, 2001, terrorist attacks in the U.S.
The official spoke on condition of anonymity because he was not authorized to speak publicly.
AP-GfK Poll: Debit card fees might change behavior
NEW YORK (AP) _ Many Americans prefer using their debit cards at the cash register. But a small fee could change that.
A new Associated Press-GfK poll finds that about two-thirds of consumers use debit cards more frequently than credit cards. When debit card holders were asked how they would react if they were charged a $3 monthly fee for their debit card, 61 percent say they'd find another way to pay.
If the fee was $5, 66 percent would do the same. If the fee was $7, the figure rises to 81 percent.
The findings come at a time when consumers are seeing unwelcome changes to their debit cards and the checking accounts to which they're linked. Although banks haven't started imposing monthly fees for debit cards, there are signs higher costs could be on the way.
Starting in October, a new cap will sharply limit the revenue banks can collect from merchants whenever customers swipe their debit cards. That revenue has been a critical income source for banks; merchants paid issuers $19.7 billion for debit transactions in 2009, according to the Nilson Report, which tracks the payments industry.
Consumers are already seeing the fallout. Chase, PNC Bank and Wells Fargo ended or scaled back their debit rewards programs citing the new regulation. The availability of free checking accounts also declined last year for the first time since 2003.
Google second-quarter earnings soar past analyst estimates
Google Inc. ushered in new CEO Larry Page with second-quarter earnings that were far better than analysts expected.
The results released Thursday reassured investors who had been fretting about whether Google would still thrive under Page's leadership. The Google co-founder replaced Eric Schmidt, the CEO of the previous decade, at the start of the quarter.
Wall Street wasted little time signaling its exuberance with Page's performance. Google shares increased $54.51, or more than 10 percent, to $583.45 in extended trading after finishing the regular session at $528.94.
Google Inc. earned $2.5 billion, or $7.68 per share, in the April-June period. That's a 36 percent increase from $1.84 billion, or $5.71 per share, a year ago.
Oil giant ConocoPhillips to split into 2 companies
Oil giant ConocoPhillips said Thursday it will split into two companies: one that produces oil and another that refines it into gasoline and other fuels.
The decision was cheered by Wall Street analysts and investors, who see advantages to running smaller, more focused operations. Shares gained $1.21 to close at $75.61.
The move continues an about-face for a company that spent billions of dollars during the past several years growing into America's third-largest oil company. After snapping up Burlington Resources for $35 billion and making multi-billion dollar investments in Russia's Lukoil and the Rockies Express gas pipeline, Conoco was deep in debt. The company has been trying to shed assets since last year.
ConocoPhillips also said CEO Jim Mulva will retire when the spin-off is completed.
Unemployment aid applications fall for 2nd week
WASHINGTON (AP) _ Fewer people sought unemployment benefits last week, an encouraging sign the job market may be slowly improving.
Weekly applications dropped 22,000 to a seasonally adjusted 405,000, the Labor Department said, to the lowest level in almost three months.
The government said the total was increased by 11,500 state workers from Minnesota, who have filed applications because of the government shutdown there.
Even with last week's decline, applications have now topped 400,000 for 14 weeks, evidence that the job market has weakened since earlier this year.
Applications had fallen in February to 375,000, a level that signals healthy job growth. They stayed below 400,000 for two months, then surged to an eight-month high of 478,000 in April and have declined slowly since then.
Retail sales up slightly in June after May drop
WASHINGTON (AP) _ Consumers spent more on cars and in big chain stores in June but falling gas prices held back retail sales.
Retail sales rose a modest 0.1 percent last month, the Commerce Department said Thursday. That follows a 0.1 percent decrease in May, which was the first decline after 10 straight gains.
When excluding autos, retail sales were flat in June. A rebound from spring supply disruptions caused by the Japan earthquake and tsunami helped pushed auto sales up 0.8 percent.
Sales at general merchandise stores, which include stores such as Wal-Mart and Target, rose 0.4 percent.
Falling prices pushed gasoline sales down 1.3 percent. But consumers are still paying nearly a dollar more for gas than they did a year ago.
Retail sales have been slowing since February. Consumers are being more cautious about spending because of the higher gas prices and a sluggish job market.
By The Associated Press(equals)
The Standard & Poor's 500 index fell 8.85 points, or 0.7 percent, to close at 1,308.87. The Dow Jones Industrial Average fell 54.49, or 0.4 percent, to 12,437.12. The Nasdaq composite fell 34.25, or 1.2 percent, to 2,762.67.
Benchmark West Texas Intermediate crude for August delivery fell $2.36 to settle at $95.69 per barrel on the New York Mercantile Exchange. In London, Brent crude gave up $1.59 to settle at $116.26 per barrel on the ICE Futures exchange.
In other Nymex trading for August contracts, heating oil fell 1.48 cents to settle at $3.0849 per gallon and gasoline futures gave up 2.68 cents to settle at $3.1248 per gallon. Natural gas lost 2.9 cents to settle at $4.358 per 1,000 cubic feet.