Preparing for worst as debt-limit talks drag on
NEW YORK _ Scrambling to protect themselves against a U.S. default, investors are buying gold and foreign currencies, using derivatives to bet on a stock market collapse and taking out complicated insurance policies.
They may want to consider crossing their fingers.
If the United States suddenly stiffed its creditors, the impact would be so widespread, complex and unpredictable that it is next to impossible to shield against steep losses, experts say.
A default could cause turmoil in the stock and bond markets, plus a replay of the fear that froze lending in the depths of the 2008 financial crisis. In the chaos, investments you'd think were a sure bet to fall might rise instead, and vice versa.
UAW wants bigger cut of Detroit's newfound profits
AUBURN HILLS, Mich. _ To help American carmakers stay in business, autoworkers grudgingly gave up pay raises and some benefits four years ago.
Now that General Motors, Ford and Chrysler are making money again, workers want compensation for their sacrifice. Just how much they get is the central question hanging over contract talks that start this week between Detroit and one of the nation's largest and most powerful unions.
The negotiations, the first since Chrysler and GM took government aid and emerged from bankruptcy, will set wages and benefits for 111,000 members of the United Auto Workers, including those at Ford, which avoided bankruptcy by taking out massive private loans. The UAW's four-year contracts with the Detroit Three expire on Sept. 14.
Blackberry maker to cut 2,000 jobs, splits COO job
NEW YORK _ Faced with tough competition and falling profits, BlackBerry maker Research In Motion Ltd. is cutting 2,000 jobs as part of a cost savings plan announced last month and is shuffling some senior executives.
The job cuts amount to about 10 percent of the company's work force.
Its U.S. shares fell $1.24, or 4.4 percent, to $26.67. The shares are close to their five-year low of $25.60, hit Wednesday.
Although BlackBerrys have dominated the corporate smartphone market, their popularity in the consumer market has been short-lived.
AP-GfK Poll: Worries about debt rising once again
Just last fall, Americans were feeling better about their personal finances. Now they're starting to worry more about how they'll pay off debts as they feel the nation's economic recovery wobbling.
Household debt is causing stress for nearly half the country, according to a new Associated Press-GfK poll. One in five adults worries about debt most or all of the time. If they bought something on a credit card in the past month, more than a third say they won't pay it off when the bill comes.
The increased stress represents a reversal from last fall's AP-GfK poll, which found increasing confidence about personal finances.
Dozens of airport construction projects halted
Dozens of airport construction projects across the country are on hold and thousands of federal employees are not working because Congress failed to pass legislation to keep the Federal Aviation Administration operating, Transportation Secretary Ray LaHood said Monday.
The FAA's operating authority expired at midnight Friday, forcing a partial agency shutdown.
Dozens of stop-work orders were issued over the weekend for projects to build and modernize airport control towers, as well as other improvement projects, officials said. Many of the airport projects are designed to improve the efficiency of air travel and reduce congestion.
All indications Monday pointed to a prolonged shutdown.
More airlines raise fares to grab tax savings
DALLAS _ The great tax holiday of 2011 for air travelers is just about over.
By Monday, most U.S. airlines had raised fares to reap the benefit of lower federal taxes on airline tickets. A few airlines that were passing the savings on to consumers changed their minds.
Several federal taxes on airline tickets expired over the weekend after Congress failed to pass legislation to keep the Federal Aviation Administration running at full speed. So raising the fares allows the airlines to charge the consumer the same amount as before, while pocketing money previously collected for the government.
Impasse over US debt limit sends stocks lower
NEW YORK _ The debt showdown in Washington is rattling the stock market again.
Stocks fell Monday after Republican and Democratic leaders offered competing proposals to avoid a catastrophic default on the U.S. government's debt.
Lawmakers hoped to reach a compromise on raising the country's borrowing limit late Sunday, but those talks stalled. President Barack Obama wants to raise revenues by letting tax cuts for wealthy Americans expire. Republicans have pushed for more spending cuts and have rejected higher taxes.
If an agreement is not reached by Aug. 2, the U.S. won't have enough cash to pay all its bills. That could have a huge impact on financial markets. Interest rates would rise for millions of consumers. And stocks could fall the way they did during the 2008 financial crisis, analysts say.
Netflix bracing for slowdown in subscriber growth
SAN FRANCISCO _ Netflix Inc. is bracing for a customer backlash that could result in its slowest subscriber growth in more than three years amid changes to its online video and DVD rental service that will raise prices by as much as 60 percent.
The sobering forecast issued Monday overshadowed the second-quarter earnings that accompanied the company's outlook.
Netflix's shares plummeted more than 10 percent, largely because the company expects its results for the current quarter ending in September to miss the targets set by stock market analysts.
The shortfall stems from an anticipated slowdown in Netflix's subscriber growth amid the most radical change in the company's pricing since it began renting DVDs through the mail 12 years ago.
Mass. AG puts conditions on bank settlement
NEW YORK _ Massachusetts Attorney General Martha Coakley said on Monday that she will not sign any agreement between attorneys general and big banks that releases the banks from future mortgage related liability.
Coakley's stance could create an obstacle for a settlement that has been in the works for weeks between attorneys general in all 50 states and banks. That agreement is supposed to settle claims of shoddy mortgage and foreclosure practices that were discovered last fall, including document fraud.
Coakley and several other attorneys general believe a release from future liability would hamper their investigation into banks' mortgage practices. Attorneys general from Delaware and New York have already balked at a settlement that would include the release.
US Steel turns quarterly profit on stronger sales
PITTSBURGH _ United States Steel Corp. says it turned a quarterly profit for the first time since the fourth quarter of 2008, as it benefited from higher steel prices even though shipments declined.
The Pittsburgh steelmaker on Monday reported net income of $222 million, or $1.33 a share, for the April-to-June period. That compares with a net loss of $25 million, or 17 cents per share, a year ago.
Sales rose to $5.12 billion from $4.68 billion. Shipments fell 6.5 percent from a year ago.
Analysts surveyed by FactSet predicted earnings of $1.22 per share on revenue of $5.56 billion.
Players vote to OK deal to end NFL lockout
Now it can be said with certainty: Get ready for some football!
NFL players voted to OK a final deal Monday, days after the owners approved a tentative agreement, and the sides finally managed to put an end to the 4 1/2-month lockout, the longest work stoppage in league history.
The labor dispute comes to a close after claiming one exhibition: the Hall of Fame game between the Bears and Rams, scheduled for Aug. 7 in Canton, Ohio. Otherwise, the entire preseason and regular-season schedules remain intact.
By The Associated Press(equals)
The Dow Jones industrial average fell 88 points, or 0.7 percent, to close at 12,593. The Dow had been down as many as 145 points earlier. The Standard & Poor's 500 index fell 8, or 0.6 percent, to 1,337. The Nasdaq composite index fell 16, or 0.6 percent, to 2,843.
Benchmark West Texas Intermediate crude for September delivery on Monday lost 67 cents to settle at $99.20 per barrel on the New York Mercantile Exchange. In London, Brent crude fell 73 cents to settle at $117.94 per barrel on the ICE Futures exchange.
In other Nymex trading for August contracts, heating oil lost 2.08 cents to settle at $3.1207 per gallon and gasoline futures gave up less than a penny to settle at $3.0817 per gallon. Natural gas lost 1.5 cents to settle at $4.355 per 1,000 cubic feet.