Dow falls 512 in steepest decline since 2008 crisis
NEW YORK (AP) _ Gripped by fear of another recession, the financial markets suffered their worst day Thursday since the crisis of 2008. The Dow Jones industrial average fell more than 500 points, its ninth-steepest decline ever.
The sell-off wiped out the Dow's gains for 2011. It put the Dow and broader stock indexes into what investors call a correction _ down 10 percent from the highs of this spring.
The day was reminiscent of the wild swings that defined the markets during the crisis three years ago. Gold prices briefly hit a record high, oil fell an extraordinary $5 a barrel, and frightened investors were so desperate to get into some government bonds that they were willing to accept almost no return on their money.
It was the most alarming day yet in the almost uninterrupted selling that has swept Wall Street for two weeks. Since July 21, the Dow has lost more than 1,300 points, or 10.5 percent of its value. It has closed lower nine of the 10 trading days since then.
For the day, the Dow closed down 512.76 points, at 11,383.68. It was the steepest point decline since Dec. 1, 2008.
Wall Street plunge could worsen economy's troubles
WASHINGTON (AP) _ The two-week plunge in stock prices is signaling economic anxiety, but it's also compounding the problem: Lower stock prices are shrinking Americans' wealth, rattling their confidence and making them less inclined to spend.
And employers may become even slower to hire.
The Dow Jones industrial average plummeted 513 points, or 4 percent, Thursday on fears about the U.S. economy and the debt crisis in Europe. The major stock indexes have sunk more than 10 percent from their previous highs.
Economists say sustained drops in stock prices tend to suppress consumer spending as people see their wealth shrink. And consumer spending accounts for about 70 percent of economic activity.
All this comes just as fears of another recession are rising. Many consumers, their wages devoured by high gasoline and food prices, are pinching pennies: In June, they reduced spending for the first time in 20 months, the government said this week.
Retailers report solid sales gains for July
NEW YORK (AP) _ The back-to-school season got off to a strong start as discounts and high temperatures in July drove shoppers to air-conditioned malls. But merchants worry that momentum won't continue through the remainder of the second-biggest shopping period of the year as the weather gets cold and the deals dry up.
Despite a flow of bad economic news that kept consumer confidence shaky, a number of retailers reported July revenue on Thursday that beat Wall Street estimates, including discounter Target, department store Macy's, and luxury chain Saks. The International Council of Shopping Centers' preliminary tally of retailers' revenue at stores open at least a year _ a key indicator of a merchant's health _ was up 4.6 percent, a slower pace than June's 6.9 percent gain but in line with forecasts.
While the numbers offer encouraging signs for the start to the back-to-school shopping period, which runs roughly from mid-July through September, there are concerns that shoppers will stick to the habits of the Great Recession by focusing on necessities and waiting for sales. That could be a big problem for retailers, which are raising prices in order to offset rising fuel, labor and other production costs.
Kraft Foods plans to split into 2 companies
PORTLAND, Ore. (AP) _ Kraft Foods Inc. said Thursday it plans to split into two publicly traded companies, with one focusing on its international snack brands like Trident gum and Cadbury chocolates and the other on its North American grocery business that includes Maxwell House coffee and Oscar Mayer meats.
Kraft is the latest in a string of U.S. companies including rival Sara Lee Corp. to separate its business to cater to different niche markets. As companies increasingly look for ways to drive growth during a difficult economic environment, there's been a major shift from thinking bigger is always better to sharpening their strategy on smaller businesses that focus on a group of brands.
The move surprised industry watchers because Kraft, the nation's largest food maker, had long touted its scale and reach as its strength. Kraft officials said Thursday that after several years of acquisitions, sales and other changes, it became clear that the company had built two "strong, but distinct, portfolios" and the next step is to recognize the separate priorities for each.
GM profit doubles as sales and prices rise
DETROIT (AP) _ After years of big discounts, GM is charging customers more for its cars and trucks, and it's helping the bottom line.
General Motors Co. said Thursday its second-quarter profit nearly doubled. Higher pricing _ mostly in North America _ added $1 billion to its results.
Despite the good news, GM's stock faltered as the market saw its worst drop in three years. Investors fretted about the economic outlook and GM's admission that the second half won't be as strong as the first. GM shares fell 4 percent to $25.99, their lowest closing price since the company's November public stock offering.
The company's net income totaled $2.5 billion, or $1.54 per share. It was GM's third straight quarterly profit since the IPO, and its sixth straight overall.
Revenues rose 19 percent to $39.4 billion.
The numbers show how far GM has come since the days before its 2009 bankruptcy, when it cranked out too many mediocre products and was forced to offer big discounts to clear them off the lots. GM has closed plants, shuttered brands and plowed the savings into making better vehicles.
CVS Caremark second-quarter profit slips 1 percent
NEW YORK (AP) _ CVS Caremark said Thursday its profit slipped 1 percent in the second quarter as its pharmacy benefits management business weathered lower prices on contract renewals.
The Woonsocket, R.I., company said Caremark faced lower prices related to contract renewals. The most significant of those was its retail pharmacy contract with the Federal Employee Health Benefit Program, which the company renewed in the third quarter of 2010. While those renewals cut into its profit, total revenue for CVS Caremark rose 10.9 percent to $14.57 billion as the company began a new 12-year contract with Aetna Inc. and acquired Universal American Corp.'s Medicare Part D business.
Caremark's results have also been hurt by continued declines in prescription drug use, which mostly affect medications for chronic ailments. Prescriptions have slumped since early 2010 because Americans have cut back on doctors' visits and tried to make their prescriptions last longer. The company said it now expects a slightly bigger decline in Caremark's annual profit because of those cutbacks.
LinkedIn's second-quarter earnings soar as growth accelerates
SAN FRANCISCO (AP) _ LinkedIn Corp.'s first quarterly update since its ballyhooed IPO reassured investors who believe it's smart to buy into the hype surrounding a promising crop of Internet companies.
The second-quarter results announced Thursday not only included the rapid revenue and membership growth that LinkedIn's professional networking website needed to show to justify its lofty stock price, but also delivered an impressive increase in earnings when analysts were bracing for a loss.
It marked the first update since LinkedIn's initial public offering of stock in May. The company's shares immediately doubled from their IPO price of $45 and have remained in that range since then. LinkedIn's performance is being closely watched amid a stirring debate about whether investors are overvaluing Internet companies and setting the stage for a devastating collapse like the one that occurred in the sector a decade ago.
Unemployment aid applications tick down to 400K
WASHINGTON (AP) _ The number of people seeking unemployment benefits dipped last week, a sign the job market may be improving slowly.
Weekly applications for unemployment benefits edged down 1,000 to a seasonally adjusted 400,000, the Labor Department said Thursday. That's the lowest level in four months. The previous week's figure was revised upward from 398,000 to 401,000.
The four-week average, a less volatile figure, dropped for the fifth straight week to 407,750. That suggests there is a downward trend in layoffs.
By The Associated Press(equals)
The Dow Jones industrial average closed down 512.76 points, at 11,383.68. The S&P 500 closed down 60.27 points at 1,200.07. The Nasdaq fell 136.68 points to 2,556.39.
Benchmark West Texas Intermediate crude for September delivery fell $5.30, or 5.8 percent, to settle at $86.63 per barrel on the New York Mercantile Exchange.
Natural gas plunged, losing nearly 15 cents to settle at $3.941 per 1,000 cubic feet.
In other Nymex trading for September contracts, heating oil fell 12.5 cents to settle at $2.8939 per gallon and gasoline futures gave up 19.41 cents to settle at $2.7372 per gallon.