Dow falls 391 points on worldwide fears about economy
Investors on Wall Street and around the world sold stocks with abandon Thursday, more convinced than ever that a global recession is under way. The Dow Jones industrial average lost almost 400 points.
The sell-off began in Asia, intensified in Europe and rattled markets in the United States all day. Stocks in New York staged a small rally before the end of trading but still finished near their lows for the year.
One financial indicator after another showed that investors are quickly losing hope that the economy can keep growing. The price of oil and metals, both of which depend on economic demand, fell sharply. Traders bought bonds for safety.
FedEx, a company that ships so many goods it is considered a barometer of the U.S. economy, had to lower its earnings forecast for the year because its customers are putting off purchases of electronics and other gadgets from China.
HP names eBay veteran Meg Whitman as new CEO
Hewlett-Packard Co. has named Meg Whitman, the former eBay CEO and California candidate for governor, as its new CEO, pushing aside Leo Apotheker after just 11 months on the job. Whitman got the top spot because there are few available people with the experience to run complex technology businesses, a source familiar with the matter told The Associated Press. Apotheker is being removed because the board lost confidence in his ability to lead the company long-term.
The management shake-up represents yet another turnaround strategy at one of Silicon Valley's oldest, but most publicly dysfunctional, firms. Since joining HP in November, Apotheker's strategic decisions had been drastic, and did little to inspire confidence. HP's stock fell nearly 50 percent during his time at the helm.___
FedEx sees global slowdown, cuts profit outlook
FedEx Corp. says consumers are putting off purchases of electronics and other gadgets from China, another example of the global economic slowdown that's prompting fears of another recession.
The slowdown prompted the world's second-largest package delivery company to lower its earnings expectations for the fiscal year that ends in May. But while anxiety over the economy created a rout in the stock markets, and its own shares, FedEx isn't yet ready to predict another recession in the U.S.
FedEx and UPS are closely watched indicators of broader economic health because they ship so many packages between consumers and businesses every day.
When consumers and businesses are concerned about the strength of the economy, they tend to choose slower shipping options _ like switching from overnight express service to slower ground shipping _ to save money. It's the same move many made during the recession.
Mixed impact on consumers from Fed's `Twist'
Operation Twist doesn't give consumers much to shout about.
The Federal Reserve's latest effort to boost the economy by driving down long-term interest rates won't have a big impact on home and car buyers, savers or credit card users.
Any noticeable changes from the central bank shuffling $400 billion of its portfolio are likely to be mixed. Although borrowers may benefit from lower rates on mortgages and other fixed-rate loans, savers holding long-term bonds are likely to see their interest income dip.
The stock market's skeptical reaction reflected the limited outlook for the program's impact. If the Fed's move spurs the economy, investors could see their portfolios climb. But the initial response of investors was a sell-off Wednesday and Thursday, partly because of the Fed's suggestion that the economic slump could last for years.
Berkshire Hathaway stock dips below $100,000
Berkshire Hathaway's Class A stock slipped below $100,000 for the first time since January 2010 amid broader market declines and concern about the health of the economy.
The Class A shares of billionaire investor Warren Buffett's company traded as low as $98,952 Thursday, but rebounded to close at $100,000. The more affordable Class B shares traded as low as $65.35, during the day. The Standard & Poor's 500 index dropped 3.2 percent.
Over the past year, Berkshire's Class A shares declined nearly 19 percent from $124,865 to Wednesday's closing price of $101,250. By contrast, the S&P 500 index that Buffett measures his company's progress against was up about 2 percent from a year earlier at Wednesday's close.
Nike's 1Q net income rises 15 percent
Nike Inc.'s fiscal first-quarter net income rose 15 percent as sales of its athletic gear rose faster than its costs.
The world's largest athletic shoe and clothing maker reported after the market closed Thursday that it earned $645 million, or $1.36 per share, for the quarter that ended Aug. 31. That's up from $559 million, or $1.17 per share, in the same quarter last year.
Nike's revenue rose 18 percent to $6.08 billion. Excluding the impact of foreign exchange rates, revenue rose 11 percent.
Nike, based in Beaverton, Ore., said demand for its product remained strong around most of the globe. That helped make up for the higher prices it paid for raw materials and for selling more things at a discount, both of which hurt its profit margins during the period.
Fewer people applied for unemployment benefits
The number of people applying for unemployment benefits fell last week, though the decline isn't enough to signal improvement in the job market. Weekly applications dropped by 9,000 to a seasonally adjusted 423,000, the Labor Department said Thursday. The four-week average, a less volatile figure, rose slightly for the fifth straight week to 421,000.
Applications typically need to fall below 375,000 to signal sustainable job growth. They haven't been that low since February. Higher unemployment benefit applications may suggest more employers are laying off workers amid growing worries that the economy has weakened.
Pacific Biosciences of California Inc. said Wednesday that it will cut 130 employees, or 28 percent of its work force. Last week, Bank of America Corp. said it is cutting 30,000 jobs.
Still, economists say the main problem is that there are few jobs for the 14 million people who are unemployed.
Discover 3Q profit more than doubles, card use up
Discover Card users used their plastic more often during the summer, with higher gas prices adding to increased pursuit of the card's cash-back rewards. The increased use, combined with better payment habits, helped Discover Financial Services fiscal third-quarter profit more than double.
The Riverwoods, Ill.-based credit card company's results solidly beat Wall Street expectations, which buoyed its stock while the broader markets plunged as fears mounted over the health of the global economy.
Higher gas prices helped push sales volume on Discover cards up 9 percent to $26.3 billion for the quarter. The average price per gallon during the June to August period was $3.648 per gallon, up from $2.729 the prior year, according to auto club AAA, Wright Express and Oil Price Information Service.
Target's blunder with designer continues
Target Corp. drummed up so much hype around its exclusive, limited-time line by upscale Italian designer Missoni that the discounter's website crashed and was down most of the day on Sept. 13 when the collection was launched, angering customers. More than a week later, some shoppers who bought the Missoni for Target line are posting on social media websites Facebook and Twitter that they won't shop at Target again because their online orders are being delayed _ or worse, canceled _ by the retailer. The Missoni collection was an attempt by Target to regain the cachet it lost among the fashion-forward crowd after it began focusing on expanding its food business. Target is among a few retailers who have partnered with high-end designers that create exclusive lines they can offer for a limited time at deep discounts.
By The Associated Press(equals)
The Dow Jones industrial average fell 391.01 points, or 3.5 percent, and closed at 10,733.83.The Standard & Poor's 500 index fell 37.20, or 3.2 percent, to 1,129.56 The Nasdaq composite fell 82.52, or 3.3 percent, to 2,455.67.
Benchmark crude slid $5.41 to finish at $80.51 per barrel in New York. Brent crude, used to price crude from foreign countries, fell $4.87 to finish at $105.49 in London. In other energy trading, heating oil dropped 8.57 cents to end at $2.8485 per gallon, while gasoline futures lost 10.65 cents to finish at $2.56 per gallon. Natural gas fell 2.5 cents to end at $3.705 per 1,000 cubic feet.