Will higher gas prices derail the economy?
NEW YORK (AP) _ The price of gas has jumped 45 cents since Jan. 1 and is the highest on record for this time of year, at an average of $3.73 a gallon. On Wall Street, talk has turned from the European debt crisis to another worry: Will higher gas prices derail the economic recovery?
Not yet, economists say. They argue that the U.S. is in much better shape now than early last year, when a similar surge in fuel prices weighed on economic growth by squeezing household budgets. Americans spent less on clothes, food and everything else.
Rising gas prices are less of a concern when the economy is improving than when it's slowing down. So economists expect other spending won't be badly hurt, at least for now. If gas breaks its record of $4.11 a gallon, however, all bets are off.
Nasdaq cracks 3,000, but stocks fall
The Nasdaq composite index briefly broke through 3,000 on Wednesday for the first time since 2000, when the dot-com bubble burst. Stocks ended lower, but it was still the best February on Wall Street in 14 years.
The milestone for the Nasdaq, heavy with technology stocks, came a day after the Dow Jones industrial average closed above 13,000 for the first time since May 2008.
Apple, the Nasdaq's biggest component, topped $500 billion in market value, the only company above the half-trillion mark and only the sixth in U.S. corporate history to grow that big. Apple might reveal its next iPad model next week.
ECB hands out $712 billion in loans to banks
FRANKFURT, Germany (AP) _ The European Central Bank's second offering of unlimited low-interest loans was gobbled up Wednesday by 800 banks that borrowed $712.4 billion. More than $1.3 trillion has been pumped into Europe's financial system this way in just over two months in an attempt to stabilize banks, governments and businesses.
The first offering on Dec. 21 attracted 523 banks to borrow $657.9 billion and helped ease the eurozone debt crisis, as banks used some of the money to buy government bonds. That helped lower borrowing costs of heavily indebted countries like Italy and Spain and gave investors confidence that Europe was getting control of a government debt crisis that has lingered for more than two years.
How the banks deploy the money this time is an open question, although the ECB enticed more smaller banks to participate in the hope that they would help boost the eurozone economy by lending to small- and medium-sized businesses. ECB President Mario Draghi assured bankers there was "no stigma" associated with borrowing from the central bank _ an effort to convince those who feared it would make their financial institutions look desperate in the eyes of investors.
Central banks' joint efforts sustain global system
WASHINGTON (AP) _ Never before have the world's central banks sent so much money through the global financial system.
From slashing interest rates and buying government debt to dangling cheap loans to banks and taking on their risky assets, central banks have taken extraordinary steps since the 2008 financial crisis to nurse the international banking system back to health.
Over the past 3 1/2 years, the central banks of the United States, Britain, Japan and the 17 countries that use the euro have pumped out so much money that their balance sheets have reached a combined $8.76 trillion. That's a record, by far.
The infusion of money has eased borrowing costs and raised confidence in banks, governments and companies.
James Murdoch quits role at UK newspaper branch
LONDON (AP) _ James Murdoch, his credibility diminished and his future at the helm of his father's media empire in doubt, stepped down Wednesday as executive chairman of News International, the troubled British newspaper subsidiary embroiled in a deepening phone hacking scandal.
The move _ which the company cast as allowing Rupert Murdoch's younger son to focus on News Corp.'s international TV holdings _ plucks the one-time heir apparent out of the cross-hairs of the crisis that has spurred judicial and police inquiries and claimed the careers of several top executives.
The 39-year-old James will remain deputy chief operating officer of News Corp., and experts said removing him from the firestorm over News International doesn't just help with damage control. It also leaves the embattled executive in a key position at the company and places him back into the role of TV executive, where he has shone in the past.
Apple market value hits $500 billion, where few have gone
NEW YORK (AP) _ Apple's market capitalization topped $500 billion Wednesday, climbing to a mountain peak where few companies have ventured _ and none have stayed for long.
Apple was already the world's most valuable company. The gap between it and No. 2 Exxon Mobil Corp. has widened rapidly in the past month, as investors have digested Apple's report of blow-out holiday-season sales of iPhones and iPads. And, more recently, Apple has raised investors' hopes that it might institute a dividend.
On Tuesday, the Cupertino, Calif., company sent out invites to reporters for an event in San Francisco next Wednesday, apparently to reveal its next iPad model. The launch of the new model was expected around this time, a year after the launch of the iPad 2.
Microsoft unveils Windows 8 for consumer testing
BARCELONA, Spain (AP) _ Microsoft on Wednesday let consumers start trying out its upcoming touch-based Windows 8 operating system, which aims to power a new wave of computer tablets and traditional PCs and counter Apple's big gains in the market with its Macs and iPads.
The test "beta" version of the revamped system was introduced at the Mobile World Congress in Barcelona, the world's largest cellphone trade show. Windows 8 has some of the look of Microsoft's Windows Phone 7 software.
Windows 8 doesn't have the traditional "Start" menu, and applications are spread across a mosaic of tiles in a design Microsoft calls "Metro" _ seen as an attempt by the company as a scramble to preserve its market share. And executives said it powers up on PCs in eight seconds, much faster than the previous version.
Bernanke notes economy better than expected
WASHINGTON (AP) _ Chairman Ben Bernanke told lawmakers Wednesday that the economy has performed better in recent months than the Federal Reserve had expected. If the trend continues, he said the Fed might have to reassess its outlook for a slow recovery.
Investors appeared to take Bernanke's more optimistic tone as a signal that the Fed is less likely to adopt further steps to boost growth. It could also mean that the Fed could back off its plan to hold its key interest rate near zero until late 2014.
Stocks and bond prices both fell. Analysts said Bernanke's speech was notable for what it didn't include: any mention of a new round of government bond-buying.
Faster growth last quarter bolsters hopes for 2012
WASHINGTON (AP) _ Stronger hiring and higher pay and savings should support solid growth for the economy in coming months.
That was a key message that emerged Wednesday from a report on economic growth in the final three months of 2011. The economy grew at a 3 percent annual rate in the October-December quarter, up from a previous estimate of 2.8 percent, the Commerce Department said.
Most of last quarter's growth stemmed from a jump in company restocking. That happened because businesses rebuilt inventories that had been depleted last summer. Stockpiling is expected to slow sharply this quarter. And as it slows, economic growth could, too.
By The Associated Press(equals)
The Dow Jones industrial average lost 53.05 to close at 12,952.07. The Standard & Poor's 500 index fell 6.50 points to close at 1365.68. The Nasdaq closed down 19.87 points at 2,966.89.
West Texas Intermediate, which is used to price oil produced in the U.S., rose 52 cents to $107.07 a barrel. Brent crude, which is used to price international oil, gained 69 cents to $122.24 in London.
In other energy trading, natural gas futures rose 8.3 cents to $2.71 per 1,000 cubic feet. Heating oil fell by 1.4 cents to $3.206 a gallon.