JPMorgan CEO Dimon acknowledges $800 million segment loss
JPMorgan Chase, the largest bank in the U.S., said Thursday that it expects to lose $800 million this quarter on complex investments made by its own traders.
The company's stock plunged more than 6 percent in after-hours trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America suffered heavy losses as well.
The loss occurred in JPMorgan's Corporate and Private Equity segment. JPMorgan previously had planned on a profit of $200 million for the segment, excluding some special items.
The loss is expected to hurt JPMorgan's overall earnings for the second quarter, which ends June 30. Dimon apologized for the losses, which he said occurred since the first quarter ended on March 31.
Bing to duel Google with Facebook-friendly format
SAN FRANCISCO (AP) _ Microsoft's Bing search engine is heading in a new direction as it drills deeper into Facebook's social network and Twitter's messaging service to showcase information unlikely to be found on Google.
The changes, unveiled Thursday, will reshape how Bing displays its search results. It represents Microsoft's most dramatic shift in Internet search since the software maker introduced Bing as a "decision engine" nearly three years ago.
Microsoft Corp. is counting on the new format to loosen Google's stranglehold on the lucrative Internet search market. In the process, Microsoft hopes to turn a profit in its online division, which has lost more than $6.3 billion since Bing's June 2009 debut.
With Apple in, Dow would have set record long ago
Apple is the world's most valuable company. The Dow Jones industrial average is probably the world's best-known stock index. So don't they deserve each other?
Consider this: If Apple had been added to the Dow in June 2009, the last time there were serious rumors that it would happen, the average would be about 2,500 points higher than it is today and well above its all-time high.
Paul Hickey of Bespoke Investment Group, which crunches markets numbers, says the Dow would be at 15,360, about 1,200 points above its record of 14,164, set in October 2007. The Dow closed Wednesday at 12,835.
Spain bank rescue underscores financial dilemma
MADRID (AP) _ The Spanish government's decision to take control of the country's fourth-largest bank highlights the problem gripping the nation's financial system. Banks are taking huge losses on real estate loans that have soured, but the deeper the government gets involved in providing aid, the greater the risk it will need an international bailout.
Financial stocks in Madrid soared Thursday, a day after the government said it would take a 45 percent controlling stake in Bankia SA, which has the highest exposure to bad property loans of all Spanish banks following a crash in the construction sector that started in 2008.
But because the government _ already strapped for cash _ will finance the takeover, investors continued to worry that the country might eventually need a bailout itself. Spain's sovereign borrowing rates remained uncomfortably high on Thursday, suggesting traders are wary of its financial future.
US applications for unemployment aid dip to 367,000
WASHINGTON (AP) _ The number of people applying for U.S. unemployment benefits ticked down last week following a sharp drop the previous week.
Applications are falling again after rising for most of April, suggesting hiring could pick up this month.
Weekly applications dropped 1,000 to a seasonally adjusted 367,000 in the week ending May 5, the Labor Department said Thursday. The previous week's figure was revised up slightly.
The four-week average, a less volatile measure, fell by 5,250 to 379,000. It was the first decline since late March.
Bernanke says lending spigots are more open now
Federal Reserve Chairman Ben Bernanke said Thursday that many businesses and consumers are finding it easier to borrow as banks shore up their balance sheets.
He said that large companies are selling bonds at historically low interest rates and that people with strong credit have "ready access" to credit card and auto loans.
Bernanke also noted that many creditworthy Americans are finding it difficult to get mortgage loans. He said small business owners who have used their homes as collateral for loans also face "challenging" conditions.
USDA predicts record US corn harvest this summer
DES MOINES, Iowa (AP) _ Consumers could see some relief from higher food prices by late fall, if the latest government crop forecast holds up.
The U.S. Agriculture Department predicted Thursday that corn production will total a record 14.8 billion bushels. That compares with 12.4 billion bushels a year ago and it's 11 percent higher than the previous record crop in 2009. The government also predicts a record yield of 166 bushels per acre.
The USDA also increased an estimate for corn stockpiles at the end of this August to 851 million bushels from 801 million bushels, noting that some of this year's crop may be ready for use earlier than normal because of a fast start to the planting season.
Postal Service loses $3.2 billion in 2nd quarter
WASHINGTON (AP) _ Drowning in red ink, the U.S. Postal Service on Thursday reported a quarterly loss of $3.2 billion and blamed Congress for blocking the agency's cost-cutting efforts to offset declining mail volume and mounting costs for future retiree health benefits.
From January to March, losses were $1 billion more than during the same period last year. The Postal Service said that without legislative action, it will be forced to default on more than $11 billion in health prepayments due to the Treasury this fall.
The Postal Service is seeking new leeway from Congress to eliminate Saturday mail delivery and reduce health and other labor costs. The Senate last month passed a bill that would give the agency an $11 billion cash infusion and reduce the health payments while delaying a move to five-day delivery for two years; the House remains stalled over a separate bill allowing for far-reaching cuts.
US rate on 30-year mortgage drops to record 3.83 percent
WASHINGTON (AP) _ Average U.S. rates for 30-year and 15-year fixed mortgages fell to record lows this week. Cheap mortgage rates have made home-buying and refinancing more affordable than ever for those who can qualify.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan ticked down to 3.83 percent. That's the lowest since long-term mortgages began in the 1950s. And it's below the previous record rate of 3.84 percent reached last week.
The 15-year mortgage, a popular option for refinancing, dropped to 3.05 percent, also a record. That's down from last week's previous record of 3.07 percent.
US deficit looms large despite April surplus
WASHINGTON (AP) _ For the first time in nearly four years, the U.S. government last month took in more money than it spent.
The surplus for April was a welcome sign that the economy is trudging back to health. Still, it's just one month of black ink in a budget stained in red. For the budget year, the country remains on track for a fourth straight $1 trillion deficit _ a trend that should keep the deficit near the center of the presidential race.
Through the first seven months of the budget year that began Oct. 1, the U.S. has run a $719 billion deficit, the Treasury said Thursday. The April surplus of $59.1 billion isn't unusual, because annual tax returns are due that month. Yet as the first April surplus since the 2008 financial crisis erupted, the surplus shows that modest job growth and higher corporate profits have boosted tax revenue.
US phone subscribers hang up on contracts
NEW ORLEANS (AP) _ U.S. consumers have had their fill of expensive, contract-based phone plans.
Figures from T-Mobile USA on Thursday, added to earlier reports from other companies, indicate that the U.S. wireless industry lost subscribers from contract-based plans for the first time in the first quarter. Contract-based plans are the most lucrative ones for phone companies. The industry default over the past several decades, they account for the vast majority of revenue at the big phone companies.
The seven largest U.S. phone companies, representing more than 95 percent of the market, lost a combined 52,000 subscribers from contract-based plans in the January-to-March period, according to a tally by the Associated Press. The companies have a combined 220 million devices on such plans, accounting for about two-thirds of the total number of devices.
By The Associated Press(equals)
The Dow Jones Industrial average rose 19.98 points to close at 12,855.04. The Standard & Poor's 500 index rose 3.41 points to close at 1,357.99. The Nasdaq composite index fell 1.07 points to 2,933.64.
Benchmark U.S. crude rose by 27 cents to end the day at $97.08 per barrel in New York, while Brent crude fell by 47 cents to finish at $112.73 per barrel in London.
Natural gas futures rose 2.2 cents to end at $2.487 per 1,000 cubic feet on Thursday.
In other futures trading, heating oil lost 1.57 cents to finish at $2.9834 per gallon and wholesale gasoline fell by 1.39 cents to end at $3.0102 per gallon.