Business Highlights

AP News
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Posted: Aug 02, 2016 5:19 PM

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Stressed times for Europe's banks despite rosy assessment

LONDON (AP) — The results of recent stress tests of Europe's biggest banks should have reassured investors that the sector can withstand another crisis. But a slump in share prices since the findings' publication on Friday suggests many have yet to be convinced.

Bank stocks across Europe — even those that were effectively given a clean bill of health— fell sharply Tuesday for the second day and weighed heavily on the wider market indexes.

The falls aren't just confined to Italy, where concerns over the health of the banking sector have been the most acute. Britain's Barclays dropped, while Germany's Commerzbank slid as well.

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US stocks take biggest losses in nearly a month

NEW YORK (AP) — U.S. stocks took their biggest loss in almost a month on Tuesday as investors worried about the health of the U.S. economy and sold shares in retailers and car companies.

While stocks set all-time records as recently as July 22, they've been trading in a very narrow range for the last few weeks. Since stocks aren't making big gains, investors are sensitive to signs of trouble for the U.S. economy, like weaker sales of autos or last week's disappointing GDP report.

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US consumer spending grew a solid 0.4 percent in June

WASHINGTON (AP) — American consumers turned in another strong month of spending in June despite a decline in spending on autos.

Consumer spending rose a solid 0.4 percent in June after an identical increase in May and a 1 percent surge in April, the Commerce Department said Tuesday. The strength in June came from a surge in spending on nondurable goods, which offset a drop in spending on autos.

Personal income grew a moderate 0.2 percent in June, matching May's gain.

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New insurance policy: Abandon ACA exchanges to avoid losses

Aetna became the latest health insurer to cast doubt upon its future in the Affordable Care Act's insurance exchanges after it called off a planned expansion Tuesday and suggested it could abandon that market completely.

A departure by Aetna, the nations' third-largest insurer, could further reduce the number of choices for customers and eventually push insurance prices higher.

Aetna said Thursday it has been swamped with higher than expected costs, particularly from pricey specialty drugs, and it will take a hard look at its current presence on exchanges in 15 states.

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Pfizer beats Street 2Q forecasts despite big drop in profit

Rising sales of Pfizer Inc.'s key new medicines and prospects that more drugs will be approved soon have analysts speculating the biggest U.S. drugmaker won't break up after all.

For five years, the maker of Viagra and fibromyalgia and pain treatment Lyrica has been mulling a split up that might enable the resulting pieces to grow faster.

Pfizer executives fielded numerous questions on the issue as they discussed second-quarter results with analysts Tuesday, repeating that they will decide by year's end.

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CVS Health tops 2Q profit forecasts, spurred by acquisitions

CVS Health beat second-quarter earnings expectations and nudged its 2016 forecast higher after the drugstore chain and pharmacy benefits manager reaped gains from a couple of deals and its sales of pricey specialty drugs rose.

The company said revenue from established stores — a key metric for retailers — rose 2 percent during the second quarter

Overall, CVS Health's earnings plunged 27 percent to $924 million in the quarter that ended June 30. That was due mainly to a $542-million loss on the early retirement of some debt and $81 million in acquisition-related costs. Adjusted earnings came to $1.32 per share.

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P&G tops forecasts as company cuts costs, steps up marketing

CINCINNATI (AP) — Procter & Gamble reported a quarterly profit Tuesday that topped Wall Street expectations as the world's biggest consumer products company worked on slashing costs and pruning its product lineup to offset slow growth.

The maker of Tide detergent, Charmin toilet paper and Pantene shampoo said its sales declined for its fiscal fourth quarter, hurt by unfavorable currency exchange rates.

P&G has been trying to transform its struggling business to better focus on bigger brands with growth potential. The company has already shed more than half the 105 smaller brands it says collectively contribute little to its operating profit.

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Freddie Mac posts $993M profit in 2Q; paying $933M dividend

WASHINGTON (AP) — Mortgage giant Freddie Mac reported net income of $993 million for the second quarter, down sharply from the same period of 2015.

The company said Tuesday its income from fees received from lenders for guaranteeing mortgages increased in the April-through-June period, but it sustained losses on investments because of the decline in interest rates.

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July US auto sales could fall on weaker demand

DETROIT (AP) — U.S. auto sales were expected to drop slightly in July as unusually hot weather — and softening demand — kept buyers at home.

Kelley Blue Book predicted a 1 percent decline from last July to about 1.5 million new cars and trucks. Sales were strong at the beginning of the month thanks to Independence Day promotions, but weakened after that, KBB senior analyst Alec Gutierrez said.

General Motors' sales fell 2 percent while Ford's U.S. sales fell 3 percent. Toyota's sales slipped 1 percent. Fiat Chrysler's sales were flat. Volkswagen's sales fell 8 percent.

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Australia cuts key interest rate to record-low 1.5 percent

SYDNEY (AP) — Australia's central bank cut its benchmark interest rate to a record-low 1.5 percent on Tuesday, in a bid to jolt the nation's sluggish economy amid low inflation rates.

The Reserve Bank of Australia cut the cash rate by a quarter percentage point from its previous low of 1.75 percent. The board last cut rates in May. Economists had largely predicted Tuesday's cut.

RBA Governor Glenn Stevens cited the nation's low inflation rate as a driver behind the cut. Annual inflation is just 1 percent, far below the bank's target of 2 to 3 percent.

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Japan Cabinet OKs new stimulus package to pump up growth

TOKYO (AP) — Japan's Cabinet approved a fresh economic stimulus package on Tuesday worth more than 28 trillion yen ($275 billion), Prime Minister Shinzo Abe's latest effort to get the stalling recovery back on track.

Abe called the package "an investment for the future." It focuses on Japan's agriculture and tourism, and on providing support for the child and elder care industry to enable more women to work full-time, since the labor force is shrinking as the population ages.

Japan's economy has stagnated for years, with short spurts of faster growth, as companies have focused investments in faster-growing markets overseas.

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The Dow Jones industrial average fell 90.74 points, or 0.5 percent, to 18,313.77. The Standard & Poor's 500 index lost 13.81 points, or 0.6 percent, to 2,157.03. The Nasdaq composite slid 46.46 points, or 0.9 percent, to 5,137.73.

Benchmark U.S. crude fell 55 cents, or 1.4 percent, to $39.51 in New York. Brent crude, which is used to price international oils, sank 34 cents to $41.80 a barrel London. Wholesale gasoline rose 1 cent to $1.31 a gallon. Heating oil held steady at $1.26 a gallon. Natural gas fell 4 cents to $2.73 per 1,000 cubic feet.