WASHINGTON (AP) - Federal Reserve policymakers meeting in early August
acknowledged that they might have to take action to ease a growing credit
crunch, even as they held out hope for "a return to more normal market
conditions" without any intervention.
A cut in one interest rate came 10 days later, and analysts are expecting a
broader rate cut when Chairman Ben Bernanke and his Fed colleagues meet in
September.
The Fed, however, didn't feel an immediate need to step in at its Aug. 7
meeting. Instead, the Fed left a key interest rate at 5.25 percent, where it has
stood for more than a year. Policymakers left rates alone even as they
acknowledged that the worsening housing slump, credit problems and turbulence on
Wall Street had increased risks to the economy.
NEW YORK (AP) -- Volatility returned to Wall Street Tuesday, sending stocks
plunging as investors grew more uneasy about the economy and whether the Federal
Reserve will take the steps needed to prevent credit market problems from
spreading further. The Dow Jones industrials fell 280 points.
The stock market found little to assuage concerns in minutes from the Fed's
last meeting, released during afternoon trading. The major indexes' losses
steepened after investors parsed the minutes for signs of a possible cut in
interest rates.
There had been some hope on the Street that Fed policymakers might have sent
a stronger signal they were more willing to cut interest rates to help calm
turbulent market conditions.
NEW YORK (AP) -- Consumer confidence weakened in August as Americans focused
on turbulent financial markets, a decline in home prices and tighter credit
standards.
The New York-based Conference Board said Tuesday its Consumer Confidence
Index, declined to 105.0 from a revised reading of 111.9 in July, which was
still a six-year high.
Although the index was down, it was slightly stronger than the 104.5 that
Wall Street analysts expected.
The survey is closely watched because consumer spending represents
two-thirds of the U.S. economy and confidence levels tend to influence spending.
NEW YORK (AP) -- U.S. home prices fell 3.2 percent in the second quarter,
the steepest rate of decline since Standard & Poor's began its nationwide
housing index in 1987, the research group said Tuesday.
The decline in home prices around the nation shows no evidence of a market
recovery anytime soon, one of the architects of the index said.
MacroMarkets LLC Chief Economist Robert Shiller said the declining
residential real estate market "shows no signs of slowing down."
The report came a day after the National Association of Realtors said sales
of existing homes dropped for a fifth straight month in July while the number of
unsold homes shot up to a record level.
The S&P/Case-Schiller quarterly index tracks price trends among existing
single-family homes across the nation compared with a year earlier.
DALLAS (AP) -- Whole Foods Market Inc. said Tuesday it has lined up
financing to complete its $565 million purchase of rival organic and natural
foods grocer Wild Oats Markets Inc., ending a six-month battle against federal
regulators who tried to block the deal on antitrust grounds.
The company said it took out a five-year, $700 million loan to fund the
deal, which also includes the assumption of $137 million in Wild Oats debt.
The fight to buy Wild Oats was bruising, and both Mackey and the FTC emerged
from the fight with black eyes, according to former FTC officials and analysts.
ATLANTA (AP) -- The Home Depot Inc. said Tuesday it has agreed to sell its
wholesale distribution business to private equity groups for $8.5 billion --
about $1.8 billion less than originally agreed.
The announcement comes after several days of intense negotiations to
preserve the deal, even at a lower price.
The sale price as announced in June was $10.3 billion. But tightening credit
conditions and a rocky housing market led to renegotiation.
As part of the amended terms, Home Depot will purchase a 12.5 percent equity
interest in the whole business for $325 million and will guarantee a $1 billion
senior secured loan of HD Supply, a business that serves construction
contractors.
The sale is scheduled to take place on Thursday.
UNDATED (AP) -- A federal appeals court said Tuesday that despite his poor
health and good works, former Wal-Mart executive Thomas Coughlin got off too
easy after admitting he had cheated his company and the IRS.
If anything, the 8th U.S. Circuit Court of Appeals said, Coughlin's standing
in his community made his crimes appear worse. It directed an Arkansas federal
judge to resentence Coughlin -- rejecting a term that included only home
detention and probation.
Coughlin pleaded guilty in January 2006 to felony wire fraud and tax evasion
charges after embezzling cash, gift cards and merchandise from Wal-Mart Stores
Inc., where he worked for 28 years and served as Sam Walton's protege. Wal-Mart
estimated the loss at nearly $500,000.
ATLANTA (AP) -- Internet service provider EarthLink Inc. said Tuesday that
it would cut 900 jobs -- or about half its work force -- and close four offices
in an effort to reduce operating costs. EarthLink shares climbed 7 percent on
the news.
The moves come as the company continues struggling to generate revenues as
dial-up access customers turn to high-speed alternatives from cable and phone
companies.
More actions could be announced by the year's end but no more cuts are
expected, said Rolla P. Huff, the Atlanta-based company's president and chief
executive. As part of the plan, EarthLink also said it will repurchase $200
million of its stock.
MOUNTAIN VIEW, Calif. (AP) -- Google Inc. said Tuesday that its chief
financial officer will retire by the end of the year, creating the
highest-ranking job opening at the Internet search leader since it went public
three years ago.
George Reyes, Google's CFO since 2002, will stay on the job while he helps
the Mountain View-based company find his successor. The transition is expected
to be completed before January.
In a statement announcing his decision, Reyes, 53, didn't say why he decided
to retire.
WASHINGTON (AP) -- Five years into a national economic recovery, the share
of Americans living in poverty finally dropped.
The nation's poverty rate was 12.3 percent in 2006, down from 12.6 percent a
year before, the Census Bureau reported Tuesday. Median household income
increased slightly, to $48,200.
The numbers provided some good economic news at a time when financial
markets have been rattled by a slumping housing market. But they were tempered
by an increase in the number of Americans without health insurance, from 44.8
million in 2005 to 47 million last year.
Some advocates said the numbers were evidence of an uneven economy that is
leaving many Americans behind.
By The Associated Press
The Dow fell 280.28, or 2.10 percent, to 13,041.85, its biggest drop since
Aug. 9.
The Standard & Poor's 500 index was down 34.43, or 2.35 percent, at
1,432.36, and the Nasdaq composite index shed 60.61, or 2.37 percent, to
2,500.64.
Gasoline for September delivery fell 2.39 cents to settle at $2.0154 a
gallon on the New York Mercantile Exchange while October light, sweet crude fell
24 cents to settle at $71.73 a barrel.
In London, October Brent crude fell 40 cents to settle at $70.55 a barrel on
the ICE Futures exchange.
In other Nymex trading, heating oil futures fell 1.34 cents to settle at
$1.9963 a gallon.
September natural gas rose 21.3 cents to settle at $5.593 per 1,000 cubic
feet.
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