Tuesday's Business Highlights
Tuesday, October 29, 2013
Here are business news highlights from Tuesday, Oct. 29, 2013.
Sears considering spinning off Lands’ End
NEW YORK (AP) — It’s like watching an old friend slowly fall apart.
Sears was once the place where families could go for an afternoon of one-stop shopping for everything from clothing to appliances to car parts. But it has struggled in recent years amid declining sales and stiff competition.
Now, Sears, which runs 2,500 Kmart and Sears stores, is considering separating its Lands’ End catalog business and Sears Auto Center businesses from the rest of the company. The retailer also plans to continue closing some of its unprofitable stores and is selling some store leases in Canada.
The announcements came Tuesday as Sears warned that it expects a loss of $582 million in the third quarter on another drop in sales. The company said that for the 12 weeks that ended Saturday its sales at stores open at least a year fell 3.7 percent.
AP source: Stumbling block cited in JPMorgan talks
WASHINGTON (AP) — Negotiations between the Justice Department and JPMorgan Chase & Co. have hit a stumbling block that has put the talks at risk, a person briefed on the discussions said Tuesday.
A week and a half ago, JPMorgan tentatively agreed to pay $13 billion to settle allegations surrounding the low quality of mortgage-backed securities it sold in the run-up to the 2008 financial crisis.
One of the unresolved issues in the talks: JPMorgan says it should be able to seek money from a receivership involving Washington Mutual, a failed savings and loan that JPMorgan purchased in 2008, said the person, who spoke on condition of anonymity because the source was not authorized to speak by name about the matter.
Health policy cancellations: New blow for administration
WASHINGTON (AP) — Move over, website woes. Lawmakers confronted the Obama administration Tuesday with a difficult new health care problem — a wave of cancellation notices hitting individuals and small business who buy their own insurance.
At the same time, the federal official closest to the website apologized for its dysfunction in new sign-ups and asserted things are getting better by the day.
Medicare chief Marilyn Tavenner said it’s not the administration but insurers who are responsible for cancellation letters now reaching many of the estimated 14 million people who buy individual policies. And, officials said, people who get cancellation notices will be able to find better replacement plans, in some cases for less.
The Associated Press, citing the National Association of Insurance Commissioners, reported in May that many carriers would opt to cancel policies this fall and issue new ones. Administratively that was seen as easier than changing existing plans to comply with the new law, which mandates coverage of more services and provides better financial protection against catastrophic illnesses.
Outside drop in autos, US retail spending rises
WASHINGTON (AP) — A sharp drop in auto sales caused largely by a calendar quirk lowered U.S. retail spending in September. But Americans spent more on most other goods, showing some confidence in the economy before much of the government shut down.
Overall retail sales dipped 0.1 percent, the Commerce Department said Tuesday. That was the weakest showing since March.
Wholesale prices dipped 0.1 percent in September
WASHINGTON (AP) — A big decline in food costs helped hold down wholesale prices in September, contributing to a 0.1 percent decline, the first drop since April.
The Labor Department says the slight dip followed a 0.3 percent rise in prices in August. Wholesale food prices fell 1 percent, led by a plunge in vegetable prices.
The lower food costs helped offset a 0.5 percent rise in energy prices. That increase reflected higher prices for home heating oil, diesel fuel and natural gas. Gasoline prices, which had shot up 2.6 percent in August, dipped 0.1 percent in September.
US home prices rise at fastest pace since 2006
WASHINGTON (AP) — U.S. home prices rose in August from a year earlier at the fastest pace since February 2006. But the price gains slowed in many cities from July, a sign that the spike in prices over the past year may have peaked.
The Standard & Poor’s/Case-Shiller 20-city home price index rose 12.8 percent over the 12 months ending in August. That’s up from 12.4 percent in July from a year earlier. All 20 cities showed year-over-year gains.
However, a measure of month-over-month prices for the 20 cities rose just 1.3 percent in August. That’s’ down from a 1.8 percent month-over-month gain in July. And 16 of the 20 cities reported more modest price increases in August than in July.
US consumer confidence plunges on gov’t shutdown
WASHINGTON (AP) — Americans’ confidence in the economy fell this month to the lowest level since April, as many worried about the impact of a 16-day partial government shutdown. The decline could weigh on spending and economic growth.
The Conference Board said Tuesday that its index of consumer confidence dropped to 71.2 in October, down from 80.2 the previous month. September’s figure was slightly higher than initially reported.
Consumers grew particularly pessimistic in their outlook on the economy six months from now, while their assessment of current economic conditions declined by much less. They also expect less hiring in the months ahead. Consumers’ confidence is closely watched because their spending accounts for 70 percent of economic activity.
Dutch bank paying $1 billion to settle LIBOR charges
WASHINGTON (AP) — Rabobank of the Netherlands has agreed to pay about $1 billion to settle U.S., British and Dutch charges of manipulating a key global interest rate. The bank’s chairman resigned as it became the fifth financial firm sanctioned in the international rate-rigging scandal.
The amount Rabobank is paying includes $325 million in an agreement with the U.S. Justice Department that allows the bank to avoid criminal prosecution in exchange for its continued cooperation in the investigation of major banks’ conduct regarding LIBOR.
The authorities said Tuesday that Rabobank, one of the world’s largest banks, engaged in rigging of the London interbank offered rate, or LIBOR, from 2005 to 2011.
Health insurer Aetna’s 3Q profit rises 4 percent
A multi-billion dollar deal helped fuel third-quarter earnings growth for Aetna Inc., but the performance missed expectations, and shares slid Tuesday after it became the latest big health insurer to warn about challenges that lie ahead.
Chairman and CEO Mark Bertolini told analysts that the Hartford, Conn., insurer is committed to growing operating earnings next year, and it expects the floor for its performance to be around where it finishes this year.
But Aetna also expects to pay about $600 million toward a health insurance fee required as part of the health care overhaul, and it faces a Medicare Advantage funding cut also mandated by the law, which aims to fund coverage for millions of uninsured people over the next few years.
LinkedIn posts 3Q net loss but revenue grows
NEW YORK (AP) — LinkedIn Corp. posted a loss for the third quarter on Tuesday, but the results were stronger than expected as the professional networking service boosted its user base and increased its revenue.
Such results have become routine for the company. LinkedIn has surpassed Wall Street’s expectations in all of its quarters as a publicly traded company and this one was no exception. But its outlook was below estimates and its shares fell in extended trading.
LinkedIn booked a loss of $3.4 million, or 3 cents per share, in the July-September period. It had earned $2.3 million, or 2 cents per share, in the same period a year earlier. Adjusted earnings were 39 cents per share in the latest quarter, beating analysts’ expectations by 7 cents.
The Dow Jones industrial average rose 111.42 points, or 0.7 percent, to 15,680.35. The Nasdaq composite rose 12.21 points, or 0.3 percent, to 3,952.34. The Standard and Poor’s 500 index rose 9.84 points, or 0.6 percent, to 1,771.95.
Benchmark U.S. crude for December delivery dropped 48 cents to $98.20 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international crude also used by U.S. refineries, was down 75 cents to $108.86 on the ICE Futures exchange in London.
Wholesale gasoline lost 2 cents to $2.61 a gallon. Heating oil was flat at $2.96 a gallon. Natural gas fell 7 cents to $3.50 per 1,000 cubic feet.
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