Wednesday's Business Highlights
Wednesday, October 30, 2013
Here are business news highlights from Wednesday, Oct. 30, 2013.
Federal Reserve leaves low interest-rate policies unchanged
WASHINGTON (AP) — The Federal Reserve says its low interest-rate policies are still needed to invigorate a subpar U.S. economy.
In a statement Wednesday after a policy meeting, the Fed said it would keep buying $85 billion a month in bonds to keep long-term rates low and encourage borrowing and spending.
Yet the Fed seemed to signal that it thinks the economy is improving despite some recent weak data and uncertainties caused by the partial government shutdown.
The Fed no longer expresses concern, as it did in September, that higher mortgage rates could hold back hiring and economic growth. And its statement makes no reference to the 16-day shutdown, which economists say has slowed growth this quarter.
Facebook 3Q results fly past expectations
NEW YORK (AP) — Facebook’s stock soared after the company reported a 60 percent revenue increase in the third quarter thanks to mobile advertising growth. The numbers beat Wall Street’s expectations for the second quarter in a row.
The world’s largest social network said Wednesday that it earned $425 million, or 17 cents per share, in the July-September quarter. That’s up from a loss of $59 million, or 2 cents per share, in the same period a year ago.
Adjusted earnings were $621 million, or 25 cents per share, in the latest quarter. That’s 6 cents better than analysts expected. This figure excludes special items, mainly stock compensation expenses.
iPads face toughest holiday competition yet
NEW YORK (AP) — Apple CEO Tim Cook believes Santa’s sleigh will be loaded with iPads this Christmas, but a variety of competing tablets are sure to be along for the ride, too.
Apple’s iPad Air, a thinner, lighter and faster-running version of its previous large tablet computers, goes on sale Friday with a starting price of $499. The company also unveiled an updated version of its iPad Mini recently. It goes on sale sometime in November.
Apple is expecting strong sales of both models —so much so that Cook told analysts during the company’s most recent earnings conference call that “this is going to be an iPad Christmas” as he predicted year-over-year growth.
EU spying backlash threatens billions in US trade
BRUSSELS (AP) — The backlash in Europe over U.S. spying is threatening an agreement that generates tens of billions of dollars in trans-Atlantic business every year — and negotiations on another pact worth many times more.
A growing number of European officials are calling for the suspension of the “Safe Harbor” agreement that lets U.S. companies process commercial and personal data — sales, emails, photos — from customers in Europe. This little-known but vital deal allows more than 4,200 American companies to do business in Europe, including Internet giants like Apple, Google, Facebook and Amazon.
Revelations of the extent of U.S. spying on its European allies is also threatening to undermine one of President Barack Obama’s top trans-Atlantic goals: a sweeping free-trade agreement that would add an estimated $138 billion (100 billion euros) a year to each economy’s gross domestic product.
Top EU officials say the trust needed for the negotiations has been shattered.
ADP: US companies add just 130,000 jobs in October
WASHINGTON (AP) — U.S. businesses added just 130,000 jobs in October, according to a private survey, as the 16-day partial government shutdown slowed an already-weak job market.
Payroll processor ADP also said Wednesday that companies created just 145,000 jobs in September, far below the 166,000 it had reported earlier this month.
The job market had been weakening even before the shutdown started Oct. 1. Employers were also worried about a standoff over raising the federal borrowing limit.
US consumer prices rise just 0.2 percent in September
WASHINGTON (AP) — U.S. consumer prices increased only slightly in September, as higher energy costs offset flat food prices. The figures are the latest evidence that slow economic growth is keeping inflation tame.
The consumer price index rose a seasonally adjusted 0.2 percent in September, the Labor Department said Wednesday. That’s up from 0.1 percent in August. Higher gas, electricity and other energy costs rose 0.8 percent, making up about half the overall increase.
In the past year, consumer prices have increased just 1.2 percent, down from a 1.5 percent annual gain in August. That’s the smallest 12-month gain since April, and it’s below the Federal Reserve’s 2 percent inflation target.
Social Security benefits to go up by 1.5 percent
WASHINGTON (AP) — Social Security benefits will rise 1.5 percent in January, giving millions of retired and disabled workers an average raise of $19 a month to keep up with the cost of living.
The increase is among the smallest since automatic adjustments were adopted in 1975, and reflects the fact that consumer prices haven’t gone up much in the past year. The annual cost-of-living adjustment, or COLA, is based on a government measure of inflation that was released Wednesday.
Automatic COLAs were adopted in 1975 so that benefits for people on fixed incomes would keep pace with rising prices. Some advocates for older Americans, however, complain that the COLA sometimes falls short, especially for people with high medical costs.
Chrysler IPO could happen by year end, CEO says
DETROIT (AP) — On the heels of a profitable third quarter, Chrysler Group said it will proceed with a public offering of shares before the end of this year.
Italy’s Fiat SpA owns the majority of Chrysler shares. Sergio Marchionne, who runs both companies, wants to combine them by purchasing the 41.5 percent of Chrysler now controlled by a United Auto Workers-run trust.
The two sides disagree on the value of the trust’s shares, and on a conference call Wednesday, the CEO said the two sides still haven’t reached a deal.
General Motors hints at dividend, stock buyback on 3Q profit
DETROIT (AP) — Another solid quarterly performance at General Motors brought the strongest talk yet of the automaker paying a dividend for the first time in five years, or perhaps buying back stock.
GM on Wednesday reported pretax profit of $2.64 billion for the third quarter, up almost 15 percent over a year ago. Earnings grew in North America, South America and China and losses narrowed in Europe.
Chairman and CEO Dan Akerson said on a conference call that the board knows that shareholders want the best possible return on their investment. “We understand what we’re here for, and one of them is to return money to our shareholders,” he said, without giving a specific time frame.
Barnes & Noble releases new Nook e-reader for $119
NEW YORK (AP) — Barnes & Noble Inc. is releasing a new Nook e-book reader for the holidays, while it evaluates the future of tablet computers.
Nook tablets haven’t sold well amid intense competition with Apple’s iPad, Amazon’s Kindle Fire and others. Barnes & Noble had a slim 2 percent share of the worldwide tablet market in the fourth quarter of 2012, but fell off IDC’s top 5 list this year.
The company said it isn’t giving up on tablets, but it will focus on a new e-reader this year while continuing to sell last year’s tablet models. The move comes as research firm IDC says the market for dedicated electronic-book readers is declining. Instead, consumers have been more interested in tablets, which can do much more, including video, email, Facebook and games.
The Dow Jones Industrial average fell 61.59 points, or 0.4 percent, to 15,618.76. The Standard & Poor’s 500 index fell 8.64 points, or 0.5 percent, to 1,763.31. The Nasdaq composite fell 21.72 points, or 0.6 percent, to 3,930.62.
Benchmark U.S. crude for December delivery dropped $1.43. or 1.5 percent, to close at $96.77 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international crude also used by U.S. refineries, rose 85 cents to $109.86 on the ICE exchange in London.
Wholesale gasoline rose 4 cents to $2.65 a gallon. Heating oil rose 1 cent to $2.98 a gallon. Natural gas fell 1 cent to $3.62 per 1,000 cubic feet.
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