Dow closes above 10,000 for 1st time in a year
NEW YORK (AP) - When the Dow Jones industrial average first passed 10,000, traders tossed commemorative caps and uncorked champagne. This time around, the feeling was more like relief.
The best-known barometer of the stock market entered five-figure territory again Wednesday, the most visible sign yet that investors believe the economy is clawing its way back from the worst downturn since the Depression.
The milestone caps a stunning 53 percent comeback for the Dow since early March, when stocks were at their lowest levels in more than a decade. The average closed at 10,015.86, up 144.80 points. It was the first time the Dow had touched 10,000 since October 2008, that time on the way down.
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JPMorgan earns $3.6B, but loan losses remain high
NEW YORK (AP) - JPMorgan Chase & Co. reported strong third-quarter earnings Wednesday as its thriving investment banking business more than offset rising loan losses that the bank warned would continue for the foreseeable future.
JPMorgan, the first of the big banks to report earnings for the July-September period, reported a $3.59 billion profit but also said it roughly doubled the amount of money it set aside for failed home and credit card loans in the quarter.
The bank's stock rose on the news, helping to lift the overall market. Still, JPMorgan's performance shouldn't be taken as a forecast for how well other banks did during the quarter. Many financial companies don't have such big investment banking operations, which includes trading of stocks and bonds and allowed JPMorgan, the nation's largest bank by assets, to overcome its loan losses.
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Worries persist despite some retail sales strength
WASHINGTON (AP) - Retail sales outside of autos showed surprising strength in September, but economists worry the rebound in all-important consumer spending will be short-lived as American families contend with rising unemployment and tight credit.
Removing autos, sales rose a better-than-expected 0.5 percent, led by gains at furniture stores, general merchandise stores and specialty clothing stores.
Many economists saw that as a sign that Americans are starting to spend again, a critical development for any recovery since consumer spending accounts for 70 percent of total economic activity.
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Fed officials were conflicted over revival program
WASHINGTON (AP) - Amid uncertainties about strength of the budding recovery, Federal Reserve policymakers last month were conflicted over whether to expand or cut back a program intended to drive down mortgage rates and prop up the housing market, according to a document released Wednesday.
In the end, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of a $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed said it would do so by the end of March.
But minutes of the Fed's closed-door deliberations on Sept. 22-23, revealed some members thought "an increase" in the mortgage securities buying program could help the economy recover more quickly.
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Bank regulators: real estate loans biggest concern
WASHINGTON (AP) - Rising losses on commercial real estate loans will continue to hurt U.S. banks in coming months and pose the biggest challenge for many financial institutions and their overseers, regulators said Wednesday.
Real estate loans will continue to be "the most prominent area of risk" for banks over the next several quarters, Federal Deposit Insurance Corp. Chairman Sheila Bair told lawmakers at a Senate hearing.
With more than 7 million jobs lost in the recession, office space has sat empty and developers have defaulted on their loans. The $6.2 billion in loans backed by commercial properties that banks wrote off as lost in the past two years will likely grow sharply as more loans come due, Bair said.
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Watchdog: Treasury and Fed failed in AIG oversight
WASHINGTON (AP) - Treasury Secretary Timothy Geithner is "ultimately responsible" for regulators' failure to rein in massive bonus payments at American International Group because he led the agencies that provided AIG's lifelines, according to a bailout watchdog.
Geithner was president of the Federal Reserve Bank of New York before taking over at Treasury in January. He has said he did not learn until March about the $1.75 billion in bonuses and other compensation promised to AIG employees. But Geithner's subordinates at the New York Fed learned of the payments in November, according to Neil Barofsky, the special inspector general for the $700 billion financial bailout.
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US and Canada regulators approve Pfizer-Wyeth deal
NEW YORK (AP) - Pfizer Inc.'s $68 billion purchase of Wyeth will close Thursday after antitrust regulators in the U.S. and Canada cleared the deal, which will make Pfizer the world's largest drugmaker by revenue.
The Federal Trade Commission approved the deal Wednesday, and Pfizer said the Canadian Competition Bureau also gave its blessing. Pfizer will have to sell about half of Wyeth's animal health business and change a Canadian distribution agreement, and the company said it will also sell its horse vaccine business.
German drugmaker Boehringer Ingelheim will buy those divisions, including Wyeth's vaccines for cattle, dogs, and cats, and medicines used in treating cattle, dogs, cats, and horses.
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Dollar loses punch and crude hits $75 at the close
NEW YORK (AP) - Oil prices on Wednesday rose above $75 a barrel for the first time in a year because of a weak dollar and the belief that the upcoming holiday shopping season will bring more traffic to the roads.
Benchmark crude for November delivery added $1.03 to settle at $75.18 on the New York Mercantile Exchange. The last time crude finished above $75 a barrel was Oct. 14, 2008, exactly one year ago.
Oil prices have wavered mostly between $50 and $70 a barrel since May with signs of an economic recovery emerging slowly. But a plunge in the dollar convinced many investors to pump money into crude and other commodities as a hedge against inflation.
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7,500 tax dodgers apply for IRS amnesty program
WASHINGTON (AP) - Some 7,500 international tax dodgers have applied for an amnesty program that promises no jail time and reduced penalties for tax cheats who come forward, the Internal Revenue Service announced Wednesday.
The tax dodgers were hiding money in more than 70 countries and on every continent except Antarctica. Accounts ranged from just over $10,000 to more than $100 million.
Response to the program has been unprecedented, IRS Commissioner Doug Shulman said.
The IRS long has had a policy that certain tax evaders who come forward before they are contacted by the agency usually can avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply. But if the money was earned legally, tax evaders can usually avoid criminal prosecution.
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Fund managers face trial in mortgage market case
NEW YORK (AP) - Two former Bear Stearns hedge fund managers went on trial Wednesday in one of the few criminal cases brought against Wall Street executives in connection with the housing market collapse.
Ralph Cioffi and Matthew Tannin face charges that they misled partners in their multibillion dollar hedge funds about the grim outlook for investments in subprime mortgages as the market soured in 2007.
Neither man is accused of doing anything to precipitate the crash, but federal prosecutors say they saw problems looming. In internal e-mails, the pair expressed concern that the funds they managed were headed for a "meltdown." Cioffi pulled $2 million of his own money from one of the investments as the bad news mounted. By The Associated Press
The Dow rose 144.80, or 1.5 percent, to 10,015.86, its biggest gain since Aug. 21 and its highest close since Oct. 3 last year.
The Standard & Poor's 500 index rose 18.83, or 1.8 percent, to 1,092.02. The Nasdaq composite index rose 32.34, or 1.5 percent, to 2,172.23. It's up 71.2 percent since March.
Benchmark crude for November delivery added $1.03 to settle at $75.18 on the New York Mercantile Exchange.
In other Nymex trading, gasoline for November delivery climbed 2.57 cents to settle at $1.8575 a gallon, and heating oil for November delivery added 1.93 cents to settle at $1.9427 a gallon. Natural gas for November delivery gave up 15.2 cents to settle at $4.436 per 1,000 cubic feet.
In London, Brent crude rose 70 cents to settle at $73.10 on the ICE Futures exchange.