Business

Stocks fall sharply on surge in oil, jobs data


Published: June 8, 2008

NEW YORK (AP) — Wall Street tumbled yesterday, taking the Dow Jones industrials down nearly 400 points, on a pair of alarming economic developments.

Oil prices shot up by more than $11 a barrel and approached $140 for the first time, and the Labor Department's data showed the biggest gain in the government's unemployment rate in more than 20 years.

The jump in oil to nearly $140 a barrel appeared to wipe out investors' recent optimism over the prospects for a strengthening of the economy.

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Oil rises jump more than $10 to new record high

NEW YORK (AP) — Oil prices shot up more than $11 to a new record above $139 Friday after Morgan Stanley predicted prices would hit $150 by the Fourth of July. The unprecedented jump is all but certain to drive gas prices well past the $4 mark in the coming weeks.

Oil's meteoric surge, which pushed prices more than 8 percent higher in a single day, added to a huge increase Thursday to cap oil's biggest two-day gain in the history of the New York Mercantile Exchange.

The burst higher — which also came on rising Middle East tensions — also raised the prospect of accelerating inflation by adding to already strained transportation costs.

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FTC opens formal probe of Intel

SAN JOSE, Calif. (AP) — Escalating the world's largest computer chip maker's legal woes, the Federal Trade Commission has opened a formal probe into Intel Corp.'s sales tactics.

The move is a victory for its much smaller rival, Advanced Micro Devices Inc.

Intel disclosed yesterday that it has received a subpoena from the FTC for records about Intel's microprocessor sales, which dominate the world market with a roughly 80 percent share.

The FTC's two-year investigation had been considered "informal" until that point, and Intel, which is already fighting antitrust charges in the European Union and was fined this week by antitrust regulators in South Korea, said it had been cooperating.

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Biggest jobless jump since '86 — Wall Street sinks

WASHINGTON (AP) — The nation's unemployment rate zoomed to 5.5 percent in May, the biggest one-month jump in decades.

Wall Street swooned, the Dow Jones industrials tumbled almost 400 points, and the White House said President Bush was considering new proposals to revive the economy.

The unemployment rate is likely to keep climbing, a government report indicated, underscoring the toll the housing and credit crises are taking on jobseekers, employers and the economy as a whole.

Adding to the pain, oil prices soared to a new record high, while the value of the dollar fell.

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Icahn recommends Yahoo set a $49.5B sale price

SAN FRANCISCO (AP) — Hoping to negotiate a compromise, activist investor Carl Icahn urged Yahoo Inc. to declare it is willing to accept a takeover offer of $49.5 billion — about $2 billion above Microsoft Corp.'s last bid for the Internet pioneer.

Icahn recommended the price tag, which works out to $34.375 a share, in a letter he sent Friday to Yahoo Chairman Roy Bostock.

It marks the first time that Icahn has publicly indicated what price he has in mind as he tries to force Yahoo's sale before the Sunnyvale-based company's annual meeting on Aug. 1.

If a deal isn't done before August, Icahn will try to replace Yahoo's board with a slate of his own directors and then fire company co-founder Jerry Yang as chief executive.

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Senate climate bill blocked

WASHINGTON (AP) — Senate Republicans yesterday blocked a global warming bill that would have required major reductions in greenhouse gases, pushing debate over the world's biggest environmental concern to next year for a new Congress and president.

Democratic leaders fell a dozen votes short of getting the 60 needed to end a Republican filibuster on the measure and bring the bill up for a vote, prompting Majority Leader Harry Reid to pull the legislation from consideration.

The Senate debate focused on bitter disagreement over the expected economic costs of putting a price on carbon dioxide, the leading greenhouse gas that comes from burning fossil fuels. Opponents said it would lead to higher energy costs.

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Consumer borrowing rises at slower pace in April

WASHINGTON (AP) — The Federal Reserve said yesterday that consumer borrowing increased at an annual rate of 4.2 percent in April, slower than the 6.2 percent increase of March.

The slowdown reflected the fact that borrowing in the category that includes credit cards rose at an annual rate of just 0.4 percent, the weakest performance since borrowing in this area actually declined at a 1.8 percent rate in May 2005.

The slowdown in growth in credit cards and other revolving debt was offset somewhat by a surge in borrowing for auto loans and other types of non-revolving credit, which jumped at an annual rate of 6.5 percent, up from the March rate of increase of 5.5 percent.

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Wal-Mart keeps low-price mantra going at meeting

FAYETTEVILLE, Ark. (AP) — Wal-Mart officials, bolstered by a rebounding stock price and improved image, told shareholders yesterday that their renewed focus on price and better merchandise is winning over customers who they expect to keep when the sluggish economy improves.

Still, Wal-Mart wants to play a larger role in addressing the financial challenges Americans face, store officials said.

The retailer is striving for greater environmental sustainability and lower health care costs through its discount drug program for customers.

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Minivan sales slow, hit by gas prices and image

DETROIT (AP) — While the rapid decline in pickup and sport utility sales has been grabbing the headlines, minivan sales have also taken a tumble, falling 20 percent in the first five months of this year.

And unlike trucks, which could rebound once the construction industry picks up, it's unclear if minivans have a future in the U.S. market or if they're being killed off by crossovers and the stodgy taint of the soccer mom image.

The slump reflects what's going on in the wider U.S. market. Overall auto sales were down 8 percent through May, and big vehicles like minivans took the brunt of it because of high gas prices. Large pickup truck sales fell 21 percent, while large SUVs were down 32 percent.

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By The Associated Press

The headwinds facing the economy sent the Dow Jones industrial average down 394.64, or 3.13 percent, to 12,209.81; it was down by as much as 412 points at its low of the session. The decline was the worst percentage and point drop since Feb. 27, 2007, when the blue chips dropped 416.02 points, or 3.29 percent, amid concerns about souring debt and an economic slowdown.

Broader stock indicators also fell sharply Friday. The Standard & Poor's 500 index lost 43.37, or 3.09 percent, to 1,360.68, and the Nasdaq composite index fell 75.38, or 2.96 percent, to 2,474.56. The day's declines were the steepest percentage losses for the S&P 500 and the Nasdaq since Feb. 5 this year.

Light, sweet crude for July delivery jumped as high as $139.12 on the Nymex, before easing slightly to settle at $138.54, up $10.75. Prices hit a previous record of $135.09 a barrel on May 22, and settled Thursday at $127.79.

In other Nymex trading, heating oil futures rose 23.72 cents to $3.918 a gallon while gasoline prices rose 15.7 cents to $3.4915 a gallon. Natural gas futures rose 25 cents to $12.769 per 1,000 cubic feet.

In London, July Brent crude shot up $7.75 to $135.30 a barrel on the ICE Futures exchange.