Stocks drop amid credit concerns
NEW YORK (AP) -- Stocks tumbled Thursday as the ailing credit market and a spike in home foreclosures intensified the market's worries about a sagging economy. The Dow Jones industrials gave up 214 points.
Concerns about credit grew after Thornburg Mortgage Inc. and a Carlyle Group bond fund revealed troubles with investments backed by mortgages. The entities failed to make margin calls, which are payments to guarantee much larger debt or investments.
And the genesis of the credit concerns that erupted last year -- souring mortgage loans -- dealt investors another blow after the Mortgage Bankers Association reported that home foreclosures rose to record levels in the fourth quarter. Worries about defaults have made lenders hesitant to extend credit, preventing the credit markets from functioning normally.
Home equity falls below 50 percent
NEW YORK (AP) -- Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.
Homeowners' portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter -- the third straight quarter it was under 50 percent.
That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
ECB, BoE keep rates unchanged
FRANKFURT, Germany (AP) -- The message from Europe: Market turmoil and a soaring euro won't sway the continent's dominant central bank to reduce interest rates -- no matter how loudly markets, politicians and businesses bray for the kind of cuts being made elsewhere.
European Central Bank President Jean-Claude Trichet stressed his mandate to fight inflation Thursday after his bank and the Bank of England both kept their key rates unchanged. The euro hurtled to another record high against the dollar as Trichet quashed any expectation of a rate cut soon, dashing some analysts' predictions.
The 15 nations that use the euro include more than 318 million people and account for more than 15 percent of the world's gross domestic product. Trichet's stance won't please European industry groups and labor unions, who called for quick rate cuts to tame the euro -- worried that as it rises, Europeans will lose orders to U.S. and Japanese competitors.
Jobless claims drop
WASHINGTON (AP) -- The number of people signing up for unemployment benefits fell sharply last week, a spot of welcome news that nonetheless failed to change the overall picture of a softer employment climate.
The Labor Department reported Thursday that new applications filed for unemployment insurance fell by a seasonally adjusted 24,000 to 351,000 for the week ending March 1.
Although the drop left claims lower than the 360,000 showing that economists were expecting, the longer-term picture shows a slowing in the jobs market. A year ago, new filings for unemployment benefits stood at 327,000.
The number of people continuing to collect unemployment benefits rose by a sharp 29,000 to 2.83 million for the week ending Feb. 23, the most recent period for which that information is available. That was the highest level since late September 2005.
Retailers get a reprieve in February
NEW YORK (AP) -- Consumers gave the nation's stores some relief in February, spending a little more freely although they mostly gravitated toward discounters and grocers. The challenge for merchants in coming months is to get shoppers to splurge on spring fashions -- a tough task when Americans are worried about plunging home values, tighter credit and rising gas prices.
As retailers reported mixed February sales results Thursday, it was clear that shoppers bought the basics, helping low-price operators like Wal-Mart Stores Inc. and Costco Wholesale Corp. exceed Wall Street expectations after a dismal January and disappointing holiday season. But customers largely shunned mall-based apparel stores, hurting merchants like Gap Inc., Limited Brands Inc. and J.C. Penney Co.
Oil ends turbulent day higher on dollar
NEW YORK (AP) -- Crude oil futures rose to another record close Thursday, boosted once more by the dollar's continuing slide to new lows against the euro.
At the pump, meanwhile, gas prices extended their own advance toward record levels. The national average price of a gallon of gas rose 0.7 cent overnight to $3.185, according to AAA and the Oil Price Information Service. Gas prices are following oil higher, and are expected to peak this spring well above last May's record of $3.227 a gallon.
Analysts believe the steadily weakening dollar is the reason oil prices have jumped to a number of new inflation-adjusted record highs this week. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
Firms accused of toxic toothpaste import
LOS ANGELES (AP) -- Criminal charges have been filed against officials of two companies that prosecutors say imported and distributed more than 70,000 tubes of Chinese toothpaste containing a poisonous substance, City Attorney Rocky Delgadillo announced Thursday.
The charges allege that Vernon Sales Inc. and Selective Imports Corp. sold toothpaste containing diethylene glycol, a chemical used in a.jpgreeze and as a solvent.
Vernon Sales President Kamyab Toofer and Vice President Pejman Mossay each were charged with 14 criminal counts of receiving, selling and delivering an adulterated drug.
Selective Imports President Frahad Nazarian and Vice President Yones Ghermezi each were charged with two criminal counts each of receiving, selling and delivering products containing the chemical known as DEG.
The charges were filed Tuesday, said Frank Mateljan, spokesman for Delgadillo. Each count carries a maximum penalty of one year in jail and a $1,000 fine.
GM restores Wagoner's salary
DETROIT (AP) -- General Motors Corp. said Thursday that Chief Executive Rick Wagoner will earn a salary of $2.2 million in 2008, restoring his base pay to the level it was before he took a pay cut in 2006 as part of the company's turnaround plan.
GM said its board of directors, which met Monday, also voted to give the company's new president and chief operating officer, Fritz Henderson, a salary of $1.8 million.
The board's action restores Wagoner's salary to the level it was from 2003 to 2005. Wagoner accepted a pay cut in 2006, and his salary was $1.28 million that year. The company made a profit of $2.2 billion in 2006 despite continuing losses in North America.
Pentagon bans Google teams from bases
WASHINGTON (AP) -- The Pentagon has banned Google Earth teams from making detailed street-level video maps of U.S. military bases.
A message sent to all Defense Department bases and installations around the country late last week told officials to not allow the popular mapping Web site from taking panoramic views inside the facilities.
Michael Kucharek, spokesman for U.S. Northern Command, told The Associated Press on Thursday that the decision was made after crews were allowed access to at least one base. He said military officials were concerned that allowing the 360-degree, street-level video could provide sensitive information to potential adversaries and endanger base personnel.
Barbicide goes out of the barbershop
MILWAUKEE (AP) -- Barbers have dipped their combs and scissors in it for six decades. Now the makers of Barbicide want masseurs, waiters and jail wardens to try a new form of the ubiquitous blue disinfectant.
The launch of wipes marks the first remake of Barbicide since its creation in 1947 by a high school science teacher in New York. New owners hope the public's fear of germs will give the product new life when the wipes start shipping this month.
The blue liquid in the tall glass jar is as much a part of the classic barbershop experience as the red-and-white pole. It's in more than 70 percent of the world's barbershops and salons that use disinfectants, said Alan Murphy, president of King Research, which makes Barbicide.
Now Murphy and Chief Executive Kevin Schuele, who bought the company with an investor group in 2006 for an undisclosed sum, envision the wipes used in hotels, spas, restaurants, schools and jails.
By The Associated Press
The Dow fell 214.60, or 1.75 percent, to 12,040.39 -- almost slipping below the 12,000 level, which it briefly did in January for the first time since November 2006.
Broader indexes also retreated. The Standard & Poor's 500 index fell 29.36, or 2.20 percent, to 1,304.34, and the Nasdaq composite declined 52.31, or 2.30 percent, to 2,220.50.
Light, sweet crude for April delivery rose 95 cents to settle at a record $105.47 a barrel on the New York Mercantile Exchange, after earlier spiking to a new trading record of $105.97. However, prices alternated between gains and losses frequently Thursday as some investors sold to lock in profits from a rally that added 6 percent to crude's price in two days.
In other Nymex trading, April heating oil futures rose 3.02 cents to settle at a record $2.9733 a gallon, while April gasoline futures rose 1.11 cents to settle at $2.6532 a gallon.
April natural gas futures inched up 0.1 cent to settle at $9.742 per 1,000 cubic feet. The Energy Department said inventories fell by 135 billion cubic feet last week, less than analysts had expected.
In London, Brent crude rose 97 cents to settle at $102.61 a barrel on the ICE Futures exchange.
Diesel prices jumped 1.4 cents overnight to a new record national average of $3.71 a gallon. High diesel prices are boosting prices of consumer goods, the vast majority of which are transported by the distillate fuel.