Business Highlights

Business Highlights

October sales offer relief to merchants

NEW YORK (AP) — Stores are heading into the period with slashed inventories, determined not to have the fire sales that characterized last Christmas. But shoppers are still facing tight credit and a weak job market and might wait for fat discounts or not buy at all. That game of chicken will determine the holiday winners and losers.

Sales at stores open at least a year rose 2.1 percent in October, according to the International Council of Shopping Centers-Goldman Sachs tally, compared with a 4.2 percent drop in October 2008. The October results beat estimates for a 1 percent gain and followed a surprising 0.6 percent increase in September.

Productivity gains may be bad news for job seekers

WASHINGTON (AP) — Companies across the economy are finding ways to do more with fewer workers, dimming hopes that hiring will take off anytime soon.

Employers became leaner and more efficient in the third quarter. Wages, meantime, remain flat or falling. The result is that productivity — output per hour of work — jumped at the fastest pace in six years.

The good news for companies, though, may be bad news for the jobless. As long as companies can get their workers to produce more, they have little reason to hire — at least until consumer spending picks up. And the squeeze on incomes could depress consumer spending, putting the economic recovery at risk.

Stocks surge on jobs data, Cisco forecast

NEW YORK (AP) — A drop in unemployment claims and an upbeat forecast from Cisco Systems Inc. gave investors a jolt of confidence a day before a key government report on jobs.

The Dow Jones industrial average jumped 200 points Thursday to its first close above 10,000 in two weeks, while the Nasdaq composite index led major indexes with a gain of 2.4 percent after Cisco, the maker of computer-networking gear, predicted its revenue would grow.

Five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.3 billion shares compared with 1.4 billion Wednesday.

Fannie Mae seeks $15 bln in US aid after 3Q loss

WASHINGTON (AP) — Fannie Mae is asking for an additional $15 billion in government aid after posting another big loss in the third quarter as the taxpayer bill from the housing market bust keeps rising.

The government-controlled company continued to see a dramatic surge of borrowers fall behind as the unemployment rate climbs. At the end of last month, about 4.7 percent of Fannie Mae’s borrowers had missed at least three payments. That’s nearly triple last year’s level.

Seized by federal regulators 14 months ago, the problems at Fannie Mae and sibling company Freddie Mac have proven far worse than most experts had foreseen. Fannie Mae’s request Thursday will bring the tab for rescuing both companies to about $111 billion. The government has promised up to $400 billion in assistance.

Banks borrow more from emergency Fed program

WASHINGTON (AP) — Banks borrowed slightly more from the Federal Reserve’s emergency lending program over the past week, while reducing their use of other credit programs designed to ease the financial crisis.

The Fed said commercial banks averaged $22.6 billion in daily borrowing over the week that ended Wednesday. That’s up $32 million from the week ended Oct. 28, but is far less than the $110 billion they borrowed a year ago at the height of the financial crisis.

The increase, while slight, was the first since the week of Sept. 2.

The identities of the financial institutions are not released. They pay just 0.50 percent in interest for the emergency, overnight loans.

Hyatt Hotels, Ancestry.com jump in market debuts

NEW YORK (AP) — Two well-known companies shined in their market debuts Thursday despite what has recently been a difficult market for initial public offerings.

Shares of Hyatt Hotels Corp. jumped 12 percent in their first day on the New York Stock Exchange as markets appeared to dismiss concerns about infighting among its founder’s heirs and tepid hotel reservations around the world.

Meanwhile, investors impressed by Ancestry.com’s large subscriber base and growth story pushed the genealogy Web site’s stock up as much as 21 percent on the Nasdaq market.

DirecTV shows subscriber gains, as rivals see loss

Satellite TV operator DirecTV Group Inc. was one of the few pay-TV companies to gain subscribers in the third quarter, though earnings stayed steady because of the higher costs it incurred attracting and serving those new customers.

DirecTV said Thursday that a marketing partnership with AT&T Inc. that began in February accounted for most of the increase in U.S. subscribers, but it likely also retained subscribers and gained new ones because of a perennial favorite, the NFL Sunday Ticket package that airs out-of-market games to football fans.

DirecTV, which is controlled by media mogul John Malone’s Liberty Media Corp., has focused on attracting consumers who don’t mind paying more for quality TV as long as they get football and other packages they want.

CVS Caremark 3Q profit up but loses big contracts

NEW YORK (AP) — CVS Caremark disclosed more multibillion dollar contract losses in its pharmacy benefits management business and said the head of the unit will depart.

CEO Tom Ryan said CVS, which also runs the nation’s second-biggest drug store chain, won’t reach its goals in 2010 because of the sharp reversal of fortunes at the Caremark unit, which administers drug benefits for employers. CVS shares plunged 20 percent and took their biggest one-day loss in eight years.

In total, the company lost about $2 billion in 2010 revenue in the last three months. It now believes Caremark has lost $4.8 billion in contracts for next year.

Citi files plans to spin off Primerica in IPO

NEW YORK (AP) — Citigroup says it filed plans for an initial public offering of its Primerica Inc. life insurance unit and will sell off the rest of the division after it goes public.

Divesting the company is part of Citi’s effort to simplify its operations in the wake of the financial crisis. Citi acquired Primerica, which is focused on the middle-income market, in the late 1980s.

Citi will sell all the shares being offered, and receive all proceeds from the IPO.

IMS Health to be bought for $4 billion by TPG, CPP

NORWALK, Conn. (AP) — Health care data company IMS Health Inc. said Thursday it is being bought by investment funds TPG Capital and CPP Investment Board for $4 billion, in a move to help the company restructure its business amid the shifting health care arena and sluggish economy.

IMS shareholders are getting $22 per share under the deal, marking a 31 percent premium to the stock’s closing price of $16.81 on Wednesday. Shares were up nearly 24 percent in afternoon trading, having earlier set a new 52-week high of $21.09 on the news.

The leveraged buyout deal, which has committed debt financing from the private-equity firms and Goldman Sachs affiliates, is valued at $5.2 billion including assumed debt, according to IMS.

The Dow rose 203.82, or 2.1 percent, to 10,005.96, its first close above 10,000 since Oct. 22.

The broader Standard & Poor’s 500 index rose 20.13, or 1.9 percent, to 1,066.63, while the Nasdaq rose 49.80, or 2.4 percent, to 2,105.32.

The Russell 2000 index of smaller companies rose 18.03, or 3.2 percent, to 581.15.

Benchmark crude for December delivery gave up 78 cents to settle at $79.62 a barrel on the New York Mercantile Exchange. In London, Brent crude for December delivery fell 90 cents to settle at $77.99 on the ICE Futures exchange.

In other Nymex trading, heating oil fell 3.26 cents to settle at $2.0576 a gallon. Gasoline for December delivery lost 2.5 cents to settle at $1.9877 a gallon. Natural gas for December delivery rose 5.7 cents to settle at $4.782 per 1,000 cubic feet.