Business Highlights

The Associated Press 0

___

Fed will reduce bond purchases by $10B in January

WASHINGTON (AP) — The Federal Reserve has decided to reduce its stimulus for the U.S. economy because the job market has shown steady improvement. The shift could lead to higher long-term borrowing rates for individuals and businesses.

The Fed’s decision amounts to a vote of confidence in the economy six years after the Great Recession struck. It signals the Fed’s belief that the U.S. economy is finally achieving consistent gains.

The central bank said in a statement after its policy meeting ended Wednesday that it will trim its $85 billion a month in bond purchases by $10 billion starting in January. At a news conference afterward, Chairman Ben Bernanke said the Fed expects to make “similar moderate” reductions in its purchases if economic improvements continue.

At the same time, the Fed strengthened its commitment to record-low short-term rates. It said it plans to hold its key short-term rate near zero “well past” the time when unemployment falls below 6.5 per cent. Unemployment is now 7 per cent.

The Fed intends its bond purchases to drive down borrowing rates by increasing demand for the bonds. The idea has been to induce people and businesses to borrow, spend and accelerate economic growth. The prospect of a slower pace of purchases could mean higher rates.

___

US home construction hits highest pace in 5 years

WASHINGTON (AP) — U.S. builders broke ground on homes at the fastest pace in more than five years, strong evidence that the housing recovery is accelerating despite higher mortgage rates.

The Commerce Department said Wednesday that developers began construction on houses and apartments in November at a seasonally adjusted annual rate of 1.09 million. That’s 23 per cent more than October’s pace of 889,000 and the fastest since February 2008, just a few months after the recession began.

Construction of single-family homes jumped 21 per cent to an annual pace of 727,000, also the highest in more than five years. Apartment construction soared 26 per cent to a 354,000 annual pace.

Permits for future building slipped 3 per cent to just over 1 million, down from 1.04 million in October. The drop reflected a decline in apartments, which can be volatile. Permits for single-family homes rose.

___

Delta: No voice calls on our planes

MINNEAPOLIS (AP) — Delta Air Lines won’t allow passengers to make voice calls from its planes.

Right now, federal rules prohibit voice calls on planes. But the government is indicating that it might loosen those rules. If that happens, it could be up to airlines to set their own policies. On Wednesday, Delta went ahead and said, in effect, hang up and enjoy the view from 40,000 feet.

CEO Richard Anderson told workers in a memo that the airline will not allow cell calls or internet-based voice communications on mainline or Delta Connection flights, which are operated by other airlines under contract for Delta based on customer and employee preference.

Atlanta-based Delta is one of the world’s biggest airlines.

___

JPMorgan Chase sues FDIC for more than $1B

JPMorgan is suing the Federal Deposit Insurance Corp. to recover more than $1 billion tied to its purchase of Washington Mutual when that bank failed in 2008.

In a federal court complaint, the biggest U.S. bank said that the FDIC failed to honour obligations under the Washington Mutual agreement, and that has subjected JP Morgan to massive liability.

The FDIC became the receiver for Seattle-based Washington Mutual when it collapsed during the height of the financial crisis in September 2008. It was the largest bank failure in U.S. history. The FDIC brokered the sale of Washington Mutual’s assets to JP Morgan for $1.9 billion. JPMorgan said the FDIC made promises to indemnify or protect the bank against liabilities if it stepped in.

New York-based JP Morgan Chase & Co. said in a court filing Tuesday that the FDIC later declined to acknowledge that government and investors’ claims against JP Morgan for sales of Washington Mutual’s risky mortgage-backed securities should have been claims against the receivership, not the bank.

___

Ford warning on pricing, profit margins hits stock

DETROIT (AP) — Ford Motor Co. warned of tough price competition and harder-to-reach profit targets Wednesday, a sign that the company and the auto industry face a tougher road after four years of robust recovery from the Great Recession.

Ford said its pretax profit next year would drop as much as $1.5 billion below a near-record level of $8.5 billion in 2013. The company will have to slow price increases in North America — or even boost discounts on some models — and its costs will rise because of an ambitious launch of almost two dozen vehicles worldwide.

U.S. auto sales have risen by more than 1 million vehicles annually since 2009, but many analysts have said that pace isn’t sustainable.

___

UK to issue plastic banknotes in 2016

LONDON (AP) — The Bank of England says it will start issuing plastic bank notes for the first time in its 300-year history.

The decision comes after a three-year research program found that plastic notes stay cleaner for longer, are more difficult to counterfeit and last more than twice as long as than cotton paper.

The central bank said Wednesday that cash made from polymer, rather than cotton paper, will debut when a new 5 pound ($8) note featuring wartime Prime Minister Winston Churchill rolls out in 2016.

Bank governor Mark Carney said the polymer notes are “the next step” in ensuring trust and confidence in money.

___

By The Associated Press=

The Dow Jones industrial average soared 292.71 points, or 1.8 per cent, to close at 16,167.97. The Standard & Poor’s 500 index rose 29.65 points, or 1.7 per cent, to 1,810.65. The Nasdaq composite rose 46.38, or 1.2 per cent, to 4,070.06.

Benchmark U.S. crude for January delivery gained 58 cents to $97.80 a barrel on the New York Mercantile Exchange. Wholesale gasoline gained 5 cents to $2.70 a gallon. Heating oil added 5 cents to $3.01 a gallon. Natural gas fell 4 cents to $4.25 per 1,000 cubic feet. In London, the February contract for Brent crude, a benchmark for international oils, was up $1.19 to 109.63 a barrel on the ICE Futures exchange.

Leave a comment

Your email address will not be published. Required fields are marked *