Fed suggests it’s closer to slowing bond purchases
WASHINGTON (AP) — Chairman Ben Bernanke ended weeks of speculation Wednesday by saying the Federal Reserve will likely slow its bond-buying program later this year and end it next year if the economy continues to improve.
The Fed’s bond purchases have helped keep long-term interest rates at record lows. A pullback in the Fed’s purchases would likely lead to higher rates on mortgages and other consumer and business loans.
Bernanke said the reductions would occur in “measured steps” and that the purchases could end by the middle of next year. By then, he said he thought unemployment would be around 7 per cent.
Stocks slide as Fed says bond purchases could slow
NEW YORK (AP) — Financial markets shuddered Wednesday after the Federal Reserve said it could start scaling back its huge economic stimulus program later this year and end it by the middle of 2014.
The reaction by investors — the Dow Jones industrial average fell more than 200 points and the yield on the 10-year Treasury note rose to its highest in 15 months — showed just how much investors have come to depend on the Fed’s easy money policies that have helped send the stock market up 141 per cent in the past four years.
The selloff was broad. All 10 sectors in the Standard’s & Poor’s 500 were down.
The Fed’s $85 billion in monthly bond purchases have helped the U.S. economy by keeping long-term interest rates low and encouraging borrowing and investing. Now, it looks like the Fed is closer to ending that program as the U.S. economy improves.
Government report: Smooth launch unsure for health law
WASHINGTON (AP) — There’s no guarantee that President Barack Obama’s health care law will launch smoothly and on time, congressional investigators say in the first in-depth independent look at its progress.
But in a report to be released Wednesday, the congressional Government Accountability Office also sees positive signs as the Oct. 1 deadline approaches for new health insurance markets called exchanges to open in each state — in many cases over the objections of Republican governors.
Additionally, the report discloses that the administration had spent nearly $400 million as of March to set up the infrastructure of a sprawling system involving major federal agencies, every state, hundreds of insurance companies, and millions of citizens, among them many individuals seeking coverage for the first time.
Men’s Wearhouse ousts founder, pitchman Zimmer
NEW YORK (AP) — Men’s Wearhouse doesn’t like the way its founder looks anymore.
The men’s clothier said Wednesday that it has fired the face of the company and its executive chairman, George Zimmer, 64, who appeared in many of its TV commercials with the slogan “You’re going to like the way you look. I guarantee it.”
The company announced the move in a terse statement that gave no reason for the abrupt firing of Zimmer, who built Men’s Wearhouse Inc. from one small Texas store using a cigar box as a cash register to one of the North America’s largest men’s clothing sellers with 1,143 locations.
Car quality dinged by tech glitches, survey finds
DETROIT (AP) — Car buyers increasingly want high-tech features like voice recognition and navigation. But they’re not very forgiving of the car company when those systems fail.
The top complaints in J.D. Power’s closely-watched survey of new vehicle owners, released Wednesday, involved technologies that drivers are clamouring for. Voice recognition systems either didn’t recognize commands or didn’t work at all. Bluetooth systems had trouble connecting with drivers’ phones.
The result: Just when automakers had reached their highest-ever levels of quality — as they did in J.D. Power’s 2012 survey — technology glitches are dragging their scores down.
Export revival underway for small businesses
NEW YORK (AP) — When Lawrence Scheer began selling baby clothes in 2010, he didn’t realize it then, but he was on the leading edge of a recovery in small business exports.
Scheer’s company, Magnificent Baby, manufactures its products in China and then sells them in about 20 countries around the world.
Scheer took a chance that many small business owners have only recently decided to take. A growing number of companies are turning to exporting to build their sales, reversing a downturn that began with the recession and was likely made worse by the financial crisis in Europe.
Research shows an increase in overseas sales by companies already exporting, and a growing interest in exporting among those who have yet to test the international waters. Exporters say demand for their goods, from clothing to blankets to crop dusting planes, is rising. That makes it worth their while to deal with the complexities of exporting, including logistics and complying with the varying regulations of overseas markets.
Unmanned aircraft struggle to shed ‘drone’ image
LE BOURGET, France (AP) — Unmanned aircraft have helped rescue stranded hikers, worked to contain wildfires and gathered data at nuclear accidents. One helped a Russian tanker find its way through Arctic ice to bring oil to a stranded Alaskan community.
These remote-controlled planes have many more potential peacetime uses. But unmanned aircraft have an image problem: They’re also known as drones.
That word conjures up pilotless planes dropping bombs or spying in war zones. But industry officials and regulators say the day is coming when unmanned aircraft will be regularly used for more mundane purposes — and people will be at ease with them appearing in their skies.
Food stamp cuts key to farm bill’s fate in House
WASHINGTON (AP) — House passage of a massive farm bill could turn on the level of food stamp cuts as key backers scrambled Wednesday to secure support for the five-year, half-trillion dollar measure.
The House planned to begin voting on 103 amendments to the bill, including a Democratic proposal to eliminate $2 billion in annual cuts in the almost $80 billion-a-year food stamp program, now called the Supplemental Nutrition Assistance Program, or SNAP.
The bill would make it more difficult for some to qualify for food stamps while expanding some agriculture subsidies and setting policy for rural development programs.
IRS draws new criticism over $70 million employee bonuses
WASHINGTON (AP) — Already reeling from a pair of scandals, the Internal Revenue Service is drawing new criticism over plans to hand out millions of dollars in employee bonuses.
The Obama administration has ordered agencies to cancel discretionary bonuses because of automatic spending cuts, but the IRS says it’s merely following legal obligations under a union contract.
The agency is about to pay $70 million in employee bonuses, said Sen. Chuck Grassley of Iowa, a senior Republican on the Senate Finance Committee, which has jurisdiction over the IRS.
FedEx 4Q profit drops as priority services lag
DALLAS (AP) — FedEx Corp.’s fourth-quarter profit fell 45 per cent as international customers traded down to less-expensive delivery options and the company spent heavily on restructuring.
FedEx said 3,600 employees will take voluntary buyouts and nearly half of them have already left. The company is also retiring older airplanes.
Excluding charges related to those moves, FedEx’s results still beat Wall Street expectations. But the company’s profit forecast for the next 12 months was less than analysts predicted.
By The Associated Press=
The Dow Jones industrial average fell 206.04 points, or 1.4 per cent, to close at 15,112.19. The S&P 500 index fell 22.88 points, or 1.4 per cent, to 1,628.93. The Nasdaq composite fell 38.98 points, or 1.1 per cent, to 3,443.20.
Benchmark oil for July delivery dropped 20 cents to finish at $98.24 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for many international oil varieties, rose 10 cents to end at $106.12 a barrel on the ICE Futures exchange in London.
Wholesale gasoline rose 1 cent to finish at $2.89 a gallon. Heating oil rose 1 cent to end at $2.97 per gallon. Natural gas gained 6 cents to finish at $3.96 per 1,000 cubic feet.