Stocks extend slide as China adds to worries
NEW YORK (AP) — There was no let-up in the flight from stocks and bonds Thursday as the Dow Jones industrial average plunged 353 points and wiped out almost two months of gains.
A day after the Federal Reserve roiled U.S financial markets when it said it could step back from its aggressive economic stimulus program later this year, financial markets continued to slide. A slowdown in Chinese manufacturing added to Wall Street’s worries.
The breadth of the sell-off was seen across global financial markets, from sharply lower stock markets in Asia to falling government bond prices in Europe and the U.S. Gold also plunged.
How higher rates touch consumers, firms, investors
WASHINGTON (AP) — All it took was speculation that the Federal Reserve could slow its bond buying months from now — and then a few words Wednesday from Chairman Ben Bernanke to confirm it.
The result is that record-low interest rates that have fueled economic growth, cheered the stock market, shrunk mortgage rates but punished savers are headed up. And once the Fed starts scaling back its bond purchases, those trends could accelerate.
It means home loans are starting to cost more. Corporations will pay more to borrow. Bond investors are being squeezed. The stock market is plunging.
Facebook introduces video on Instagram
NEW YORK (AP) — Facebook is adding video to its popular photo-sharing app Instagram, following in the heels of Twitter’s growing video-sharing app, Vine.
Instagram co-founder Kevin Systrom said Thursday that users will be able to record and share 15-second clips by tapping a video icon in the app. They can also apply filters to videos to add contrast, make them black and white or different hues.
Vine, which launched in January, has 13 million users and lets people create and share 6-second video clips. Instagram has more than 130 million users, up from about 22 million when Facebook bought the company more than a year ago. If users like it, Facebook’s move could propel mobile video sharing into the mainstream, Systrom said.
On home turf show, Airbus steals Boeing’s thunder
LE BOURGET, France (AP) — Airbus beat its rival Boeing in the orders stakes at the Paris Air Show but both aircraft manufacturers were encouraged that their lucrative wide-body planes were finding new customers — a sign that the global economy could be on the mend.
The show at Le Bourget, which alternates with the Farnborough Air Show on an annual basis, is a platform for the sales race between the world’s two major aircraft makers, whose customers are increasingly interested in the new-generation, energy-efficient planes to offset huge increases in the price of jet fuel.
Though Europe’s Airbus said Thursday it notched up about $70 billion in sales at the show, it acknowledged a problem with its large backlog, which will delay the delivery of jets. Boeing Co., which last week signalled it expected a lower tally than Airbus, announced orders worth $66 billion — last year Boeing won the annual orders battle at Farnborough, south of London.
House rejects farm bill, 62 Republicans vote no
WASHINGTON (AP) — The House rejected a five-year, half-trillion-dollar farm bill Thursday that would have cut $2 billion annually from food stamps and let states impose broad new work requirements on those who receive them.
Those cuts weren’t deep enough for many Republicans who objected to the cost of the nearly $80 billion-a-year food stamp program, which has doubled in the past five years. The vote was 234-195 against the bill, with 62 Republicans voting against it.
The bill also suffered from lack of Democratic support necessary for the traditionally bipartisan farm bill to pass. Only 24 Democrats voted in favour of the legislation after many said the food stamp cuts could remove as many as 2 million needy recipients from the rolls. The addition of the optional state work requirements by Republican amendment just before final passage turned away many remaining Democratic votes.
Mexico tequila market in China: drunk with promise
MEXICO CITY (AP) — Mexico wants China to loosen up and have a little tequila. Actually, lots of it.
Since China President Xi Jinping and Mexico’s Enrique Pena Nieto broke a diplomatic and economic chill and agreed to boost trade, tequila producers have been gearing up to make the world’s most populous country their second-biggest market, after the margarita-loving United States.
The drink synonymous with Mexico already is available in more than 100 countries. But export of the alcoholic beverage to China has been limited by legal and sanitary restrictions.
Chinese authorities changed their rules last week, deciding that the purest and best tequila, known as blue agave, has no detrimental health effects. That has opened the door for businesses in both countries to begin promoting and exploring ways to sell more tequila.
With the purchasing power of 1.3 billion Chinese, tequila producers see a niche market, especially among the emerging upper class.
Weekly US jobless aid applications rise to 354,000
WASHINGTON (AP) — Applications for U.S. unemployment benefits rose by 18,000 last week to a seasonally adjusted 354,000. Despite the gain, the level remains consistent with moderate job growth.
The Labor Department said Thursday that the less volatile four-week average increased by 2,500 to 348,250.
Applications are a proxy for layoffs. Since January, they have fallen 6 per cent. That suggests companies are cutting fewer jobs.
US home re-sales surpass 5 million in May
WASHINGTON (AP) — U.S. sales of previously occupied homes surpassed the 5 million mark in May, the first time that’s happened in 3 1/2 years. The gain shows the housing recovery is strengthening.
The National Association of Realtors said Thursday that home re-sales rose 4.2 per cent in May to a seasonally adjusted annual rate of 5.18 million. That’s up from April’s pace of 4.97 million.
Sales last exceeded 5 million in November 2009. During that month and October 2009, a home-buying tax credit briefly inflated the sales pace. Prior to that, sales hadn’t been above 5 million since July 2007.
US rate on 30-year mortgage falls to 3.93 per cent
WASHINGTON (AP) — U.S. mortgage rates fell for the first time in seven week, keeping the average on the 30-year fixed loan just under 4 per cent. But rates are expected to surge next week, as markets respond to Chairman Ben Bernanke’s comments that the Federal Reserve will likely reduce its bond purchases later this year.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan eased to 3.93 per cent last week. That’s down from 3.98 per cent last week but is still the highest level since April 2012.
The rate on the 15-year mortgage fell to 3.04 per cent from 3.10 per cent. That’s the highest since May 2012.
Kroger bets shoppers will stay loyal
NEW YORK (AP) — Kroger says its customers are doing more of their shopping at its supermarkets, helped in part by the popularity of its store brands.
The country’s largest traditional supermarket operator on Thursday raised its profit outlook for the year after reporting a higher quarterly net income that beat Wall Street expectations, although overall sales were shy of forecasts.
The Cincinnati-based company, which also owns Ralphs, Fry’s and Food 4 Less, said sales at stores open at least a year rose 3.3 per cent during the period, excluding fuel. The figure is a key metric because it strips out the impact of newly opened and closed locations.
By The Associated Press=
The Dow Jones industrial average fell 354 points, or 2.3 per cent, Thursday to close at 14,758.32. The Standard & Poor’s 500 lost 40.74 points, or 2.5 per cent, to 1,588.19. The Nasdaq composite fell 78.57 points, or 2.3 per cent, to 3,364.63.
U.S. benchmark oil for July delivery sank $2.84, or 2.9 per cent, to finish at $95.40 a barrel in New York. Brent crude, a benchmark for many international oil varieties, was down $3.97, or 3.7 per cent, to end at $102.94 per barrel on the ICE Futures exchange in London.
Wholesale gasoline was down 10.5 cents, or 3.6 per cent, to finish at $2.79 a gallon. Heating oil fell 10 cents, or 3.4 per cent, to end at $2.87 per gallon. Natural gas retreated by 9 cents, or 2.2 per cent, to finish at $3.88 per 1,000 cubic feet.