Home price drop signals tough spring

NEW YORK (AP) Home prices plunged by record levels in January from a year ago, with almost no major cities immune from the spiraling market. Analysts worried that even the usually reliable spring selling season would fall flat.

The closely watched Standard & Poor's/Case-Shiller index of home prices in 20 cities fell nearly 11 percent in January from a year earlier, the biggest drop in its two-decade history.

Prices were down about 20 percent in Las Vegas and Miami, both paying the price for especially rampant speculation and too much new construction during the housing boom. Fourteen other cities posted record declines in the Tuesday report.

The only bright spot was a 1.8 percent increase in Charlotte, N.C., where real estate agents say prices rose more modestly during the boom years and the regional economy is relatively strong.

Consumer confidence plunges in March

NEW YORK (AP) American consumers are gloomier about the economy that at any point since just before the U.S. invasion of Iraq, as slumping housing prices and soaring fuel costs depress consumer confidence to its lowest level in five years.

The Conference Board, a business-backed research group, said Tuesday that its Consumer Confidence Index plunged to 64.5 in March from a revised 76.4 in February.

The March reading was far below the 73.0 expected by analysts surveyed by Thomson/IFR and was the worst reading since the gauge registered 61.4 in March 2003, just ahead of the U.S. invasion of Iraq.

Weakening consumer confidence foreshadows weakening consumer spending, which could hurt the already faltering economy.

Stocks pause after big two-day rally

NEW YORK (AP) Wall Street paused after a huge two-session rally Tuesday but closed mostly higher, holding on to almost all its gains even after disappointing reports on consumer sentiment and the housing market.

Volume was light, with many investors holding off any big moves while the market sought a direction; trading remained uneasy amid the ongoing uncertainty about the economy and credit markets. Still, the fact that stocks didn't suffer a huge pullback, which has been the market's pattern for months after a big gain, indicated that at least for the time being Wall Street seems more capable of handling bad news.

Stocks had charged higher in the days following the Federal Reserve's decision to aid investment banks and orchestrate a buyout deal for a near-collapsed Bear Stearns Cos. The Dow Jones industrials shot up nearly 450 points in the previous two sessions.

Government benefit programs in trouble

WASHINGTON (AP) Trustees for the government's two biggest benefit programs warned that Social Security and Medicare are facing "enormous challenges" with the threat to Medicare's solvency far more severe.

The trustees, issuing their once-a-year analysis, said the resources in the Social Security trust fund will be depleted by 2041. The reserves in the Medicare trust fund that pays hospital benefits were projected to be wiped out by 2019.

Both those dates were the same as in last year's report. But the trustees warned that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes. For Medicare, that threshold is projected to be reached this year and for Social Security it is projected to occur in 2017.

Both programs are expected to come under increasing pressure as 78 million baby boomers start retiring and drawing benefits.

Oil ekes out a slight gain on dollar

NEW YORK (AP) Oil futures rose modestly Tuesday as investors focused on the dollar's latest decline rather than new worries about the economy. Gas and diesel prices, meanwhile, retreated further from their recent record levels.

The dollar's decline against the euro, which ended a greenback rally that began last week, attracted investors back to oil. The U.S. currency's protracted slide was a big contributor to oil's march to nearly $112 in recent weeks; many investors regard oil and other commodities as inflation hedges, and turn to such hard assets when the dollar is falling.

But oil's slight gain was far from definitive, and followed a session in which prices alternated frequently between gains and losses.

Fed auctions another $50 billion

WASHINGTON (AP) Fighting to ease a dangerous credit crisis, the Federal Reserve has provided a total of $260 billion in short-term loans to squeezed banks since December to help them overcome credit problems.

The central bank on Tuesday announced the results of its most recent auction the eighth since the program started in December where commercial banks bid to get a slice of $50 billion in short-term loans.

It's part of an ongoing effort by the central bank to provide relief to a spreading credit crunch that has unnerved financial markets. The situation threatens to push the country into a deep recession. Counting the latest auction results announced Tuesday, the Fed has provided a total of $260 billion in short-term loans to banks since December.

In the most recent auction which marked the eighth commercial banks paid an interest rate of 2.615 percent, the lowest rate for any of the auctions of this kind conducted so far.

March auto sales likely to drop again

SOUTHFIELD, Mich. (AP) Just like everyone else in Southeast Michigan, Desta Woudenh is worried about declining home values, high gas prices and the economic slowdown.

But the computer software maintenance specialist still spent much of his Good Friday holiday inside the showroom at Tamaroff Honda, sitting in a deluxe new Accord and talking with a salesman.

No matter what happens to the economy, Woudenh, 41, needs to replace his 1995 Honda Civic with 180,000 miles on it.

Automakers are hoping that there are more people like Woudenh out there as they face what could be one of the toughest months in one of the toughest sales years in more than a decade.

Industry analysts are predicting that U.S. auto sales in March will be worse than the same month last year. Just how bad depends on the analyst.

Monsanto boosts guidance, shares climb

ST. LOUIS (AP) Monsanto Co. shares jumped nearly 10 percent Tuesday after the agricultural products company said earnings per share for the second quarter and for all of fiscal 2008 will be stronger than originally projected.

St. Louis-based Monsanto said its seeds and traits business will contribute more than expected to profit due to brand share growth and increased volume in the soybean business. Meanwhile, Monsanto said its Roundup and other herbicides have performed well in the second quarter, with demand exceeding supply.

Monsanto now projects that its full-year earnings per share will be in the range of $3.38 to $3.48, including a gain of 23 cents per share for a settlement of claims related to subsidiary Solutia's emergence from bankruptcy.

Excluding the gain, the expected earnings per share range from $3.15 to $3.25. The company previously expected full-year earnings per share of $2.70 to $2.80. Analysts expect full-year earnings of $2.87 per share.

Appeals court rejects N.Y. airline law

NEW YORK (AP) A federal appeals court Tuesday struck down a state law requiring airlines to give food, water, clean toilets and fresh air to passengers stuck in delayed planes, saying the measure was well-intentioned but stepped on federal authority.

The 2nd U.S. Circuit Court of Appeals said New York's law the first of its kind in the country interferes with federal law governing the price, route or service of an air carrier.

The law was passed after thousands of passengers were stranded aboard airplanes for up to 10 hours on several JetBlue Airways flights at Kennedy International Airport on Valentine's Day last year. They complained they were deprived of food and water and that toilets overflowed. A month later, hundreds more passengers were stranded at the same airport after a daylong ice storm.

The law was challenged by the Air Transport Association of America, the industry trade group representing leading U.S. airlines.

By The Associated Press

The Dow fell 16.04, or 0.13 percent, to 12,532.60.

The blue chip index was actually the laggard in Tuesday's session the broader Standard & Poor's 500 and Nasdaq composite indexes had more robust gains. The S&P rose 3.11, or 0.23 percent, to 1,352.99; the Nasdaq added 14.30, or 0.61 percent, to 2,341.05.

Light, sweet crude for May delivery rose 36 cents to settle at $101.22 a barrel on the New York Mercantile Exchange.

Other energy futures were mixed Tuesday. April gasoline futures rose 3.9 cents to settle at $2.6802 a gallon on the Nymex, while April heating oil futures fell 3.83 cents to settle at $2.9248 a gallon. April natural gas futures rose 9 cents to settle at $9.419 per 1,000 cubic feet.

In London, May Brent crude rose 74 cents to settle at $100.60 a barrel on the ICE Futures exchange.

Copyright 2008 The Associated Press.