WASHINGTON (AP) – The Federal Reserve is ready to lower interest rates again to brace the wobbly economy even as zooming oil prices spread inflation, Chairman Ben Bernanke signaled to Congress on Wednesday.
He is fighting to keep the economy afloat after mighty blows from the housing and credit crises, while trying to contain inflation.
For now, the priority is shoring up the economy, Bernanke suggested in an appearance before the House Financial Services Committee. He pledged anew to slice a key interest rate and help the economy, which many fear is on the verge of a recession, if not already in one.
NEW YORK (AP) — Wall Street finished mixed in another seesaw session Wednesday after regulators allowed Fannie Mae and Freddie Mac to buy more mortgages and Federal Reserve Chairman Ben Bernanke said the central bank will remain vigilant about the weakened economy.
Investors pared the market's gains after both developments had initially boosted confidence amid increasing signs of a slowing economy. Wall Street has in recent months grappled with concerns about rising prices, a weaker dollar and continued turmoil in the credit markets.
WASHINGTON (AP) — Fannie Mae and Freddie Mac will be allowed to expand their roles in the turbulent mortgage market even as worsening conditions in the housing sector punish the two companies.
Fannie, the largest buyer and backer of U.S. home loans, said Wednesday it lost nearly $3.6 billion in the fourth quarter of 2007 amid mounting home-loan delinquencies and soured bets on interest rates. Freddie is expected Thursday to report a $1.5 billion fourth-quarter loss, according to Wall Street estimates.
Under a previous agreement with federal regulators, the timely filing of Fannie's and Freddie's financial results triggers the removal of an investment-portfolio cap placed in the aftermath of multibillion-dollar accounting scandals at the government-sponsored companies.
WASHINGTON (AP) — In more bad news for the beleaguered housing industry, sales of new homes fell in January for a third straight month, pushing activity down to the slowest pace in nearly 13 years. The median price of a new home dropped to the lowest level in more than three years.
The Commerce Department reported Wednesday that new home sales fell by 2.8 percent last month to a seasonally adjusted annual rate of 588,000 units, the slowest pace since February 1995.
The median price of a new home dropped to $216,000 in January, down 4.3 percent from the December median sales price, the point where half the homes sold for more and half for less. That was the lowest median price since September 2004 and underscored that the steep slide in housing is still under way.
WASHINGTON (AP) — The House approved $18 billion in new taxes on the largest oil companies Wednesday as Democrats cited record oil prices and rising gasoline costs in a time of economic troubles.
The money collected over 10 years would provide tax breaks for wind, solar and other alternative energy sources and for energy conservation. The legislation, approved 236-182, would cost the five largest oil companies an average of $1.8 billion a year over that period, according an analysis by the House Ways and Means Committee. Those companies earned $123 billion last year.
BRUSSELS, Belgium (AP) — The European Union's longest-running fight with Microsoft Corp. neared an end Wednesday as regulators imposed a record $1.3 billion fine on the world's largest software company for failing to fully comply with a 2004 antitrust order.
Microsoft has not decided whether to appeal the penalty, which amounts to a fraction of the $14.07 billion it earned in fiscal 2007. In all, the company has been fined just under $2.4 billion by European antitrust regulators over the years.
Barring an appeal, the fine shuts the door on an investigation into Microsoft's behavior that was triggered by a 1998 complaint by Sun Microsystems Inc. It alleged Microsoft was refusing to supply information that servers need to work with its market-dominating Windows operating system.
BERLIN (AP) — The dollar sank Wednesday to its lowest level ever against the euro after markets took comments from the Federal Reserve chairman as a sign that yet more U.S. rate cuts are on the way.
The 15-nation euro topped $1.50 for the first time since its 1999 introduction in Asian trading, then surged after Fed Chairman Ben Bernanke told the House Financial Services Committee that "the economic situation has become distinctly less favorable" since last summer.
That added to sentiment that the Fed is likely to add to recent rate cuts that already have left U.S. interest rates below those in the euro zone.
The euro surged as high as $1.5143 after Bernanke's testimony — well above the $1.4967 it bought in New York late Tuesday. It settled back to $1.5120 in late New York trading Wednesday.
NEW YORK (AP) — Crude prices spiked above $102 a barrel for the first time Wednesday, then retreated after the government reported the nation is greased with more oil and gasoline than expected.
Prices nonetheless stayed within range of Tuesday's record close as the dollar tumbled to fresh lows against the euro and U.S. economic worries drove more money into energy futures as a hedge against inflation.
DETROIT (AP) — Chrysler LLC lost about $2.7 billion in the two months after Daimler AG sold controlling interest in the U.S. automaker to a New York private equity firm, Daimler said in its annual report Wednesday.
The figure, for the period from Aug. 4, 2007 to Sept. 30, was calculated under international financial reporting standards used in Europe and not under U.S. accounting standards, Daimler said.
The net loss also includes about $466 million in expenses incurred in the fourth quarter of last year, including Chrysler restructuring costs and costs related to a new four-year contract with the United Auto Workers, Daimler said in its report, filed with the U.S. Securities and Exchange Commission.
PHILADELPHIA (AP) — Luxury-home builder Toll Brothers Inc. said Wednesday it swung to a loss in the first quarter as write-downs on properties it could no longer sell at a profit more than doubled and its sales tumbled 23 percent.
Chief Executive Robert Toll said in a conference call with analysts that the selling season that started in mid-January has been "weak for the third year in a row," but there were a few "glimmers of hope" in areas such as Naples, Fla. and suburban Washington, D.C.
The Horsham, Pa.-based company lost $96 million, or 61 cents per share, in the three months ended Jan. 31 compared with profit of $54.3 million, or 33 cents per share, a year earlier.
By The Associated Press
The Dow Jones industrial average — now up four straight sessions — rose 9.36, or 0.07 percent, to 12,694.28.
Broader indexes were narrowly mixed. The Standard & Poor's 500 index fell 1.27, or 0.09 percent, to 1,380.02, and the Nasdaq composite index rose 8.79, or 0.37 percent, to 2,353.78.
Light, sweet crude for April delivery fell $1.24 to settle at $99.64 on the New York Mercantile Exchange, after surging as high as $102.08 a barrel in electronic trading earlier.
In London, Brent crude fell $1.20 cents to settle at $98.27 a barrel on the ICE Futures exchange, below the intraday record of $100.53 a barrel set earlier in the session.
In other Nymex trading Wednesday, heating oil futures fell 4.39 cents to settle at $2.7711, while gasoline futures fell by 7.28 cents to settle at $2.4777.
Natural gas futures lost more than 27 cents to settle at $8.93 per 1,000 cubic feet.
Copyright 2008 The Associated Press.