Business Highlights

Business Highlights

	Published : Wed, 21 Mar 2007 23:10 By : Agencies Print this Story

WASHINGTON (AP) - The Federal Reserve held interest rates steady on Wednesday and raised the possibility they could be cut in the months ahead, igniting a rally on Wall Street where investors are thirsting for a reduction.

Fed Chairman Ben Bernanke and his central bank colleagues left an important interest rate unchanged at 5.25 percent, the sixth straight meeting without budging the rate. The decision was unanimous.

On Wall Street, stocks rose sharply. The Dow Jones industrials closed up 159.42 points at 12,447.52 in the index's biggest one-day gain since July 24.

The Fed's decision means that commercial banks' prime interest rate -- for certain credit cards, home equity lines of credit and other loans-- stays at 8.25 percent. The Fed has left rates alone since August, giving borrowers time to catch their breath after two years of steadily rising rates.

In an important change, Fed policymakers got rid of language from previous policy statements that suggested their next move could be a rate increase.

NEW YORK (AP) -- Wall Street rallied sharply Wednesday after an economic assessment by the Federal Reserve ignited hopes that the central bank has warmed to the idea of lowering short-term interest rates.

Largely thanks to Wednesday's triple-digit gains, the Dow Jones industrials have surged 337 points this week, the best three-day performance for the blue chip average since November 2004.

Investors had nervously awaited the economic statement that accompanied the Fed's decision to leave short-term interest rates unchanged at 5.25 percent, and were encouraged that the central bank didn't refer to the possibility of 'additional firming' of rates as it did in January. Policymakers said 'future policy adjustments' will depend on inflation and growth -- more neutral language that the market interpreted as opening the way for a possible rate cut. The Fed indicated that it remains vigilant about the threat of inflation, though.

NEW YORK (AP) -- Morgan Stanley Inc. on Wednesday won a reversal of a $1.58 billion verdict handed to billionaire Ron Perelman for misleading him in a deal to sell Coleman Co. to Sunbeam Corp.

The Florida Court of Appeal in West Palm Beach ruled that the New York-based investment bank was punished unfairly for destroying e-mails involved in the transaction. The latest decision will be appealed in a case that could end up in the Florida Supreme Court.

Perelman, the chairman of cosmetics giant Revlon Inc., accused Morgan Stanley of conspiring with client Sunbeam to mislead him about the company's financial health. Because of this, he sold camping supplies maker Coleman Co. to Sunbeam in 1988 -- months before Sunbeam restated earnings and ahead of its 2001 bankruptcy.

After the 2-1 vote, Judge Carole Y. Taylor wrote in her opinion that because there was no proof at trial on the correct measure of damages, the final judgment for compensatory damages should be reversed.

SCHAUMBURG, Ill. (AP) -- Motorola Inc. replaced its chief financial officer Wednesday as it slashed its first-quarter sales forecast, blaming weaker-than-expected revenue from its mobile devices unit.

Thomas Meredith, 56, was named acting chief financial officer, effective April 1. He replaces David Devonshire, 61, who will retire from the position.

Motorola now expects first-quarter sales of $9.2 billion to $9.3 billion, down from a January forecast for first-quarter sales of $10.4 billion to $10.6 billion.

Analysts expect average first-quarter revenue of $10.46 billion in revenue, according to a Thomson Financial survey.

The company expects a first-quarter loss of 7 cents to 9 cents per share, including 9 cents per share in charges

MEMPHIS, Tenn. (AP) -- FedEx Corp. reported a 2 percent drop in third-quarter earnings Wednesday, blaming the decline largely on an economic slowdown that tested the company's ability to quickly adjust costs.

The shipping company said it also will have to struggle to keep up with a long-range goal of 10 percent to 15 percent growth a year in per share earnings.

But FedEx executives expressed confidence the economy would improve and said the company is well positioned to take advantage of it.

For the quarter ended Feb. 28, earnings slipped to $420 million, or $1.35 per share, from $428 million, or $1.38 per share, a year earlier.

FedEx said expenses for dealing with bad winter weather cut into profit by 6 cents per share, but that was offset by a gain of 8 cents a share related to a lower tax rate.

CHICAGO (AP) -- An attorney criminally charged with helping former media mogul Conrad Black swindle the Hollinger newspaper empire out of $60 million was a news business 'outsider' who did the best job he could, his lawyer told a federal court jury Wednesday.

Defense attorneys were wrapping up opening statements on the second day of the trial, which is expected to last 12 to 16 weeks. Prosecutors hoped to call their first witness Wednesday afternoon.

Defendant Mark Kipnis ranked well below Black and other two co-defendants at Hollinger, but prosecutors say that he handled much of the paperwork in a series of deals that netted Black millions of dollars that rightfully belonged to shareholders.

Defense attorney Ronald Safer, however, said his client worked hard to make all aspects of the transactions public but lacked extensive knowledge of newspapers and corporate securities.

CHARLESTON, W.Va. (AP) -- The owner of the Sago Mine, where 12 men died after an explosion last year, said Wednesday it has idled the coal operation because of high production costs and weak prices.

International Coal Group Inc. spokesman Ira Gamm described the shutdown as a purely business decision.

The Sago Mine became the focus of national attention for two days in January 2006 after a methane gas explosion trapped a team of miners deep inside its shafts. By the time searchers reached the team 40 hours later, only one man had survived the carbon monoxide gas.

It was the highest-profile coal mining accident in recent U.S. history and led to sweeping changes in federal and state mine safety laws.

Gamm said the company could reopen the mine if prices rebound.

NEW YORK (AP) -- Crude oil prices edged higher Wednesday after the U.S. government said gasoline inventories dropped for the sixth straight week, keeping worries alive that supplies will be tight going into the peak driving season.

Gasoline prices slipped, though, as the government report showed that U.S. refineries ramped up production last week and that crude imports rose -- indicating that it's possible for supplies to catch up before summer demand is in full swing.

Though crude prices have been fairly stable in recent months, gasoline prices have been surging amid low inventories and refinery outages. At the retail level, U.S. pump prices have risen about 19 percent over the past two months.

Light, sweet crude for May delivery gained 36 cents to settle at $59.61 a barrel on the New York Mercantile Exchange, even though U.S. crude inventories rose by 4 million barrels.

NEW YORK (AP) -- Sirius Satellite Radio Inc. is promising more programming choices and lower pricing options as part of an effort to convince federal regulators to approve its proposed acquisition of rival XM Satellite Radio Holdings Inc.

The deal still faces opposition from several consumer groups, however, and what's certain to be a tough regulatory review in Washington by antitrust authorities and the Federal Communications Commission.

In an application submitted to the FCC on Tuesday and disclosed in a regulatory filing on Wednesday, Sirius said that the combined company would allow subscribers greater flexibility in choosing programming options, including a lower price if they elect to receive fewer channels.

Customers of both Sirius and XM already can block out adult-themed channels such as Playboy, adult humor and urban music, but they don't receive any discount for doing so.

By The Associated Press

According to preliminary calculations, the Dow Jones industrial average rose 159.42, or 1.30 percent, to 12,447.52, after having been little changed before the Fed announcement.

Broader stock indicators also posted strong gains. The Standard & Poor's 500 index jumped 24.10, or 1.71 percent, to 1,435.04, and the Nasdaq composite index advanced 47.71, or 1.98 percent, to 2,455.92.

Light, sweet crude for May delivery gained 36 cents to settle at $59.61 a barrel on the New York Mercantile Exchange, even though U.S. crude inventories rose by 4 million barrels.

Brent crude gained 57 cents to settle at $60.77 a barrel.

Gasoline futures for April slid 0.72 cent to settle at $1.9349 a gallon.

On the Nymex, April heating oil futures fell 0.41 cent to settle at $1.6646 a gallon, while natural gas prices rose 25 cents to settle at $7.160 per 1,000 cubic feet.