US economy grew at sluggish 1.7 pct. pace in Q2
WASHINGTON (AP) — The U.S. economy grew from April through June at an annual rate of 1.7 percent — a sluggish pace but stronger than in the previous quarter. Businesses spent more, and the federal government cut less, offsetting weaker spending by consumers.
The government on Wednesday sharply revised down its estimate of growth in the January-March quarter to a 1.1 percent annual rate from a previously estimated 1.8 percent rate.
Though growth remains weak, the pickup last quarter supports forecasts that the economy will accelerate the rest of the year. Economists think businesses will step up investment, job growth will fuel more consumer spending and the drag from government cuts will fade.
If so, the Federal Reserve could scale back its stimulus later this year.
Fed's dimmer outlook could mean longer bond buying
WASHINGTON (AP) — The Federal Reserve stopped short Wednesday of signaling any timetable for slowing its bond buying.
Instead, it dropped hints that it might need to maintain its $85 billion a month in bond purchases, which have helped keep long-term borrowing rates ultra-low.
This position, along with other assessments of the economy, could delay any pullback in its bond buying beyond September. September is when many economists have thought the Fed would start to slow its purchases because of a strengthening economy.
The Fed does expect growth to pick up in the second half of the year. But it doesn't appear ready to assume it will.
Facebook passes $38 initial public offering price
NEW YORK (AP) — Facebook's stock has passed its $38 IPO price for the first time since its rocky public debut last May, crossing a symbolic hurdle that has eluded it for more than a year.
Shares of Facebook Inc. increased 1.2 percent to $38.08 in morning trading Wednesday. That's the highest the stock has traded since the company's highly anticipated initial public offering ended with a thud. The stock is up by more than 50 percent since last week.
The world's biggest online social network has been on a roll since reporting stronger-than-expected earnings on July 24. Investors are especially upbeat about its fast-growing mobile advertising revenue.
Facebook's ability to grow mobile revenue was one of the biggest concerns in the weeks leading up to its IPO last year. Investors were worried that its ad business was not migrating to mobile gadgets as quickly as its user base.
House ready to lower rates on student loans
WASHINGTON (AP) — The cost of borrowing for college is about to drop.
The House on Wednesday was expected to give final congressional approval to bipartisan legislation linking student loan interest rates to the financial markets. The impact: lower rates for most students now but higher ones down the line if the economy improves as expected.
Undergraduates this fall would borrow at a 3.9 percent interest rate for subsidized and unsubsidized loans. Graduate students would have access to loans at 5.4 percent, and parents would borrow at 6.4 percent. The rates would be locked in for that year's loan, but each year's loan could be more expensive than the last.
Rates would rise as the economy picks up and it becomes more expensive for the government to borrow money.
Dell's board deals blow to CEO's $24.4B buyout bid
SAN FRANCISCO (AP) — Dell's board rejected CEO Michael Dell's attempt to change the voting rules for his bid to buy the slumping personal computer maker, a decision that is likely to doom the deal.
But the endangered buyout could still get a reprieve if Michael Dell and his allies accept a counterproposal that would extend the voting period for a third time and allow a bigger pool of shareholders to cast ballots.
The rebuff announced Wednesday marks the latest blow that Michael Dell and his main backer, Silver Lake Partners, have absorbed since reaching an agreement with Dell Inc.'s board nearly six months ago to buy the Round Rock, Texas, company for $24.4 billion, or $13.65 per share.
A vote on Michael Dell's offer is scheduled to be held Friday.
DuPont wins fight for South African seed company
DES MOINES, Iowa (AP) — After a nearly three-year battle with South African regulators, DuPont Co. said Wednesday that it has completed the purchase of a majority stake in South Africa's Pannar Seed. The deal greatly expands the chemical and seed company's access to new markets, and will help it boost research efforts and seed availability for farmers in Africa.
DuPont's Pioneer subsidiary, based in Des Moines, Iowa, is the second-biggest seed company in the United States after Monsanto Co. It now takes control of an 80 percent stake in Pannar Seed Ltd., a 55-year-old firm with operations throughout Africa and in other parts of the world.
Financial terms weren't disclosed, but DuPont Pioneer President Paul Schickler said it is one of the largest deals in the subsidiary's history and DuPont's largest investment on the African continent.
Africa marks a major growth opportunity for seed companies because of the global scramble to grow enough crops to meet growing demand for food and biofuels. Because so much of the region has missed out on yield-improving technology, the upside to biotech development is significant.
Court: College athletes can sue EA over images
SAN FRANCISCO (AP) — A federal appeals court has ruled that video game maker Electronic Arts must face legal claims by college players that it unfairly used their images without compensation.
The 9th U.S. Circuit Court of Appeals ruled Wednesday that the Redwood City, Calif., company can't use the 1st Amendment to shield it from the players' lawsuit.
EA says it plans to appeal. The company had claimed its college-based sports games were works of arts deserving freedom of expression protection.
The court disagreed, ruling the avatars used in the company's basketball and football games were exact replicas of individual players. The court concluded that the company did little to transform the avatars into works of art.
The decision upheld a lower court ruling.
FDA warns of massive diabetes test strip recall
WASHINGTON (AP) — The Food and Drug Administration is warning patients with diabetes about a recall of up to 62 million glucose test strips used to measure blood sugar levels that can show incorrect, abnormally high blood sugar readings.
Nova Diabetes Care announced the recall Friday. An incorrect reading could potentially lead to dangerous medication errors for patients.
The strips covered by the recall are marketed under the brand names Nova Max Blood Glucose Test Strips and Nova Max Plus Glucose Meter Kits. The recall affects certain lots of the strips distributed in the U.S., Canada, Chile, Peru, Argentina, the Dominican Republic, Jamaica and a half-dozen other countries. Nova Diabetes Care sells them through retail stores and websites.
The FDA said Wednesday that the strips are contaminated with a chemical used in the manufacturing process, which interferes with readings. FDA regulators are working with the company to investigate the problem and make sure it is corrected.
By The Associated Press=
The Dow Jones industrial average fell 21 points, or 0.1 percent, to 15,499 Wednesday. The Standard & Poor's 500 index lost a fraction of a point to end at 1,685. The Nasdaq rose 10 points, or 0.3 percent, to 3,626.
U.S. benchmark oil gained $1.95, or 1.9 percent, to close at $105.03 per barrel on the New York Mercantile Exchange. Gasoline futures rose 3 cents to finish at $3.04 per gallon. Heating oil rose 4 cents to finish at $3.04 a gallon. Natural gas rose 1 cent to end at $3.45 per 1,000 cubic feet.
Brent crude, traded on the ICE Futures exchange in London, rose 79 cents to end at $107.70 per barrel.