Top 10 Stories / March 12-16
1. In Bear Territory: It was a week for milestones on Wall Street--but not the kind investors would want to celebrate. The Dow Jones industrial average lost 821 points on its way to a 7.7% decline--its worst one-week performance since Oct. 13, 1989. The benchmark Standard & Poor’s 500 index tumbled 6.7%, falling into a bear market--defined as a loss of 20% from a previous high--for the first time since late 1990. And the Nasdaq composite index, one year removed from its all-time high of 5,048.62, slid below 2,000 for the first time in more than two years while falling 7.9% for the week. Economic worries were to blame, as the continued grim profit news from bellwether tech companies such as Compaq Computer Corp. and Oracle Corp. was joined by similar warnings from non-tech companies such as UAL Corp. and Charles Schwab Corp. Overseas financial woes, particularly in Japan, contributed to the U.S. market malaise.
(A Times Staff Writer)
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2. The Fall of the Nikkei: A drop in Japan’s Nikkei stock index, to a 16-year low of 11,433, helped feed a global sell-off in stocks Monday. The 3.6% decline came as a cloud of skepticism over the health of Japanese banks, along with the swoon in U.S. markets on the previous Friday, overwhelmed a better-than-expected economic growth report for the fourth quarter. An emergency task force convened by politically besieged Prime Minister Yoshiro Mori failed to agree on steps to address the nation’s many financial problems. But word of one plan under which the government would guarantee a fund that would be charged with buying battered stocks from banks gave the stock market a boost. Economists criticized the plan as government interference in the marketplace solely for political reasons. The Nikkei, which had already declined 40% in the last year before last week, closed Friday up 80.15 at 12,232.98.
(Times Staff Writers)
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3. Senate OKs Bankruptcy Reform: A bill that would make it harder for individuals to erase their debts by filing for bankruptcy passed the Senate on a vote of 83-15. Then-President Bill Clinton vetoed similar legislation three months ago, but President Bush has signaled he will sign it. The measure was sought by the banking and credit card industries, which spent $37 million in campaign contributions last year and stand to collect billions of dollars a year in previously unrecoverable debts. But consumer groups fear the act will add to the hardships of filers forced into bankruptcy by job loss, divorce or illness. The Senate bill must now be reconciled with a version passed by the House.
(Greg Miller)
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4. U.S. Bans EU Meat Imports: Federal regulators banned the import of live hogs and all uncooked animal products from the European Union, temporarily shutting down more than $300 million in annual trade, after France reported Europe’s first recent case of foot-and-mouth disease outside Britain. Although the disease does not pose a health risk to humans, it can be debilitating and even deadly to cattle, sheep and hogs. The economic effect of the ban in the United States is not expected to be great; the EU accounted for just $1.4 billion of $8.3 billion in animals and animal products imported to the U.S. in 2000.
(Melinda Fulmer)
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5. Stolen E-Mail Creates Havoc at EFront: The illicit posting of thousands of personal messages on the Internet has thrown Costa Mesa-based EFront Media Inc. into crisis and raised serious privacy and legal concerns about instant-messaging systems used by more than 50 million Americans. Messages written or received by EFront Chief Executive Sam Jain that detailed the company’s efforts to stay afloat were apparently stolen from a log file on his personal computer. Although the episode represents the most flagrant violation of privacy regarding instant messaging to date, security experts noted that such systems are designed for openness, not privacy.
(Times Staff Writers)
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6. More Evidence for Rate Cut: The latest batch of economic data appeared to put more pressure on the Federal Reserve to cut interest rates aggressively to turn the economy around. Producer prices, excluding food and energy, declined 0.3%, more in February than at any time in 7 1/2 years, as wholesale costs fell for autos, computers and paper, the government said Friday. Meanwhile, industrial production plunged for the fifth month in a row. California’s economic picture continued to outshine that of the nation as a whole. The state’s jobless rate declined in February to 4.5%, the lowest level since 1969, as 38,000 jobs were created.
(Times Staff Writers)
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7. Business Group Fights Attorney Fees: The U.S. Chamber of Commerce launched a sharp attack on fees paid to private attorneys who represented states in litigation against U.S. industries that yielded $246 billion in settlements. Chamber officials branded the $11.3 billion in fees awarded thus far as “outrageous” and expressed horror at the prospect of legions of plaintiffs’ lawyers using their newly acquired riches in legal fights against HMOs, gun manufacturers and the lead paint industry. The organization said it had filed requests under the Freedom of Information Act in 21 states seeking a bevy of records, including information on how contracts were awarded to those lawyers and whether any of the attorneys had made contributions to state officials.
(Henry Weinstein)
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8. Turbulent Skies: The nation’s two largest airlines, United and American, made it official--the airline industry ran into a big slump in the current quarter. UAL Corp. and AMR Corp., the parents of United and American, respectively, both predicted losses for the first quarter, joining Delta Air Lines Inc., Northwest Airlines Inc. and US Airways Group Inc. in forecasting that their results would badly trail earlier expectations. Already beset by high fuel costs, weather disruptions and contentious contract talks with their labor unions, the carriers are hurting from the economy’s slowdown, which is reducing business travel. That’s especially painful for the airlines, which derive most of their profits from business passengers. Separately, AMR won Justice Department clearance to buy Trans World Airlines Inc., the last major hurdle in the deal, days after a bankruptcy judge approved the bid.
(James F. Peltz)
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9. Technology Cuts Deepen: Several more technology companies warned of lower profits and job reductions as the economic slowdown cut into demand for their products. Compaq Computer Corp., the world’s biggest personal computer maker, cut its profit outlook by as much as 25% and said its plan to cut 5,000 jobs, or 7% of its work force, is in preparation for continuing weakness in the U.S. and a likely economic decline in Europe. El Segundo-based Computer Sciences Corp. cut its earnings forecast by nearly two-thirds and said it would cut up to 900 jobs, sending its shares down 40%. Motorola Inc. added 7,000 to the number of employees in its cell-phone unit who will be laid off this year, for a total 36% cut at the division, as rival Ericsson warned of a loss rather than break-even results for the first quarter.
(A Times Staff Writer)
10. Porsche Takes the SUV Road: Owning a Porsche sports car has been one of the enduring status symbols of our times, and one of the last things most Porsche enthusiasts want is a hulking sport-utility vehicle polluting the brand’s image. But Porsche is hurtling down that road, readying the Cayenne SUV to go on sale next year. Purists cry sacrilege, but the German auto maker pleads survival: It says it can’t rely on just two sports car models to sustain itself in an uncertain economy. The Cayenne will be a sports car, Porsche promises, and it says the twin turbo version will beat any SUV in a 0-60 mph race.
(Terril Yue Jones)
* These and additional stories from last week are available at https://www.latimes.com/business, divided by category.
* Please see Monday’s Business section for a preview of the week’s events.
