TOP 10 STORIES / OCT. 6-12
The stock market survived another bioterrorism scare to notch its third straight winning week--the first time that has happened in more than a year.
The benchmark Standard & Poor’s 500 index and the Nasdaq composite index--a key gauge of technology shares--both erased the sharp losses they suffered after the Sept. 11 terrorist attacks.
The Nasdaq rose 6.1% for the week. The S&P; 500 rose 1.9% for the week, but a slight dip Friday pushed it a point below its close of Sept. 10. The Dow Jones industrial average gained 2.5% for the week. The widely followed Dow remains 2.7% below its Sept. 10 close.
The weekly gains came despite a short-lived sell-off Friday that followed reports of another anthrax infection, this time in New York City.
Jobs Report Indicates Troubled Economy
The latest employment statistics show that California’s economic slump was deepening even before the terrorist attacks prompted thousands of fresh layoffs.
State officials reported that California’s unemployment rate reached 5.4% in September, up from a revised 5.3% in August and the highest level in nearly 2 1/2 years. The latest figures, based on surveys assessing employment before Sept. 11, also showed that the state lost 17,400 jobs last month.
The new employment reports, taken together with a recent surge in claims for unemployment insurance and daily announcements of job cutbacks, provide fresh evidence that the state has entered a recession or near-recession.
Three Americans Win Nobel Economics Prize
Three American economists won the Nobel Memorial Prize in Economic Sciences for describing how “asymmetric information”--what happens when a used-car dealer knows the car he’s trying to sell you is a “lemon” but you don’t--can send markets spiraling off in unexpected and sometimes devastating directions.
George A. Akerlof of UC Berkeley, A. Michael Spence of Stanford University and Joseph E. Stiglitz of Columbia University won the prize for uncovering fundamental flaws in markets by looking closely at used-car lots, the snobbery that surrounds college education and the insurance intricacies.
Recognition of the trio’s work, which many have used to justify corrective steps by government, comes as Washington prepares to play a dramatically larger role in the economy.
The trio’s works “form the core of modern information economics,” the Royal Swedish Academy of Sciences said.
NBC Agrees to Buy Telemundo Network
General Electric Co.’s NBC network agreed to pay $1.98 billion for Telemundo, the nation’s second-largest Spanish-language television network. The deal represents NBC’s biggest acquisition ever, NBC network executives said.
NBC will pay half of the $1.98 billion in cash and half in GE stock. NBC also will assume Telemundo’s debt, estimated to be about $700 million.
Telemundo is owned by Sony Corp., Liberty Media Corp. and smaller investors. Sony and Liberty Media bought the fledgling network four years ago for $539 million.
In its pursuit of Telemundo, NBC outlasted rivals Viacom Inc., which owns the CBS television network; Walt Disney Co., which owns ABC; AOL Time Warner Inc. and several other broadcasters.
Analysts say NBC will face an uphill battle competing with the industry giant, Los Angeles-based Univision Communications Inc., which commands an 80% market share.
FAA Limits Number of Carry-On Bags
The Federal Aviation Administration limited passengers to one carry-on bag plus one personal item, such as a purse, and called for additional searches of travelers to bolster security after the U.S. attacks on Afghanistan.
A federal law to further tighten airline and airport security also passed the Senate, and the airlines began retrofitting their cockpit doors to protect pilots.
Yet despite fears that U.S. retaliation might dampen travel further, the airlines said passenger loads continued to slowly build one month after the attacks. The added traffic, combined with the FAA’s action, made for long check-in lines at Los Angeles International Airport and elsewhere.
Meanwhile, Southwest Airlines--which had refused to join other major carriers in slashing its operations in response to the slump in travel--did trim its schedule slightly, by less than 1%.
The massive service reductions by the other big airlines is increasingly evident at the Mojave Airport, where the carriers have parked nearly 200 jetliners that they no longer need.
Discounters Bright Spot in Retail Sales Report
Retail sales were as dismal as expected in September, as consumers stayed home and held tight to their wallets in the days after the terrorist attacks.
Even so, not all retailers suffered. Consumers flocked to discount stores such as Wal-Mart Stores Inc., which posted better-than-expected sales numbers, instead of heading to department stores and other specialty sellers.
Wal-Mart’s strong performance, alongside good showings from Costco Wholesale Group Inc. and J.C. Penney Co., was among the only factors keeping sales from slipping into negative territory.
Overall, analysts put September sales at between zero and 2% above September 2000 and suggested that the sector may not see improvement until mid-2002.
Construction Forecast Sees Extended Slump
After five years of stellar growth, new home and commercial building in California is headed for a decline this year and next.
That’s according to a revised forecast of the Construction Industry Research Board, whose reports are closely watched by the trade.
The Burbank group said the number of new homes planned in California, as measured by building permits, probably will total 144,000 this year. If that forecast holds, it would be a 3% decline from last year. Two weeks before the Sept. 11 disaster, the research board projected a 1% increase for this year and next.
The biggest drop-off is expected to come in spending for additions and renovations, as homeowners and building owners put off projects because of the slumping economy.
Public TV Allowed to Sell Ad Times
In a decision that triggered an outcry from media watchdog groups, the Federal Communications Commission voted to let public broadcasters earn money by selling ads and other services on their new digital TV broadcasts.
The 3-1 vote, along party lines, paves the way for a dramatic expansion in commercialism at public TV stations, which Congress has ordered to convert to digital TV technology by May 2003.
Under the ruling, which was pushed by public broadcasters, a “substantial” majority of a station’s digital programming still must be noncommercial.
FTC Disputes Mergers by Santa Ana Company
Stepping up its scrutiny of small mergers and acquisitions, the Federal Trade Commission moved to undo two acquisitions completed two years ago by a Santa Ana software company.
The FTC said the acquisitions gave MSC Software Corp. a monopoly on specialized engineering software used in the automotive and aerospace industries.
The company fiercely disputed the claim, which ultimately could force it to shed businesses that helped generate as much as 39% of its $178 million in sales last year.
GE, Motorola Lead Off Earnings-Report Cycle
The third-quarter earnings reporting season opened with heavyweights General Electric Co. and Motorola Inc.
The first of the major Internet companies, Yahoo Inc., also reported, posting third-quarter earnings in line with expectations but with a 44% drop in revenue.
GE’s earnings rose 3.2% and sales fell for a second straight quarter. The World Trade Center and the planes used in the attacks were insured by GE. Profit would have increased 16% without the $400 million in losses.
Mobile phone giant Motorola posted a third-quarter loss of $1.41 billion as revenue dropped 22%.
