Week in Review
Stocks End Volatile Week on a High Note
Wall Street ended a volatile week with a strong advance Friday as oil prices tumbled below $50 a barrel and jittery investors took solace in a pair of economic reports that eased their inflation concerns.
For the week, however, major stock indexes were mixed. The Dow Jones industrial average posted a gain of 0.3%, ending at 10,192.51. The Nasdaq composite, at 1,921.65, lost 0.6% for the week.
The buying Friday was further buoyed by economic data that showed that prices and labor costs remained in check.
Bond yields rebounded ahead of Tuesday’s Fed meeting, when policymakers are again expected to raise their key short-term rate, despite recent signs of economic weakness.
*
Adelphia’s Rigas Family to Forfeit $1.5 Billion
The founding family of Adelphia Communications Corp. agreed to forfeit $1.5 billion in assets to settle federal fraud charges stemming from accounting shenanigans that cost investors billions of dollars and forced the nation’s fifth-largest cable provider into bankruptcy.
Under the settlement with the Securities and Exchange Commission and the Justice Department, members of the Rigas family will give up substantially all of their assets in Adelphia. Those family holdings include separately owned cable systems with 215,000 subscribers, valued at as much as $900 million; $567 million in securities; and $10 million in real estate.
Adelphia, Southern California’s largest cable operator, will pay the government $715 million to end federal criminal and civil investigations. The company will keep assets valued at $762 million from the Rigas settlement.
*
Valero to Buy Rival Oil Refiner for $6.9 Billion
Valero Energy Corp. agreed to buy rival Premcor Inc. for $6.9 billion in a deal that would make Valero the nation’s largest refiner of gas and other fuels.
The purchase of Premcor, based in Old Greenwich, Conn., would add four refineries in Texas, Tennessee, Delaware and Ohio to Valero’s current stable of 15 refineries, which includes two California facilities -- one in Wilmington and one in Benicia.
The transaction would give San Antonio-based Valero total refining capacity of 3.3 million barrels a day, surpassing that of Exxon Mobil Corp. and ConocoPhillips. Valero’s total annual revenue would reach $70 billion.
The acquisition is subject to approval by the Federal Trade Commission.
*
Genentech Cancer Drug Shows Promise in Trials
Genentech Inc. said that its drug Herceptin prolonged the lives of breast cancer patients in two large clinical trials, setting the stage for a new way to treat the disease.
The drug, which is used to treat advanced breast cancer, also showed effectiveness in preventing recurrence of the disease in patients who had undergone surgery for early breast cancer.
The studies involved 5,500 women and were designed to see whether Herceptin could prevent recurrence of cancer after surgery.
The trials showed that women who received Herceptin had a 52% decrease in cancer recurrence compared with patients on chemotherapy alone. The National Cancer Institute, which sponsored the study in collaboration with Genentech, said the result was “highly statistically significant.”
*
GDP Grows at Slowest Rate in Two Years
The U.S. economy grew at its slowest rate in two years during the first quarter, the government reported, confirming fears that rising energy prices, soaring imports and slowing business investment created an economic soft patch.
The Commerce Department said the nation’s gross domestic product grew at an annual rate of 3.1%, down from 3.8% in the fourth quarter and short of the 3.5% consensus forecast of economists. It was the slowest growth since the first quarter of 2003, when the rate was 1.9%.
Expecting production to slow while companies draw down inventories, Goldman Sachs reduced its forecast of growth in the second quarter to 3% from 4%.
Economists said the specter of inflation would keep the Federal Reserve on course to raise its benchmark short-term interest rate by 0.25 percentage point to 3% on Tuesday at the meeting of its policymaking committee.
*
Patients Sue for Amgen Parkinson’s Treatment
Two Parkinson’s disease patients sued Amgen Inc. to force the biotechnology giant to provide an experimental and potentially dangerous drug that the patients and their families view as their only hope.
The suit, filed in federal court in New York, demands that Amgen offer the Parkinson’s medicine to patients who had once received it in a clinical trial that ended last year.
The patients said they went to court after months of begging Amgen for the drug, which they considered a godsend. The Parkinson’s patients want to assume the risks of taking the Amgen drug, but the company won’t allow them to do so.
Amgen declined to comment on the lawsuit.
Amgen broke its contract with patients when it pulled the drug, the suit charges. Patients allowed physicians to “drill holes in their brains and insert catheters” in return for the right to receive the drug “indefinitely.”
*
Panel OKs Appointee to Workers’ Comp Post
The state’s top workers’ compensation official got a key legislative endorsement but only after the Senate’s Democratic leader said he had a commitment from Gov. Arnold Schwarzenegger to consider changes in controversial new regulations that allegedly slash benefits to injured workers.
Andrea Hoch’s appointment as administrative director of the state Division of Workers’ Compensation appears more likely to be approved by the full Senate after being confirmed by the Rules Committee on a 3-2 vote. Hoch was named to the post a year ago by the governor.
The deciding vote was cast by committee Chairman and Senate President Pro Tem Don Perata (D-Oakland), who broke with two fellow Democrats. Labor officials accused the Senate president of selling out.
*
New York’s Spitzer Sues L.A. Firm Over Spyware
In the first effort by a state to curb spyware, New York Atty. Gen. Eliot Spitzer sued Intermix Media Inc. of Los Angeles, accusing the company of hiding malevolent programs inside games and screen savers.
The lawsuit, filed in New York, alleges false advertising, deceptive business practices and trespassing.
It claims that Intermix, which operates more than 40 websites offering free downloadable entertainment programs, included hidden spyware that generated pop-up advertising, redirected Web searches, changed home pages and added unwanted links to toolbars.
Intermix Media issued a statement saying it had stopped distributing programs mentioned in the suit and blamed much of the situation on “prior leadership.” Executives declined to be interviewed.
*
AFL-CIO President Proposes Shake-Up
Hoping to blunt criticism from dissidents in the labor movement, AFL-CIO President John J. Sweeney proposed pouring additional funding into organizing and politics.
The federation would pay for it by laying off as many as one-fourth of its 420 staff members and eliminating some departments, he said.
The presidents of five major unions -- the Teamsters, the Laborers, the United Food and Commercial Workers, the Service Employees International Union and textile and hospitality union Unite Here -- complained of “many unanswered questions” and called for more complete budget numbers.
The labor federation represents about 13 million members in 57 affiliated unions. About 2.2 million are in California.
