Consumer confidence sinks to 16-year-plus low
NEW YORK (AP) -- U.S. consumers are the gloomiest they've been since the tail end of the last prolonged recession. Inflation, sinking home values and soaring gas prices have pushed confidence to the lowest level since 1992. Consumers' view of the economic future has never been lower, raising worries that already weak consumer spending could deteriorate further.
The Conference Board's consumer confidence index, released Tuesday, fell to 50.4 this month, the lowest reading since February 1992 and half what it was a year ago. The index dropped more steeply than expected from 58.1 in May. The consensus estimate of economists surveyed by Thomson/IFR was for a more modest decline to 56.5 for June.
Separately, home prices continued to tumble. April's decline in the Standard & Poor's/Case-Shiller home price index was the steepest since its 2000 inception.
The last prolonged U.S. recession was from July 1990 to March 1991. The most recent recession began in March 2001 and ended that November.
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Stocks end lower after drop in consumer confidence
NEW YORK (AP) -- Wall Street ended an erratic session moderately lower Tuesday as concerns grew about the impact of high fuel costs on consumers and corporate profits. Treasury prices rose on the economic uncertainty.
The disappointing news from The Conference Board arrived after shipper UPS Inc. warned late Monday that high oil prices are dampening its profits, and after a dismal reading on U.S. home prices.
Crude oil prices rose 26 cents to settle at $137.00 a barrel on the New York Mercantile Exchange, adding to investors' anxiety.
Wall Street's overriding concern is that expensive energy will prevent the economy from growing and aggravate inflation at the same time. Given the anemic economy -- not to mention the additional debt losses expected at the nation's biggest banks -- the Federal Reserve has little wiggle room to combat inflation with higher interest rates. Policymakers, whose rate-setting meeting began Tuesday and concludes Wednesday, are anticipated to hold the key rate at 2 percent.
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US home prices tumble in April at record rate
NEW YORK (AP) -- No matter who's measuring, the results are the same: Housing prices are tumbling at the sharpest rates ever with a bottom still at least a year away, economists say.
Both the Standard & Poor's/Case-Shiller home price indices and the Office of Federal Housing Enterprise Oversight index on Tuesday reported record year-over-year declines in April, a sobering signal that the housing slump not only is deepening, but also engulfing markets once above water.
The last holdout in the Case-Shiller index, Charlotte, N.C., finally succumbed to the national housing downturn, with prices slipping 0.1 percent from a year ago. No city in the Case-Shiller 20-city index appreciated in April, the first time that's happened since its inception in 2000.
"I think that's the most disturbing part of the report," said Mark Zandi, chief economist for Moody's Economy.com. "It shows the declines are now across all markets, that this is a nationwide housing collapse rather than one in a few markets."
The 20-city index dropped by 15.3 percent in April versus last year, while the narrower 10-city index plunged 16.3 percent, its biggest decline in its 21-year history.
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Housing rescue plan passes key Senate test
WASHINGTON (AP) -- A massive foreclosure rescue bill cleared a key Senate test Tuesday by an overwhelming margin, with Democrats and Republicans both eager to claim election-year credit for helping hard-pressed homeowners.
The mortgage aid plan would let the Federal Housing Administration back $300 billion in new, cheaper home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for government-insured, fixed-rate loans.
An 83-9 vote put the plan on track for Senate passage, but President Bush is threatening a veto, and Democrats are fighting each other over key details. Those challenges will probably delay any final deal until mid-July.
The bill advanced as separate reports underscored rising economic anxiety: Consumer confidence slid to its lowest level in more than 16 years, and closely watched indices showed a continuing decline in home values.
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Delta, Northwest pilots agree on joint contract
ATLANTA (AP) -- Delta and Northwest pilot negotiators say they have a tentative agreement with Delta management on a joint contract to cover both pilot groups when the companies combine later this year.
Delta's pilots union said in a statement Tuesday that the agreement is between the two pilot groups and Delta management. Terms were not disclosed.
Next the two pilot groups will try to reach an agreement on a merged seniority list.
The joint contract agreement, which covers roughly 12,000 pilots from both airlines, still needs rank-and-file approval and to be reviewed by the governing bodies of the two unions. Both unions' executive committees were scheduled to meet separately later this week.
Delta pilots already have their own deal with management, including pay raises and equity in the combined company. That move angered Northwest pilots, who felt left out by their fellow members of the Air Line Pilots Association (ALPA).
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Oil prices edge higher on dollar, supply concerns
NEW YORK (AP) -- Oil futures ended an uneven session with a modest gain Tuesday as traders awaited news that could help the market break out of a trading range that has lasted for more than two weeks. Retail gas prices, meanwhile, slid below a national average of $4.07 a gallon.
Some investors were buying in response to another drop in the dollar. When the dollar loses ground, crude and other commodities tend to rise on their appeal as a hedge against inflation. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies. Many analysts believe the dollar's protracted decline has been one of the main reasons oil has nearly doubled in value over the past year.
But Tuesday's advance was limited by concerns about the impact high prices are having on demand, and worries about Congress' increasing scrutiny of the oil market.
In a weekly report, MasterCard's SpendingPulse survey found that demand for gasoline fell 2.7 percent last week compared to the same week last year, and is off by an average of 3.6 over the last four weeks compared to the same period in 2007.
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Fed gathers to plot course to best handle economy
WASHINGTON (AP) -- Borrowing costs are likely to hold steady as the Federal Reserve tries to avoid both stirring inflation and stifling a fragile economy.
Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon, where they will put together their most up-to-date assessment of the economy's outlook and decide the best course on interest rates.
The Fed is almost certain to hold its key interest rate steady at 2 percent when it wraps up its session on Wednesday. If that's the case, the prime lending rate for millions of consumers and businesses would stay at 5 percent. The prime rate applies to certain credit cards, home equity lines of credit and other loans.
Looking ahead, the Fed probably will go further in highlighting inflation risks but won't go as far as to signal a rate increase at the Fed's next meeting on Aug. 5, analysts said.
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World now has 10 million millionaires, report says
NEW YORK (AP) -- Add an extra zero to the ranks of the millionaires club.
The number of people around the world with at least $1 million in assets passed 10 million for the first time last year, according to a new report. And their bank accounts are growing even faster.
The combined wealth of the globe's millionaires grew to nearly $41 trillion last year, an increase of 9 percent from a year before, Merrill Lynch & Co. and consulting firm Capgemini Group said Tuesday.
That means their average wealth was more than $4 million, the highest it's ever been.
The ranks of the wealthy are growing fastest in the developing economies of India, China and Brazil. The number of millionaires in India grew by about 23 percent.
By The Associated Press The Dow Jones industrial average fell 34.93, or 0.29 percent, to 11,807.43, after falling more than 100 points in earlier trading and later moving in and out of positive territory.
Broader stock indicators also fell. The Standard & Poor's 500 index declined 3.71, or 0.28 percent, to 1,314.29, and the Nasdaq composite index fell 17.46, or 0.73 percent, to 2,368.28.
Light, sweet crude for August delivery rose 26 cents to settle at $137.00 a barrel on the New York Mercantile Exchange.
In other Nymex trading Tuesday, July gasoline futures rose 0.84 cent to settle at $3.4635 a gallon, and July heating oil futures rose 1.72 cents to settle at $3.8136 a gallon. July natural gas futures fell 19.2 cents to settle at $13.011 per 1,000 cubic feet.
In London, August Brent crude futures rose 55 cents to settle at $136.46 a barrel on the ICE Futures exchange.
