The Associated Press
Bernanke: Recession likely if Congress doesn't act
WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke painted a bleak picture of where the U.S. economy is headed if Congress fails to reach agreement soon to avert a budget crisis.
But Bernanke said lawmakers must go beyond the year-end issues and come up with on a plan to shrink the budget deficit. Otherwise, the U.S. could suffer a financial crisis marked by rising interest rates.
Bernanke delivered his midyear report on the state of the economy to a Senate panel. He said the economy is growing modestly but has weakened in recent months. Job growth has slumped, manufacturing has weakened and consumers have lost confidence and cut back on spending.
He said the Fed is prepared to take further action if growth doesn't improve. Bernanke provided no clues about what steps the Fed might take or whether any action was imminent.
Yahoo's 2Q earnings, revenue remain flat
SAN FRANCISCO (AP) - Yahoo turned in another lackluster performance in the second quarter.
The results announced Tuesday underscore the challenges facing Yahoo's new CEO Marissa Mayer as she tries to turn around the Internet company after a 13-year career as a top Google executive.
Yahoo earned $227 million for the three months ending in June. That was down 4 percent from net income of $237 million a year ago.
Earnings per share for the quarter remained level at 18 cents.
Dutch police investigate Delta sandwich needles
THE HAGUE, Netherlands (AP) - Police at Amsterdam's Schiphol Airport opened a criminal investigation into how needles got into turkey sandwiches served to passengers on Delta Air Lines flights from Amsterdam to the U.S., a spokesman said Tuesday. The FBI also is investigating the incidents.
Delta said what appear to be sewing needles were found in five sandwiches on Sunday. One passenger on a flight to Minneapolis was injured. The other needles were on two flights to Atlanta and one to Seattle.
The sandwiches were made in the Amsterdam kitchen of catering company Gate Gourmet in the Netherlands.
Cheaper gas keeps US consumer prices flat
WASHINGTON (AP) - Consumer prices were unchanged in June, held down by cheaper gas. Outside the volatile food and energy categories, inflation was mild.
Weak economic growth is limiting the ability of companies to raise prices. Tame inflation was underscored by a 0.2 percent drop in consumer prices for the April-June period as a whole. That was the first quarterly drop in consumer prices in two years.
In May, the consumer price index fell 0.3 percent. In April, it was unchanged.
US homebuilder confidence vaults to 5-year high
Confidence among U.S. homebuilders is swelling to a five-year high, with many now anticipating that sales of new homes will strengthen this year even as signs point to a slowing economy.
The National Association of Home Builders/Wells Fargo builder sentiment index surged six points this month to 35, the highest reading since March 2007, the trade association said Tuesday.
The index, which is based on responses from 318 builders, rose from a reading of 29 last month, marking the largest one-month gain in nearly a decade. It has declined only once between January and July.
HSBC head of compliance stepping down
WASHINGTON (AP) - The chief compliance officer of Britain's HSBC says he is stepping down from that position after an investigation found that lax controls at the international bank allowed Mexican drug cartels to launder billions of dollars along with other illicit transactions through HSBC's U.S. operation.
But David Bagley, the head of compliance for London-based HSBC Holdings, told a Senate investigations panel that he will remain at HSBC.
Bagley and other current and former executives of the bank apologized for lapses but said they weren't fully aware of illicit deals flowing through the bank.
Report: US states' financial woes eroding services
WASHINGTON (AP) - U.S. states face long-term budget burdens that are already limiting their ability to pay for basic services such as law enforcement, schools and transportation, a report released Tuesday said.
Aging populations and rising health care costs are inflating Medicaid and pension expenses. At the same time, revenue from sales and gas taxes is shrinking. And grants from the federal government, which provide about a third of state revenue, are likely to shrink, the report said.
Those challenges are made worse by a lack of planning by many states and the repeated use of one-time accounting gimmicks to cut costs, the report added.
Another tough quarter for once-mighty Goldman
NEW YORK (AP) - Another tough quarter and another reminder for Goldman Sachs that it's not just its reputation that's under attack.
The once-mighty investment bank's revenue and earnings continue to decline even as it has resorted to massive job cuts and other steps to reduce costs in the past year.
On Tuesday the New York bank said net income in the April-through-June period fell 11 percent to $962 million, or $1.78 per share. That compares with $1.09 billion, or $1.85 per share, a year ago. The earnings were higher than the $1.17 per share that analysts expected.
Revenue fell 9 percent to $6.63 billion compared with the same period a year ago.
Coca-Cola's revenue up - but costs eat into profit
NEW YORK (AP) - The Coca-Cola Co. is selling more sodas, sports drinks and bottled waters in most parts of the world, with growth particularly strong in emerging markets.
The world's biggest beverage maker - which makes Minute Maid, Powerade and Dasani - said Tuesday that its sales volume rose 4 percent globally in the second quarter. Revenue growth was powered by higher prices and expansion in countries like India, where volume increased 20 percent.
Still, the company's quarterly profit slipped as costs for ingredients climbed as well. The Atlanta-based company was also up against a tough comparison, as the year-ago results were boosted by a one-time net gain related to the merger of two of the company's bottlers.
J&J 2Q profit down by half on lower sales, charges
Health care giant Johnson & Johnson, struggling with tough market conditions, ongoing manufacturing problems and other issues, lowered its profit forecast for the year after posting second-quarter net income that dropped by half due to a slew of litigation and acquisition-related charges.
The maker of Band-Aids, medical devices and prescription drugs, its iconic image tarnished by legal and manufacturing lapses, on Tuesday noted some positive signs. They include small increases in hospital admissions and surgical procedures in the U.S. Despite that, revenue dipped by 0.7 percent due to lower sales in the U.S. and for consumer health products worldwide.
The results beat analysts' expectations for adjusted profit by a penny, but fell short of the revenue forecast by nearly $250 million.
By The Associated Press(equals)
The Dow Jones industrial average rose 78.33 points to 12,805.54. The S&P 500 rose 10.03 points to 1,363.67. The Nasdaq composite index gained 13.09 points to 2,910.04.
Benchmark U.S. crude added 79 cents to end the day at $89.22 per barrel in New York. Brent crude, which is used to set the price of oil imported into the U.S., rose by 63 cents to end at $104 per barrel in London.
In other futures trading, heating oil rose 1.45 cents to finish at $2.8422 per gallon, while wholesale gasoline lost a penny to end at $2.8450 per gallon. Natural gas fell by less than a penny to finish the day at $2.7960 per 1,000 cubic feet.