Business In Brief

Wall Street skids after Bhutto's death


Wall Street skidded Thursday after the assassination of Pakistani opposition leader Benazir Bhutto and after the Commerce Department's durable goods orders exacerbated concerns about the U.S. economy. The major indexes each lost well over — percent and the Dow Jones industrial average fell 192 points.

Bhutto's assassination raised the possibility of increasing political unrest abroad, always an unsettling prospect for investors who have already been contending with domestic economic concerns for months. Oil prices rose following the news, and that unwelcome inflationary trend only added to Wall Street's uneasiness.

In a bright spot, the Conference Board said its Consumer Confidence Index advanced to 88.6 in December from a revised 87.8 in November. It was the first increase since July and Wall Street had expected a slight drop.

Thursday's drop was perhaps exaggerated by the fact that many traders were on vacation, making volume light and price swings more severe. Still, given the political uncertainty overseas, many investors were likely selling because they were uneasy about holding long positions going into a holiday weekend.

U.S. factories see marginal rise in costs


U.S. factories saw orders for costly manufactured goods rise only marginally in November &

falling short of expectations for a much bigger gain and underscoring the strains on the economy from housing and credit problems.

The Commerce Department reported Thursday that orders for "durable" goods &

products expected to last at least three years &

increased by just 0.1 percent last month. The tiny rise came after durable-goods orders fell by 0.4 percent in October. Economists were hoping for a larger rebound &

a 2.2 percent increase &

in new orders placed at the nation's factories in November. Still, the November rise marked the first increase in durable-goods orders in the last four months.

In other economics news, more people signed up for unemployment benefits last week, a sign that the job market is softening as the economy loses speed.

The Labor Department reported that new applications for unemployment insurance rose by a seasonally adjusted 1,000 to 349,000. Economists had expected new filings for jobless benefits to dip to around 340,000 for last week.

Oil futures see show increase


Oil futures rose Thursday after the government reported larger-than-expected declines in crude and heating oil inventories.

In its weekly inventory report, the Energy Department's Energy Information Administration said oil inventories fell by 3.3 million barrels last week, more than double the 1.3 million barrel decline analysts expected. Inventories of distillates, which include heating oil and diesel fuel, fell by 2.8 million barrels, much more than the expected drop of 800,000 barrels.

Crude and heating oil supplies have declined more than expected for several weeks running, exacerbating a perception that supplies may be inadequate to meet winter demand.

Oil prices also rose on news of the assassination of Pakistani opposition leader Benazir Bhutto and a vow by opposition politician Nawaz Sharif to boycott parliamentary elections next month, which raised concerns about geopolitical stability.

"" The Associated Press

Sharif also demanded that President Pervez Musharraf resign immediately.

Earlier in the week, oil prices rose when attacks by Turkish forces on Kurdish rebels in northern Iraq raised concerns about Iraqi oil supplies.

Citigroup projection may be understated


When Citigroup warned in early November that it was likely to write down its portfolio by $8 billion to $11 billion in the fourth quarter because of exposure to bad loans, investors recoiled at the size of the losses. Some now say those early estimates appear drastically understated.

Citigroup Inc. could write off as much as $18.7 billion in the fourth quarter, wrote Goldman analysts William F. Tanona, Betsy Miller and Neil C. Sanyal in a note to investors late Wednesday. If it does, they say, the bank may be forced to lower its dividend by 40 percent.

Citi has about $55 billion in exposure to subprime mortgages, about $43 billion of which are collateralized debt obligations, or CDOs, that have mortgages underlying them.

Already, Citi has been propped up by a $7.5 billion investment from the Abu Dhabi Investment Authority, a sovereign wealth fund that in late November bought a 4.9 percent stake in the bank.

Tax refunds may see delays


More than — million people will have to wait until February to get their tax refunds because of Congress' late fix to the alternative minimum tax, the IRS said Thursday.

Congress put a one-year freeze on growth of the alternative minimum tax last week, shielding many middle- and upper-middle income taxpayers from first exposure to the tax. But Congress' late action means the Internal Revenue Service won't be able to start processing five AMT-related forms until February, delaying potential refunds for those people until that month.

Between — million and 4 million people filed in January of last year using those forms, with many of those people expecting a refund, the IRS said.

The average refund in 2007 was $2,324, the agency said.


Losses to insurers from natural disasters nearly doubled this year to just below $30 billion globally after an unusually quiet 2006, a leading reinsurer said Thursday, from winter storms in Europe, flooding in Britain and wildfires in the U.S.

Munich Re warned that climate change could mean a growing number of weather-related catastrophes in coming years.

While losses soared in 2007, the figure was far short of the $99 billion Munich Re recorded in 2005 &

when Hurricane Katrina slammed into New Orleans.

The world's second-largest reinsurer put total economic losses this year"" which includes losses not covered by insurance &

from natural disasters at $75 billion (52 billion euros) &

a 50 percent increase from last year's $50 billion, but far below the 2005 figure of $220 billion.

Sallie Mae unable to assuage Wall Street


Sallie Mae's planned $2.5 billion stock sale doesn't answer all of Wall Street's questions about the struggling student lender's future.

While some analysts see the company's financing woes as a short-term problem, others highlight serious concerns about the Reston, Va. company, such as soaring loan defaults and a potential cut in its credit ratings.

Sallie Mae, formally known as SLM Corp., earlier this month lowered its earnings forecast for next year by more than 13 percent, blaming a new law that trims federal subsidies and the need to conserve cash to offset bad student loans. Then, CEO Albert Lord held a contentious conference call last week in which he dismissed several analysts' questions and ended the call with an expletive.

These developments only compounded pressure on the company's stock price, which has fallen steadily since July, when a group of investors who eventually backed out of buying Sallie Mae for $25 billion first indicated the deal could be in trouble.

Capital Holdings maintains bond unit


A recent deal with its state regulator has allowed ACA Capital Holdings Inc. to continue operating its bond insurance unit, but that solution is expected to be only temporary, as analysts doubt the company can survive in the long term.

ACA has agreed to turn over substantial control to Maryland insurance regulators, the company said in a Securities and Exchange Commission filing late Wednesday.

The deal with regulators gives ACA more time to find new capital investments or a potential buyer, but even that is unlikely, said Donald Light, a senior analyst with Celent. Light pegs ACA's odds of survival, even with the agreement with regulators, as less than 50 percent.

The agreement with the Maryland Insurance Administration gives regulators the authority to approve or reject any deals made by ACA to pledge assets, pay dividends or engage in "certain material transactions." ACA's bond unit also agreed not to object to any move by regulators to declare it delinquent on its obligations.

"" The Associated Press

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