August Wholesale Prices Up 0.6%
Soaring costs for gasoline and other energy products fueled a 0.6 percent increase in wholesale prices in August, after a 1 percent jump in July, the Labor Department reported. Core inflation, which subtracts energy and food, showed no change in August. But wholesale energy costs were up 3.7 percent in August, following an even bigger 4.4 percent July rise.
Meanwhile, the Commerce Department reported that the U.S. trade deficit in July fell by 2.6 percent, to $57.9 billion from $59.5 billion in June. So far this year, the country's trade deficit is running at an annual rate of $693.1 billion, far ahead of last year's $617.6 billion. The deficit with China increased by 0.3 percent in July, to an all-time high of $17.7 billion.
Court Rebuffs Rule Challenge
The U.S. Chamber of Commerce was denied a rehearing on whether the Securities and Exchange Commission was justified in changing its rules to require that the chairman of a mutual fund board and 75 percent of its directors must be independent.
The U.S. Court of Appeals for the District ruled against one of the Chamber's challenges to the provision. The court issued a stay last month after former SEC chairman William H. Donaldson pushed the rule through a second time in June. The agency had been ordered by the court to reconsider the cost of the measure. The stay suspends the rule until the lawsuit is resolved.
The next step in the Chamber's legal challenge will be taken by the Chamber when it files a brief Sept. 21, said Chamber lawyer Eugene Scalia, of Gibson, Dunn & Crutcher LLP in Washington.
Freeh Joins Bristol-Myers Board
Bristol-Myers Squibb, the No. 5 U.S. drugmaker, named Louis J. Freeh, left, the former FBI director who is vice chairman of MBNA America Bank, to its board as part of a June agreement with U.S. prosecutors.
New York-based Bristol-Myers, which has agreed to pay about $839 million to resolve criminal and regulatory probes and related investor litigation, is adding Freeh as part of a "deferred prosecution" arrangement with U.S. prosecutors in Newark, N.J., spokesman Brian Henry said. The June accord required the company to add a member to its board, appoint director James Robinson III as chairman and pay $300 million to avoid prosecution for inflated sales.
Fitch Puts 5 Insurers on Watch
The investment ratings of five major North American property and casualty insurance and reinsurance companies may be lowered by Fitch Ratings because of Hurricane Katrina. Fitch placed Allstate, Horace Mann Educators, Montpelier Re Holdings, PXRE Group and State Farm Mutual Automobile Insurance "on watch" for downgrades, saying ultimate losses may represent "a material percentage" of their equity base.
Fitch said it doesn't believe the equity capital exposure of major global reinsurers to the storm that ravaged the Gulf Coast calls for a ratings watch. It appears that Katrina losses for these companies "will likely be absorbed by current one-year earnings."
Ford to Take Over Parts Plants
Ford will take unprofitable plants back from parts maker Visteon. The transfer of 17 plants, six offices, research centers and other facilities in the U.S. and Mexico to Ford, Visteon's former parent, is expected to take place Oct. 1, the companies said. Under the deal, a temporary, Ford-managed business will take control of the facilities.
The transfer was approved by 89 percent of United Auto Workers members in 15 of the affected plants. Ford expects to eventually offer severance packages to 5,000 of the hourly workers represented by the UAW.
Best Buy's second-quarter earnings rose 25 percent to $188 million, driven by strong sales of high-priced personal electronics. Those results included expensing stock-based compensation. Revenue rose 10 percent, to $6.7 billion. Sales in stores open at least a year rose 3.5 percent.
Kroger, the nation's largest traditional grocery chain, said second-quarter profit rose 38 percent, to $196.5 million. Sales rose 6.8 percent to $13.9 billion. The Cincinnati company said a rebound at southern California stores after a four-month strike last year helped push earnings higher.
Compiled from staff and news service reports.