BP shares climb as company works to plug well in Gulf
BP shares are closing in on a second straight weekly gain as the oil company gets closer to plugging a blown-out well in the Gulf of Mexico.
The shares have gained about 23 percent since hitting a 14-year low of $27.02 on June 25. They rose 55 cents, or 1.66 percent, Thursday to close at $33.74 on the New York Stock Exchange.
The gains have come as BP has taken steps to reassure business partners in the Middle East and Russia that it remains a viable company. BP also is moving closer to completing two relief wells meant to stem the oil gusher in the Gulf.
One of the relief wells is expected to intercept the blown-out well pipe within 10 days. But National Incident Commander and retired Coast Guard Adm. Thad Allen said how much additional time it will take to stop the oil from flowing depended on the state of the well and the weather.
BP shares have recovered roughly $20.4 billion in value in the past seven trading sessions. Still, the shares have lost about 45 percent since the Gulf oil rig explosion on April 20.
Consumer borrowing slips; doubts over recovery linger
Consumer borrowing fell again in May, more evidence that Americans remain jittery over their finances and the durability of the economic recovery.
The Federal Reserve said Thursday that borrowing dropped by $9.1 billion in May. It also said borrowing declined by $14.9 billion in April, revising an initial estimate that showed a gain of $995 million for the month.
Consumer borrowing has fallen in 15 of the past 16 months as households have struggled with uncertain job prospects and battered finances following a deep recession.
In May, consumers borrowed less on their credit cards and took out fewer auto loans. Credit card borrowing has fallen for 20 straight months.
Analyst suggests investors sell shares of Berkshire Hathaway
An analyst advised investors Thursday to sell shares of Warren Buffett’s Berkshire Hathaway Inc. because the economy may weaken over the rest of the year and hurt demand for its businesses that rely on consumer spending.
Stifel Nicolaus analyst Meyer Shields said in a research note that declining consumer confidence will likely slow consumer spending. Oil prices could also rise and further reduce consumer spending.
Berkshire’s insurance businesses, like Geico and General Re, generated more than half the company’s $8.1 billion profit last year, but its clothing, furniture, jewelry, railroad and building materials businesses are sensitive to the health of the economy.
Shields also said Berkshire may be hurt more than other companies in an economic downturn because of its derivative contracts and investments. Some of Berkshire’s derivatives are tied to the value of several stock market indexes, so their value would fall if those stock markets falter.
Also Thursday, Buffett told Yahoo News and the Huffington Post the United States is "on the right course" and encouraged President Barack Obama to speak with "enormous confidence" about the country’s economic future.
In the story on Yahoo News’ website, Buffett disagreed with New York Times columnist and Nobel Prize-winning economist Paul Krugman, who wrote recently that he fears America is in "the early stages of a third depression."
Retailers’ revenue rises in June as consumers buy essentials
Stores deepened discounts more than planned in June to draw recession-scarred shoppers to buy summer tops and other merchandise. But shoppers bought mostly items they needed, resulting in small revenue gains.
The mixed results from June, released Thursday, are raising concerns about the back-to-school season and consumers’ ability and willingness to hit the accelerator on spending.
The International Council of Shopping Centers’ index of June retail sales rose 3 percent, the low end of its growth forecast that ranged from 3 to 4 percent. But that’s compared with a 5.1 percent decline in June 2009.
The figures are based on revenue at stores open at least a year and are a key indicator of retailers’ health.
Billionaire testifies he doesn’t want to buy Barnes & Noble
Billionaire Ron Burkle testified Thursday that he doesn’t want to buy Barnes & Noble Inc. and was shocked when the bookseller adopted a poison pill plan after he increased his stake in it.
Burkle was the first witness called in a Delaware Chancery Court trial in which his Yucaipa Cos. is challenging the shareholder rights plan adopted last year.
Under the plan, an investor can’t buy more than 20 percent of the company’s shares without board approval. Doing so would allow other Barnes & Noble shareholders to buy stock at a steep discount.
Drugmaker Merck & Co. will close plants and research sites
Drugmaker Merck & Co. said Thursday it is shutting down eight manufacturing plants and eight research sites around the world, including two domestic locations, in the latest phase in its strategic pruning of excess capacity.
The moves, which include consolidating some small offices into larger buildings with multiple functions, are part of restructuring after Merck’s acquisition of Schering-Plough Corp. last November.
That $41 billion deal made Merck the world’s second-biggest drugmaker by revenue, with roughly $45 billion in annual sales. Still, the company has said it will eliminate about 15 percent of the combined work force, or roughly 16,000 jobs.
Late Thursday, the company said in a regulatory filing that it also plans to eliminate 2,500 vacant positions, mainly duplicative positions in sales, administrative and headquarters organizations, as well as some from the 16 sites being sold or closed.
AUBURN HILLS, Mich.
Chrysler Group offers to make some payments for car buyers
Chrysler Group says it will make the first two months’ payments on most new vehicles bought this month in a bid to boost sales after a weak June.
Chrysler will pay up to $500 per month for a total of $1,000 on most vehicles. Customers also get the option of taking $3,000 to $4,000 in cash or making a "regret-free" purchase, in which they could return any new vehicle within 60 days if they’re not satisfied. Other July incentives include zero-percent financing on most Chrysler, Dodge, Ram and Jeep vehicles. The deals are set to end Aug. 2.
Chrysler’s new deals could turn around the anti-incentive trend, which has been a drag on sales, Edmunds CEO Jeremy Anwyl said. The industry has been spooked by weaker-than-expected June sales. U.S. auto sales fell more than 10 percent from May as buyers continued to worry about the economy.