Stocks drop as 'fiscal cliff' deadline nears
NEW YORK (AP) — Stocks fell for a fifth day Friday on concern that Washington lawmakers will fail to reach a budget deal before a year-end deadline.
The five-day losing streak for the Dow Jones industrial average was the longest since July. The Dow lost 158 points to close at 12,938 Friday. The Standard & Poor 500 index fell 15 points and the Nasdaq dropped 25 points.
Asia stocks wilt hours before US fiscal cliff hits
BANGKOK (AP) — With just hours left before the U.S. hits the "fiscal cliff," stocks on the other side of the world wilted today as investors sold off riskier assets to lock in profits just in case budget negotiations fail in Washington.
American political leaders face a Monday night deadline to reach an agreement before steep tax increases and spending cuts begin to take effect Jan. 1. The cuts and increases would come at a time when the U.S. economy is still struggling to recover from the last recession.
Some economists predict the tax-and-spending effects of the fiscal cliff could eventually throw the economy back into recession — although if the deadline passes, politicians still have a few weeks to keep the tax hikes and spending cuts at bay by repealing them retroactively once a deal is reached.
Benchmark crude oil rose to near $91 per barrel. The dollar gained against the euro but fell slightly against the yen.
What will the day bring?
WASHINGTON (AP) — Rank-and-file lawmakers are hoping that their leaders will give them a fiscal cliff deal to vote on when they return to Capitol Hill this morning.
But an agreement is proving elusive at the deadline to avert tax hikes on virtually every American worker and block sweeping spending cuts set to strike the Pentagon and other federal agencies.
Senate Majority Leader Harry Reid and Senate Republican leader Mitch McConnell remained at odds on such key issues as the income threshold for higher tax rates and how to deal with inheritance taxes, among other issues. McConnell complained that Reid had yet to respond to a GOP offer made Saturday evening and reached out to Vice President Joe Biden, a longtime friend, in hopes of breaking the impasse. Biden assumed the lead role for Democrats, and a McConnell spokesman said the Kentucky Republican and the vice president were expected to negotiate by telephone into the night.
One sign of progress came as Republicans withdrew a long-discussed proposal to slow future cost-of-living increases for Social Security recipients as part of a compromise.
THE WEEK AHEAD
Full slate of major releases on tap
UNDATED (AP) — Taking a look at the week ahead, stock and bond markets are closed for New Year's Day.
On Wednesday, the Institute for Supply Management releases its manufacturing index for December and the Commerce Department releases construction spending for November.
The Labor Department releases weekly jobless claims Thursday and Freddie Mac, the mortgage company, releases weekly mortgage rates. Also Thursday, the Federal Reserve releases minutes from its December interest-rate meeting and automakers release vehicle sales for December. We'll also get December sales comparisons from selected chain retailers.
On Friday, the Labor Department releases employment data for December; the Institute for Supply Management releases its service sector index for December and the Commerce Department releases factory orders for November.
FISCAL CLIFF-FARM BILL
Deal reached for stopping spike in milk prices
WASHINGTON (AP) — The top leaders in both parties on the House and Senate Agriculture committees have agreed to a one-year extension of the 2008 farm bill that expired in October, a move that would head off a possible doubling of milk prices next month.
Senate Agriculture Committee Chairman Debbie Stabenow indicated that the House could vote on the bill soon, though House leaders have not yet agreed to put the bill on the floor.
In addition to the one-year extension that has the backing of the committees, the House GOP is also considering two other extension bills — a one-month extension and an even smaller bill that would simply extend dairy policy that expires Jan. 1.
Agriculture Secretary Tom Vilsack said Americans faced the prospect of paying $7 for a gallon if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.
Tribune to leave bankruptcy after 4 years
CHICAGO (AP) — Tribune Co. announced it is emerging after more four years of bankruptcy.
Tribune said late Sunday the reorganized media company begins Monday with new ownership — the senior creditors — and a new board of directors.
Senior creditors Oaktree Capital Management, Angelo, Gordon & Co. and JPMorgan Chase & Co. will control the new company.
Tribune, which was founded in 1847, publishes some of the best-known newspapers in the U.S., including the Los Angeles Times, The Baltimore Sun and the Chicago Tribune. It also owns WGN in Chicago and 22 other television stations, as well as the WGN radio station. The Tribune's report Sunday said that the new owners expect to sell all of the company's assets.
Tribune Co. sought bankruptcy protection in 2008, less than a year after billionaire developer Sam Zell led an $8 billion leveraged buyout that left the company with $13 billion in debt.
Germany's Merkel: State must keep markets in check
BERLIN (AP) — German Chancellor Angela Merkel says the state must watch over the market to prevent the excesses that led to the 2008 financial crisis.
Merkel used her New Year's speech broadcast Monday to warn that the lessons of the market collapse five years ago haven't been fully learned yet.
The German chancellor says greater international efforts are needed to control financial markets and prevent the "irresponsibility" that began when the U.S. subprime mortgage bubble burst.
Merkel warned that reforms agreed to by governments to end the subsequent European sovereign debt crisis would require patience.
Europe's economic turmoil "isn't overcome by a long stretch," she said.
Toyota settlement gets preliminary approval
LOS ANGELES (AP) — A plaintiffs' attorney says a U.S. District Court judge in California has given preliminary approval to a $1 billion-plus settlement with Toyota Motor Corp. in cases involving unintended acceleration problems in its vehicles.
Attorney Steve Berman says Judge James Selna gave swift initial approval Friday.
Toyota has said the deal announced Wednesday will resolve hundreds of lawsuits from Toyota owners who said the value of their cars and trucks plummeted after a series of recalls stemming from claims that Toyota vehicles accelerated unintentionally.
The judge will hold a fairness hearing on June 13 and consider granting final approval to the settlement.
Claims seeking compensation for injury and death due to sudden acceleration are not part of the settlement; the first trial involving those suits is scheduled for February.
Strike averted, for now, at East Coast ports
NEW YORK (AP) — A deal has been struck that for now averts a strike by 14,500 longshoremen at major ports on the East Coast and Gulf of Mexico.
A federal mediator announced Friday that an expired contract for workers in the International Association of Longshoremen would be extended until early February while negotiations continue.
The longshoremen had been preparing for a possible strike Sunday that would probably have crippled operations at ports that handle about 40 percent of all U.S. container cargo.
The mediator says there have been major steps forward toward resolving the dispute.
Initially, the mediator announced the extension would be 30 days, until Jan. 28. Later, the union and its bargaining opponent, the U.S. Maritime Alliance, said they had agreed to extend it even further, until Feb. 6, because of the holidays.
Ford expects to sell 2.2 million autos in 2012
DEARBORN, Mich. (AP) — Ford says it expects to sell 2.2 million vehicles this year, with the Ford Focus compact car being its most popular model.
The Dearborn, Mich., company says it is the second year in a row it will sell more than 2 million cars. It sold 737,856 Ford Focuses through September. The Ford Fiesta sedan and hatchback and F-series trucks were other popular models, with Ford selling 560,061 Fiestas and 576,339 F-Series vehicles through September.
Ford Motor Co.'s EcoBoost engines, which save energy, are on track to be sold in 520,000 cars by year-end since their launch in 2009. A new 1-liter, 3-cylinder engine will be available in 2013 in new Fiesta cars in the U.S.