The Associated Press February 1, 2011, 6:22PM ET

Business Highlights

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Dow over 12,000 as remarkable bull market rolls on

NEW YORK (AP) -- Two years ago, the stock market was roadkill along the financial highway. Now one of the greatest bull markets in history is rolling along -- maybe enough to finally get the attention of average investors.

The Dow Jones industrial average closed above 12,000 for the first time in two and a half years Tuesday, putting the Great Recession even farther in the rearview mirror and erasing most of the damage it inflicted on tens of millions of retirement accounts.

A broader measure of the stock market, the Standard & Poor's 500 index, closed above 1,300 for the first time since Aug. 28, 2008. And at least one widely watched measure suggests stocks are still cheap by historical standards.

The remarkable run for stocks began on March 9, 2009. The Dow stood at 6,547, its lowest point in 12 years. Since then, in the fastest climb since the Great Depression, it has risen 84 percent thanks to surging corporate profits, the unexpected resilience of personal spending and a bond-buying intervention by the Federal Reserve that made stocks more appealing. And some of the early gains came because investors realized that stocks had fallen too far during the financial crisis.

The Dow's total return, which assumes stock dividends were reinvested, is 92 percent. Anyone who bought an S&P 500 index fund that day in March 2009 has doubled his money, assuming dividends were reinvested.

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US auto industry off to a solid start in January

DETROIT (AP) -- Americans gave automakers a confidence boost in January. They bought more cars and trucks and showed a still-fragile industry that they were ready to replace their clunkers in 2011.

Sales were expected to total around 800,000 for the month. That's still below pre-recession levels of 1 million or more, but better than last January's sales of 698,000.

Nearly all big car companies reported double-digit gains for the month, a sign that the slow recovery in U.S. auto sales that began last year remains on track. While the recovery could falter if turmoil in the Middle East pushed up gas prices or unemployment stays high, the industry was happy with what it saw last month.

Car buyers were shopping for just about everything. Sales of recently redesigned SUVS such as the Jeep Grand Cherokee and Ford Explorer were strong. People also snapped up small cars such as the Nissan Versa and Honda Fit.

Pickups remained strong, continuing a streak that began last year thanks to growing demand from construction crews and other small businesses. Ford F-Series sales rose 30 percent. Crossovers, which combine the roominess of SUVs with car-like handling, also remained strong. Sales of the Chevrolet Equinox, for example, rose 35 percent.

Last January, rental-car companies and other businesses fueled the recovery in auto sales as they began to restock their fleets after the recession. But last month, individual buyers propelled sales.

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Factory activity grows, hiring outlook brightens

WASHINGTON (AP) -- The best month for U.S. factories in nearly seven years is brightening the outlook for job growth.

Companies are exporting more construction and mining equipment, and Americans are buying more cars, appliances and computers.

The Institute for Supply Management, a private trade group, said Tuesday that its index of manufacturing activity rose last month to 60.8. It was the highest reading since May 2004 and the 18th straight month the sector has grown. Any reading above 50 indicates expansion.

The strong data on manufacturing activity was a major reason the Dow Jones industrial average closed above 12,000 for the first time since June 2008. Investors overlooked a separate report that showed builders spent less on projects in December, and that the construction spending for 2010 had hit a decade low.

Construction typically helps drive economic recoveries after a recession. But this time around, factories are more likely to crank out jobs.

Manufacturers added 136,000 jobs in 2010, the first annual net gain since 1997. And the trade group's employment index last month rose to its highest level since 1973.

Still, the sector lost almost 2.2 million jobs in 2008 and 2009. And manufacturers have managed to boost output in recent years by making their operations more efficient and getting more work out of the employees they already have.

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Egypt protests prompt new ratings review

CAIRO (AP) -- Egypt's economy suffered a fresh blow Tuesday after yet another credit agency lowered its ratings and its currency approached a five-year low with slim chance of a quick rebound amid surging street protests.

Estimates of the losses sustained during the week of unrest roiling the country have yet to emerge, but one thing is certain: Hopes for another year of solid economic growth in the Arab world's most populous nation are long gone. Companies are suspending operations, workers are staying home, banks remained closed, and tourists are fleeing by the thousands.

Standard & Poor's joined Moody's in cutting Egypt's ratings -- the second such downgrade in as many days. The third major ratings agency, Fitch, lowered its outlook for the country to negative last week. All three agencies cited the deteriorating situation in the country. More than a quarter-million people massed in the heart of the capital Tuesday in the largest demonstration to date against Mubarak.

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BP resumes dividend payouts after full-year loss

LONDON (AP) -- BP PLC said Tuesday it is resuming dividend payouts for the first time since the Gulf of Mexico well disaster and announced plans to sell off almost half of its U.S. refinery business, including the Texas City facility where 15 workers died in a massive explosion in 2005.

BP said a stronger-than-expected end to 2010, in which high oil prices lifted fourth-quarter profit by 30 percent, was not enough to avoid a full-year loss of $3.7 billion, its first since 1992.

It raised to $40.9 billion its estimate for the overall cost of the spill. The charge covers the cost of the explosion aboard the Deepwater Horizon rig, which killed 11 workers in April, as well as plugging the well and cleaning up the southern U.S. coast. BP said the final total "is subject to significant uncertainty."

BP, which suspended dividends following the Macondo well blowout in the Gulf of Mexico in April, said it would pay out 7 cents per share, or about $1.25 billion over all -- half the amount paid in the fourth quarter of 2009.

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Spain's rating upheld as crisis eases

MADRID (AP) -- Standard & Poor's has given Spain a welcome boost by affirming its credit rating Tuesday, in another sign that the government debt crisis that threatened to sink the euro has come off the boil, at least for the moment.

The agency said Spain's current, solid AA rating partly reflects the government's resolve to cut its deficit and enact reforms to make its struggling economy more productive.

That positive review from outsiders comes as a welcome relief for Spain's hard-pressed government and for worried European Union officials as they try to contain a crisis that has already forced Greece and Ireland to take bailout loans from their eurozone partners and the International Monetary Fund to avoid national bankruptcy

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FDA declines to approve Orexigen diet drug

WASHINGTON (AP) -- The government on Tuesday unexpectedly rejected what appeared to be the most promising candidate among a class of new diet drugs, wiping out hopes for a new medication to fight obesity anytime soon.

Orexigen Therapeutics Inc. said the Food and Drug Administration is concerned about the heart side effects of its drug Contrave and will require a new study, a costly undertaking that may prove too burdensome for the small drugmaker.

The FDA's ruling marks the third rejection of a weight loss drug in recent months, raising questions about whether any new drugs in the class can be made safe enough to win approval. The FDA has not approved a new diet pill in more than a decade.

The FDA request for an additional study suggests the agency may yet approve the drug, but makes that path much more difficult. The news led to a sell-off that wiped out nearly three-quarters of the market value of the company.

Orexigen said it is disappointed with the FDA's decision and will work with the agency to determine its next step.

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Citigroup takes over record label EMI

LOS ANGELES (AP) -- Citigroup Inc. has taken over debt-strapped EMI Group Ltd., closing a disastrous purchase of the music label by Guy Hands, founder of British private equity firm Terra Firma.

The foreclosure by Citigroup, EMI's main lender, brings the label of British acts such as The Beatles and Pink Floyd under American control until a new buyer can be found.

The takeover had been long expected, but came more than a month before Terra Firma Capital Partners Ltd. officially defaulted on roughly 3.4 billion pounds ($5.48 billion) of borrowings it took on to buy the label in 2007.

Citigroup's move eliminates some uncertainty over EMI's future, and restructures EMI by reducing its debt by 65 percent to 1.2 billion pounds. Citigroup booked a 2.2 billion pound loss, while Terra Firma saw its 1.75 billion pound investment evaporate.

The agreement leaves EMI, which also represents Lily Allen, Katy Perry, Coldplay and dozens of other acts, with more than 300 million pounds of available cash, enough to fund its operations, and a sustainable level of debt.

For now, it won't have to rush into the arms of a financial savior, although companies like Warner Music Group Corp. and private equity firm Kohlberg Kravis & Roberts have been jockeying to buy the company.

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State tax revenues rise for 4th straight quarter

WASHINGTON (AP) -- A new report says state tax revenues increased in the final three months of last year as the improving economy boosted income and sales taxes receipts.

Tax revenue increased 6.9 percent in the October-December quarter, according to the report from the Nelson A. Rockefeller Institute of Government, a research institute at the State University of New York. That's based on early data from 41 states. If revenues rise by that pace once all states have reported their data, it would be the fastest increase since the April-June quarter of 2006.

Still, revenues remain below pre-recession levels, while spending has risen to meet increasing demands for social services. That means states still face large budget gaps they will have to close through more spending cuts or tax hikes.

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By The Associated Press

The Dow Jones industrial average soared 148 points, or 1.3 percent, Tuesday to 12,040.16.

The S&P 500 rose 21, or 1.7 percent, to 1,307.59, its first close above 1,300 since August 2008.

The Nasdaq rose 51, or 1.9 percent, to 2,751.19

In the U.S., benchmark West Texas Intermediate, or WTI, crude for March delivery fell $1.42 to settle at $90.77 a barrel on the New York Mercantile Exchange. Brent, which analysts say better reflects global oil demand, traded as high as $102.08, a level not seen since October 2008.

In other Nymex trading for March delivery, heating oil rose 1.67 cents to settle at $2.7570 per gallon, gasoline futures climbed 1.93 cents to settle at $2.5194 per gallon, and natural gas lost 7.3 cents to settle at $4.347 per 1,000 cubic feet.


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