Stocks point to plus open after big gain By MADLEN READ, AP Business Writer

Stocks point to plus open after big gain By MADLEN READ, AP Business Writer
18 minutes ago



NEW YORK - U.S. stock futures pointed toward a higher opening Wednesday as Wall Street looked to extend its rally a day after a half-point rate cut from the Federal Reserve.

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Stocks soared Tuesday after the Fed slashed the target federal funds rate to 4.75 percent from 5.25 percent because of signs that credit market problems could hurt the overall economy. The Dow Jones industrials, climbing nearly 336 points, had their biggest one-day point gain in nearly five years.

Wednesday brings new economic data, which investors will be parsing to determine how the economy is faring amid the current credit climate and volatile stock market.

The Labor Department's August consumer price index is scheduled to come out at 8:30 a.m. EDT. According to a Thomson Financial survey, economists on average are anticipating a 0.1 percent decline in the headline CPI, and a 0.2 percent uptick in the core CPI, which eliminates food and energy prices.

At the same time, the Commerce Department reports on new home construction. The data is anticipated to show that construction of new homes and apartments in August fell to an annual rate of 1.339 million units, down 3 percent from an annual rate of 1.381 million units in July.

But in advance of the data, which of course reflects activity well before Tuesday's rate cut, investors appeared to hold on to their renewed optimism — even after Morgan Stanley, the second-largest U.S. investment bank, posted a 17 percent drop in third-quarter profit. The decline was steeper than analysts predicted.

Dow Jones industrial average futures expiring in December rose 45, or 0.32 percent, to 13,880. S&P 500 index futures rose 5.80, or 0.38 percent, to 1,538.90, and Nasdaq 100 Index futures rose 3.50, or 0.17 percent, to 2,062.75.

In August, commodity prices fell along with stocks as investors drew their cash out of riskier assets and put it into safer government securities. However, crude oil prices are back at record highs above $81 a barrel. In premarket trading on the New York Mercantile Exchange, crude rose another 48 cents to $81.99 a barrel.

Gold prices also extended strong gains made Tuesday.

And in a trend that's likely to exacerbate the effects of high commodity prices on U.S. consumers, the dollar slumped to a new low against the euro Wednesday. The euro rose as high as $1.3987 in morning European trading before settling back to $1.3981, still above the $1.3971 it bought in late New York trading Tuesday.

European and Asian stocks surged following the Fed's rate cut.

Britain's FTSE 100 rose 2.26 percent, Germany's DAX index rose 1.81 percent, and France's CAC-40 rose 2.43 percent.

Japan's Nikkei index rose 3.67 percent and Hong Kong's Hang Seng Index rose 3.98 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

General Mills profit rises 8 percent 56 minutes ago

General Mills profit rises 8 percent 56 minutes ago



MINNEAPOLIS - The foodmaker General Mills Inc. reported on Wednesday that its first-quarter profit rose 8 percent as rising revenue offset higher ingredient costs and increased spending on marketing.

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The maker of Cheerios cereals, Yoplait yogurt and Pillsbury baking mixes said it earned $288.9 million, or 81 cents per share, during the quarter that ended Aug. 26, up from $266.9 million, or 74 cents per share, a year ago.

Revenue rose 7 percent to $3.07 billion from $2.86 billion a year ago.

Analysts surveyed by Thomson Financial were expecting 80 cents per share on revenue of $3 billion. Those earnings forecasts typically exclude one-time items.

The company left its full-year guidance unchanged at $3.39 to $3.43 per share.

Sales in General Mills' retail foods division, the company's largest, grew 6 percent to $2.03 billion. Operating profits rose 6 percent to $473 million. Sales of Big G cereal rose 5 percent.

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On the Net:

General Mills Inc.: http://www.generalmills.com

Morgan Stanley profit tumbles 17 percent By JOE BEL BRUNO, AP Business Writer

Morgan Stanley profit tumbles 17 percent By JOE BEL BRUNO, AP Business Writer
50 minutes ago



NEW YORK - Morgan Stanley on Wednesday reported third-quarter profit fell 17 percent, as the No. 2 U.S. investment bank was slammed by a global credit crisis that cut into stock trading, corporate lending, and results from investments.

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Quarterly profit fell to $1.54 billion, or $1.44 per share, from $1.85 billion, or $1.75 per share, in the year ago period. Income from continuing operations, which includes results of the recently spun-off Discover Financial Services, slid 7 percent to $1.47 billion, or $1.38 per share, from $1.59 billion, or $1.50 per share.

Stronger investment banking fees helped prop up revenue during the third quarter, which rose 13 percent to $7.96 billion from $7.06 billion a year earlier.

Analysts polled by Thomson Financial expected a profit of $1.54 per share on $8.35 billion of revenue.

John Mack, Morgan Stanley's chairman and chief executive, pinned the quarter's poor performance on the "impact of the severe market disruption on some areas of the firm — including our credit products, leveraged lending and quantitative strategies businesses."

The company said its saw losses of $940 million in the quarter from the decreased market value of loans on its books as well as other financing commitments. Those losses cut 33 cents per share off of its bottom-line results.

Morgan Stanley fell $1.76, or 2.6 percent, to $66.75 in premarket electronic trading after closing Tuesday at $68.51. The stock has tumbled 24 percent since the end of the second quarter, as financial services firms were squeezed by defaults in mortgage positions and a tightening credit environment.

Consumer prices drop 0.1 percent By MARTIN CRUTSINGER, AP Economics Writer

Consumer prices drop 0.1 percent By MARTIN CRUTSINGER, AP Economics Writer
7 minutes ago



WASHINGTON - Consumer prices in August fell for the first time in 10 months as another big drop in energy costs offset higher food prices.

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The Labor Department reported Wednesday that its closely watched Consumer Price Index dipped 0.1 percent last month, slightly better than the flat reading that had been expected. It was the first decline in consumer prices since a 0.4 percent fall in October 2006.

The new report came a day after the Federal Reserve cut a key interest rate by a half point, a bigger decrease than had been expected, in an effort to ensure that recent financial market turbulence didn't push the country into a recession.

The Fed in its statement said that "some inflation risks remain," but by making the bolder half-point cut in its federal funds rate, it was signaling that it clearly believed the threat of a recession outweighed concerns about inflation.

The Commerce Department reported Wednesday that construction of new homes fell by 2.6 percent in August to a seasonally adjusted annual rate of 1.331 million units, the slowest pace in 12 years.

Outside of food and energy, inflation remained well contained as well in August, rising by 0.2 percent. This core inflation rate had been up by just 0.2 percent or 0.1 percent for the past six months.

The 0.1 percent fall in overall prices reflected a hefty 3.2 percent drop in energy costs. It was the third straight decline in energy and the biggest drop since last October. The price of gasoline dropped by 4.9 percent while natural gas prices were down 4.2 percent.

Consumer prices drop 0.1 percent By MARTIN CRUTSINGER, AP Economics Writer

Consumer prices drop 0.1 percent By MARTIN CRUTSINGER, AP Economics Writer
7 minutes ago



WASHINGTON - Consumer prices in August fell for the first time in 10 months as another big drop in energy costs offset higher food prices.

ADVERTISEMENT


The Labor Department reported Wednesday that its closely watched Consumer Price Index dipped 0.1 percent last month, slightly better than the flat reading that had been expected. It was the first decline in consumer prices since a 0.4 percent fall in October 2006.

The new report came a day after the Federal Reserve cut a key interest rate by a half point, a bigger decrease than had been expected, in an effort to ensure that recent financial market turbulence didn't push the country into a recession.

The Fed in its statement said that "some inflation risks remain," but by making the bolder half-point cut in its federal funds rate, it was signaling that it clearly believed the threat of a recession outweighed concerns about inflation.

The Commerce Department reported Wednesday that construction of new homes fell by 2.6 percent in August to a seasonally adjusted annual rate of 1.331 million units, the slowest pace in 12 years.

Outside of food and energy, inflation remained well contained as well in August, rising by 0.2 percent. This core inflation rate had been up by just 0.2 percent or 0.1 percent for the past six months.

The 0.1 percent fall in overall prices reflected a hefty 3.2 percent drop in energy costs. It was the third straight decline in energy and the biggest drop since last October. The price of gasoline dropped by 4.9 percent while natural gas prices were down 4.2 percent.