BUSINESS BRIEFS
Financial sector stocks rise after profit reports
Associated Press
NEW YORK — Investment bank stocks soared yesterday after Goldman Sachs and Lehman Brothers reported better-than-expected profits that soothed the frayed nerves of investors who were bracing for a domino effect after the near-failure of Bear Stearns.
But the good news from two of the industry's top names hardly put investment banks in the clear, and their executives are learning to accept more openness in Wall Street's secretive culture.
Investors were bolstered not just by the investment bank earnings but by the Fed's move to cut interest rates.
Shares of brokerages and investment banks posted their biggest gain since 2001, lifting the Dow Jones industrials more than 420 points. Investment banks are notoriously secretive about trading positions, tactics, and the contents of their multibillion dollar portfolios. That information could give rivals an edge and cost billions of dollars in a split-second trade.
CORE INFLATION UP A TROUBLING 0.5%
WASHINGTON — Wholesale prices rose again in February as another hefty increase in energy costs offset falling food prices. Outside of food and energy, prices shot up at the fastest pace in 15 months.
In another sign of trouble in housing, new home construction fell by a larger-than-expected 0.6 percent in February to an annual rate of 1.065 million units.
The Labor Department reported yesterday that wholesale prices rose 0.3 percent last month, following an even bigger 1 percent jump in January.
Outside of food and energy, the rise in inflation was a troubling 0.5 percent, the biggest increase for core inflation since a rise of 0.9 percent in November 2006.
The hefty February increase in core inflation raises concerns that relentless increases in energy costs over the past two years are beginning to spread to other areas of the economy.
AIRWAVE BIDDING NEAR $19.6 BILLION
WASHINGTON — Bidding closed yesterday on a record-setting government airwaves auction with the total amount pledged reaching nearly $19.6 billion. But enthusiasm for the result was tempered by doubts concerning the future of a proposed emergency communications network.
The total was the most since the Federal Communications Commission began using auctions in 1994 as a way to decide who should be granted rights to use portions of the publicly owned airwaves.
LENDERS MAY CUT CASH CUSHIONS
WASHINGTON — The government will announce a plan today to loosen capital restraints on Fannie Mae and Freddie Mac so that the mortgage-finance companies can expand their roles in the stricken housing market, people familiar with the matter said.
The Office of Federal Housing Enterprise Oversight, which oversees the government-sponsored companies, reached agreement with them on a deal in which the cash cushion they are required to maintain against risk — now nearly $20 billion for the two — will be reduced by a third. The freed-up money will go toward buying mortgages of struggling homeowners to enable them to refinance into more affordable loans.
VISA GOES PUBLIC, RAISES $17.9 BILLION
SAN FRANCISCO — Visa Inc. raised $17.9 billion yesterday to complete the largest initial public offering in U.S. history and help prop up the wobbly financial services industry.
The world's largest processor of credit and debit cards sold 406 million shares at $44 apiece to easily eclipse the previous U.S. record IPO of $10.6 billion set by AT&T Wireless eight years ago.
The IPO price topped the range of $37 to $42 per share that Visa set three weeks ago just before its executives began meeting with institutional investors and analysts to drum up interest.
