Business Highlights

Bank of America loses $2.24B as loan losses rise

CHARLOTTE, N.C. (AP) - Bank of America Corp. said Friday it lost more than $2.2 billion in the third quarter as loan losses kept rising, providing more evidence that consumers are still struggling to pay their bills.

The nation's second-largest bank said it wrote down loans on its books by almost $10 billion during the July-September period, up almost $1 billion from the second quarter. The bank also added $2.1 billion to its reserves to cover bad loans, bringing its provision for credit losses to $11.7 billion. The bank's total allowance for loan and lease losses now totals $35.83 billion.

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Finance arm pushes down General Electric 3Q profit

General Electric Co.'s troubled financial unit dragged down third-quarter earnings 44 percent, overshadowing gains in divisions that make power plant turbines and household appliances.

The results from one of the world's largest companies show the spotty strength of the global economy. While "signs of life" are emerging - profits are up for some industrial goods and services - consumers and businesses are still reeling from large numbers of defaults in credit cards and mortgages.

GE's quarterly profit fell to $2.4 billion, or 23 cents per share, hurt by sharply lower earnings at its GE Capital arm, which loans money for businesses ranging from credit cards to shopping centers. A year earlier, the company earned $4.3 billion, or 43 cents a share.

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Bank of America, GE results push stocks lower

NEW YORK (AP) - Stocks ended a strong week with a flash of selling after Bank of America Corp. and General Electric Co. signaled that businesses and consumers are still struggling to pay off their debts.

The market slid Friday as quarterly results from the companies dented hopes that earnings would show strong signs of improvement in the July-September period. A rise in oil also helped the market end well off its lows, repeating a pattern seen earlier in the week.

The Dow Jones industrial average fell 67 points to finish just below the 10,000 mark, which it had broken through on Wednesday for the first time in a year. Despite the drop, stocks still posted big gains for the week.

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Federal deficit hits all-time high of $1.42 trillion

WASHINGTON (AP) - The federal budget deficit has surged to an all-time high of $1.42 trillion as the recession caused tax revenues to plunge while the government was spending massive amounts to stabilize the U.S. financial system and jump-start the economy.

The imbalance for the budget year ended Sept. 30 more than tripled last year's record. The Obama administration projects deficits will total $9.1 trillion over the next decade unless corrective action is taken.

As a portion of the economy, the budget deficit stood at 10 percent, the highest since World War II, according to government data released Friday.

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Billionaire among 6 nabbed in inside trading case

NEW YORK (AP) - One of America's wealthiest men was among six hedge fund managers and corporate executives arrested Friday in a hedge fund insider trading case that prosecutors say generated more than $25 million in illegal profits and should be a wake-up call for Wall Street.

Raj Rajaratnam, a partner in Galleon Management and a portfolio manager for Galleon Group, a hedge fund with up to $7 billion in assets under management, was accused of conspiring with others to trade based on insider information about several publicly traded companies, including Google Inc.

U.S. Attorney Preet Bharara told a news conference it was the largest hedge fund case ever prosecuted and marked the first use of court-authorized wiretaps to capture conversations by suspects in an insider trading case.

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Wal-Mart and Amazon.com trade price cuts on books

CHICAGO (AP) - Taking a page from its original playbook, Wal-Mart Stores Inc. launched a full-fledged price war with Amazon.com Inc. and a nation of book retailers, lowering online prices on certain highly anticipated hardback titles to $9.

The volley of discounts, which began Thursday when the retailer listed prices for some upcoming hardcover releases such as Dean Koontz' "Breathless" and Stephen King's "Under the Dome" at $10, was answered with a similar price cut by Amazon, the largest online bookseller. Then the two competitors lowered the prices even further to $9.

The book discounts, the latest in a series of aggressive online maneuvers by the world's largest retailer, could position the company to do to the online marketplace what Walmart stores did to local merchants decades ago.

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Industrial output up more than expected in Sept.

WASHINGTON (AP) - Output at America's factories, mines and utilities rises for the third straight month, but some economists say the manufacturing growth that has helped lead the nascent economic recovery may slow as federal stimulus programs are phased out.

Higher output of motor vehicles and parts spurred much of the September increase, due in part to the government's "Cash for Clunkers" auto buying program. But steel and other sectors also posted gains, and General Electric reported separately Friday that its industrial businesses grew in the third quarter.

The Federal Reserve said industrial production rose 0.7 percent last month. That beat the 0.2 percent increase that Wall Street economists expected, according to a survey by Thomson Reuters.

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Ala. court rejects $274M verdicts in drug cases

MONTGOMERY, Ala. (AP) - The Alabama Supreme Court on Friday threw out jury decisions awarding the state more than $274 million from three pharmaceutical companies, ruling they did not defraud the state in pricing Medicaid prescription drugs.

The court overturned jury verdicts against the drug companies AstraZeneca, Novartis and GlaxoSmithKline, accused by the state of fraudulently manipulating prices of drugs for Medicaid recipients.

The court ruled 8-1 that the state did not have to rely on the drug companies' information in deciding what prices to pay pharmacists for prescription drugs for Medicaid recipients. The justices said state officials could have done their own research and determined the correct price.

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Crude rallies again and pump prices follow

NEW YORK (AP) - Oil prices finished above $78 per barrel for the first time in a year, marking the largest weekly percentage increase in the cost of crude since the height of the summer driving season. Retail gas prices have begun to tag along.

Friday, for the first time in almost three weeks, the national average price for a gallon of gasoline crept above $2.50.

An Energy Department report sent a ripple through the markets midweek when it revealed a huge and unexpected drawdown in gasoline supplies. Energy prices surged Friday, even though the country continues to sit on an enormous supply of petroleum.

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Foreign demand rises for long-term US assets

WASHINGTON (AP) - Foreign demand for long-term U.S. financial assets rose in August even though China trimmed its holdings of Treasury securities.

Foreigners purchased $28.6 billion more in assets than they sold in August, according to Treasury data released Friday. That followed a net increase of $15.3 billion in July, and $90.2 billion in June.

The Treasury Department is auctioning record amounts of debt to cover a deficit estimated to have hit $1.41 trillion for the budget year that ended in September. Some economists worry that if overseas buyers don't keep buying U.S. debt, interest rates could rise. Inflation eats away at the purchasing power of a currency.

By The Associated Press

The Dow fell 67.03, or 0.7 percent, to 9,995.91 after being down as much as 123 points at its low of the day.

The broader S&P 500 index fell 8.88, or 0.8 percent, to 1,087.68, and the Nasdaq composite index fell 16.49, or 0.8 percent, to 2,156.80.

Benchmark crude added 95 cents to settle at $78.53 a barrel on the New York Mercantile Exchange.

In London, Brent crude for December delivery climbed 76 cents to settle at $76.99 on the ICE Futures exchange.

In other Nymex trading, heating oil added 1.16 cents to settle at $2.0297 a gallon, while gasoline for November delivery added 3.44 cents to settle at $1.9793 a gallon. Natural gas for November delivery rose 29.9 cents to settle at $4.781 per 1,000 cubic feet.