Business Highlights

Washington Mutual raising $7 billion

SEATTLE (AP) - Washington Mutual Inc. secured $7 billion in new capital Tuesday, an injection that is aimed at reviving the company despite ballooning loan losses but which may also push it to rethink its strategy, slim down and revamp the management.

The country's largest savings and loan has been badly hurt by rising delinquencies and defaults on mortgages, and efforts last year to rehabilitate its finances fell short despite assurances from management that slashing its dividend, raising nearly $3 billion in a stock sale and leaving the subprime mortgage business would be sufficient.

Washington Mutual said it would get the new capital from an investment group led by private equity group TPG, but will cut its dividend again and post both a wider loss and set aside more in loan loss provisions for the first quarter than had been expected. TPG founding partner David Bonderman, a former WaMu director, will also rejoin the board.

Separately, the thrift said it will get out of the wholesale lending business, close all remaining standalone home loan centers and lay off about 3,000 workers.

Stocks fall after earnings, Fed minutes

NEW YORK (AP) - Wall Street retreated Tuesday after aluminum producer Alcoa Inc. and chip maker Advanced Micro Devices Inc. issued disappointing reports and the Federal Reserve voiced concerns about the slumping economy.

Stocks were already lower on worries about weak first-quarter earnings when the minutes from the Fed's March 18 meeting were released. The minutes showed that some central bank officials, who forecast that the economy would contract during the first half, were concerned about the possibility of a "prolonged and severe" business downturn.

The minutes also indicated that Fed officials were conflicted over how much more interest rates could be reduced at the expense of higher inflation. The combination of a slow economy but not much more room for interest rate cuts at first rattled investors and sent the Dow Jones industrials to a loss of 86 points, although the blue chips regained some ground in the final hour of trading.

Pending home sales hit low in February

WASHINGTON (AP) - Homeowners and investors hunting for any indication that the housing market has bottomed out didn't get it Tuesday, as the latest home sales data from a real estate trade group moved that sign further down the road to recovery.

The National Association of Realtors said pending U.S. home sales fell in February to the lowest reading since the index began in 2001. The trade group's seasonally adjusted index of pending sales for existing homes fell to 84.6 from January's upwardly revised reading of 86.2. A year earlier, the index stood at 107.6.

Wall Street economists surveyed by Thomson/IFR had predicted the index would inch up to a reading of 86.3.

A reading of 100 is equal to the average level of sales when the index started. The previous low was August's reading of 85.8, recorded at the height of the credit crunch.

With house prices falling and credit continuing to tighten, many economists say the housing market is likely to worsen in the coming months, though some remain hopeful about a recovery in the second half of the year.

American cancels more flights

DALLAS (AP) - American Airlines said it was canceling up to 500 flights Tuesday, perhaps one-fifth of its schedule, to check the bundling of wires in some planes, the same issue that caused the airline to scrap more than 400 flights last month.

American, the nation's largest carrier, said the cancellations could spill into Wednesday and beyond.

The airline said the Federal Aviation Administration raised more concerns about the recent inspections of the wiring in its approximately 300 MD-80 aircraft.

The inspections will focus on issues including the spacing and direction of cords used to secure bundles of wires in the planes' auxiliary hydraulic systems. The company said they were not safety-of-flight issues.

WellPoint customer information exposed

INDIANAPOLIS (AP) - Personal information that may have included Social Security numbers and pharmacy or medical data for about 128,000 WellPoint Inc. customers in several states was exposed online over the past year, the health insurer said Tuesday.

WellPoint, which has had other data security issues in the past, recently learned about the problem, fixed it and is notifying customers, spokeswoman Shannon Troughton said. The nation's largest health insurer by membership is offering free credit-monitoring services for those customers, but has received no reports of identity theft or credit fraud.

The latest security lapse stems from two servers maintained by an outside vendor that Troughton declined to identify. The vendor specializes in data management.

WellPoint had learned early last year that a server was improperly secured, and that information on about 1,350 customers may have been exposed online and was vulnerable to Internet search engines. The insurer fixed that breach quickly, Troughton said.

Gas prices slip, but could hit $4

NEW YORK (AP) - Retail gasoline prices pulled back slightly from record levels Tuesday and gave some consumers a small break, but a new government forecast said gas could reach as high as $4 a gallon during the summer driving season.

Oil futures prices, meanwhile, fell as the dollar stabilized, giving investors an opportunity to lock in profits from crude's recent rally. Limiting the declines were developments in Iran, which announced plans to expand its uranium enrichment program and said it has tested key equipment, a move that raised the market's concerns about political conflict that could affect the country's oil exports.

In its monthly report on petroleum supplies and demand, the Energy Department's Energy Information Administration forecast that monthly average pump prices will peak near $3.60 a gallon in June, but could rise as high as $4 a gallon at times. That's a dime higher than the EIA's previous monthly average projection, and brings government forecasts closer to those of many analysts who expect gas prices to peak close to $4 a gallon.

UPS cuts 1st-quarter profit outlook

ATLANTA (AP) - United Parcel Service Inc., the world's largest shipping carrier, cut its first-quarter profit guidance Tuesday, citing lower volume and higher fuel costs.

The company said it now expects earnings per share of 86 cents or 87 cents. Previously, the company said it expected first quarter profit between 94 cents and 98 cents per share.

Analysts polled by Thomson Financial were expecting earnings of 93 cents per share.

The company said lower volume trends from February continued through March, making it impossible to meet its prior guidance.

Atlanta-based UPS said a shift away from premium products and higher fuel costs also contributed to the guidance cut.

Industry groups make push on housing

WASHINGTON (AP) - Even supporters acknowledge that the Senate's housing bill is a partial fix for growing problems in the residential real estate market.

That's why congressional Democrats are rolling out more aggressive responses, most prominently a plan for the government to insure up to $400 billion in troubled mortgages, which would be refinanced at more affordable rates. Some in the banking industry are warming to the idea, hoping it would place the mortgage mess in the rear view mirror.

Based on the details of a measure expected to move toward passage in the Senate on Wednesday, consumer groups worry that legislation emerging from Congress will mostly reflect the interests of housing developers and mortgage lenders, not homeowners. The White House is also opposed to the bill, with spokeswoman Dana Perino saying it would "do more harm than good."

By The Associated Press

The Dow fell 35.99, or 0.29 percent, to 12,576.44.

Broader stock indicators also dropped. The Standard & Poor's 500 index fell 7.00, or 0.51 percent, to 1,365.54, and the Nasdaq composite index fell 16.07, or 0.68 percent, to 2,348.76, taking a larger hit because of concerns about high-tech companies following the news from AMD and Novellus.

Light, sweet crude for May delivery fell 59 cents to settle at $108.50 a barrel on the New York Mercantile Exchange, but alternated between gains and losses.

In other Nymex trading Tuesday, May heating oil futures rose 2.59 cents to settle at $3.1102 a gallon. Analysts said heating oil prices are being pushed higher by strong global demand for diesel, which is closely related to heating oil, and a fire that shuttered a refinery in Finland.

May gasoline futures fell 3.31 cents to settle at $2.7504 a gallon, and May natural gas futures fell 9.4 cents to settle at $9.697 per 1,000 cubic feet.

In London, May Brent crude fell 80 cents to settle at $106.34 a barrel on the ICE Futures exchange.