Business Highlights

Stocks advance following better-than-expected inflation read

NEW YORK (AP) - Wall Street advanced Wednesday after a better-than-expected report on consumer prices tempered some of the market's concerns about inflation.

The Labor Department's report that consumer prices advanced 0.2 percent in April after rising 0.3 percent in March seemed to alleviate investors' worries that the recent surge in energy costs would force prices throughout the economy to spike higher.

Wall Street has been concerned that higher food and energy costs are cutting into consumers' ability to spend. Any pullback is an unnerving prospect for investors because consumer spending accounts for more than two-thirds of U.S. economic activity.

Merck says appeals court overturns verdict in Vioxx case

TRENTON, N.J. (AP) - A Texas appeals court on Wednesday overturned a multimillion-dollar verdict against Merck & Co. in one of the few trials it lost over its withdrawn painkiller Vioxx.

A jury in Rio Grande City, Texas, in April 2006 awarded $32 million to the widow of 71-year-old Leonel Garza, a short-term Vioxx user who died of a heart attack in 2001. That award - $7 million for compensatory damages and $25 million for punitive damages - later was cut to about $7.75 million under Texas law limiting damages.

On Wednesday, a three-judge panel of the Texas 4th Court of Appeals overturned the verdict, ruling in favor of Merck. The opinion was signed by Justice Sandee Bryan Marion.

Inflation pressures ease despite food price jump

WASHINGTON (AP) - Consumer prices slowed in April despite the biggest jump in food costs in nearly two decades. But with oil near record levels, Americans should brace for more pain at the pump in the months ahead.

The Labor Department reported Wednesday that consumer prices edged up 0.2 percent last month, slightly lower than expected and better than the 0.3 percent rise in March.

The lower inflation reflected a flat reading for energy, which helped offset a 0.9 percent jump in food. That was the biggest one-month surge since a 1.5 percent increase in January 1990.

US foreclosure filings surge 65 percent in April

LOS ANGELES (AP) - More U.S. homeowners fell behind on mortgage payments last month, driving the number of homes facing foreclosure up 65 percent versus the same month last year and contributing to a deepening slide in home values, a research company said Tuesday.

Nationwide, 243,353 homes received at least one foreclosure-related filing in April, up 65 percent from 147,708 in the same month last year and up 4 percent since March, RealtyTrac Inc. said.

Nevada, Arizona, California and Florida were among the hardest hit states, with metropolitan areas in California and Florida accounting for nine of the top 10 areas with the highest rate of foreclosure, the company said.

Accounting changes help Freddie Mac beat expectations in 1Q

Freddie Mac beat Wall Street's expectations in the first quarter, but the mortgage finance company didn't vanquish concerns about its ability to weather the housing bust.

Changes in accounting practices helped McLean, Va.-based Freddie Mac achieve better-than-expected results Wednesday. For example, Freddie adjusted how it accounts for derivatives, financial instruments used to hedge against swings in interest rates.

Under the new accounting practices, the company said it lost more than $1.3 billion on those derivatives in the first quarter, compared with a loss of nearly $2.3 billion in the fourth quarter of 2007.

Macy's reports loss on weak sales, restructuring

CINCINNATI (AP) - Despite a $59 million loss and a slump in sales in the first quarter, Macy's Inc. on Wednesday posted results that beat Wall Street expectations because of what analysts said were tight controls on expenses and inventories.

The loss resulted from lower sales and the cost of consolidating business units, Macy's said.

Losses totaled 14 cents a share in the three months ended May 3, compared with a profit of $36 million, or 8 cents a share, in the same quarter a year ago, Macy's said. Revenue was $5.75 billion, down from $5.92 billion a year ago.

Stripping out unusual charges, earnings from continuing operations were 2 cents a share, Macy's said.

Deere 2Q profit rises, but warns of cost trouble ahead

ST. LOUIS (AP) - Deere & Co., the world's biggest maker of farm machinery, said Wednesday its second-quarter profit rose 22 percent, propelled by lofty crop prices that stoked global demand for its farm equipment despite a faltering U.S. economy.

But the Moline, Ill.-based company warned that rising costs of such raw materials as steel could cut into its earnings over coming months, sending its shares down nearly 10 percent Wednesday. Deere also said it was seeing spot parts shortages "cropping up."

The maker of tractors and harvesting machinery said its profit for the period ended April 30 jumped to $763.5 million, or $1.74 per share, up from $623.6 million, or $1.36 per share, during the same period last year.

Gas above $3.75 a gallon; oil falls on mixed supply report

NEW YORK (AP) - Gas prices roared above $3.75 a gallon Wednesday, while oil prices fell after an Energy Department report gave a mixed picture of the nation's petroleum reserves.

At the pump, the average national price of a gallon of regular gas rose 2.6 cents overnight to a record $3.758 a gallon, according to AAA and the Oil Price Information Service.

Gas prices are 67 cents higher than a year ago, and are expected to continue rising at least until the Memorial Day weekend.

The Energy Department recently forecast that prices will peak next month at a monthly average of $3.73 a gallon.

Sony has 4Q profit, but expects decline this year

TOKYO (AP) - Sony punctuated its recovery by swinging to a profit for the January-March quarter from a loss a year ago on its way to a record performance for the fiscal year as it reduced losses from its PlayStation 3 video game business.

Strong sales of flat panel TVs and digital cameras also helped nearly triple annual profit compared with the previous financial year, the electronics and entertainment company said Wednesday.

But Sony joined Japanese automakers Toyota Motor Corp. and Honda Motor Co. in forecasting lower profit for the fiscal year through March 2009, citing the strong yen's erosion on overseas earnings.

By The Associated Press

The Dow rose 66.20, or 0.51 percent, to 12,898.38. A late sell-off in technology stocks caused the market to pare its gains, with the blue chip index at times up more than 150 points.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 5.62, or 0.40 percent, to 1,408.66. The Nasdaq composite index rose 1.58, or 0.06 percent, to 2,496.70.

Light, sweet crude for June delivery fell $1.58 to settle at $124.22 a barrel Wednesday on the New York Mercantile Exchange.

Oil futures hit a trading record of $126.98 a barrel Tuesday.

June gasoline futures fell 1.96 cents to settle at $3.1804 a gallon.

June natural gas futures rose 17.6 cents to settle at $11.598 per 1,000 cubic feet.

In London, June Brent crude fell $2.24 to settle at $121.86 a barrel on the ICE Futures exchange.