Stocks higher on 3Q profits; Mattel jumps
NEW YORK (AP) — Stocks are rising sharply for a second straight day on Wall Street after more corporate earnings reports.
The improvement for the market comes after a down week last week. Investors had been worried that third-quarter corporate earnings would be weak, but so far many of them are coming in better than had been expected.
The Dow was up more than 100 points at midday.
Vikram Pandit steps down as Citigroup CEO
NEW YORK (AP) — CEO Vikram Pandit has stepped down as the head of Citigroup. The news came as a big surprise to the financial markets. Pandit had steered the bank through the 2008 financial crisis and the choppy years that followed.
The bank says Pandit's replacement, effective immediately, is Michael Corbat, who had been CEO of Citigroup's Europe, Middle East and Africa division. Corbat has worked at Citi and its predecessors since he graduated from Harvard in 1983.
Pandit will also relinquish his seat on Citi's board of directors. A second top executive also resigned as part of the shake-up: President and Chief Operating Officer John Havens, who also served as CEO of Citi's Institutional Client Group.
The Wall Street Journal says the move follows a clash with the company's board over strategy and performance at businesses, including its institutional clients group.
Shareholders also have objected to Pandit's massive pay packages. He received $15 million in 2011.
The news came as a surprise, and Citigroup offered no explanation. There was no hint of the departure Monday, when the bank announced strong third-quarter earnings.
Social Security benefits to go up by 1.7 percent
WASHINGTON (AP) — More than 56 million Social Security recipients will see their monthly payments go up by 1.7 percent next year.
The increase, which starts in January, is tied to a measure of inflation released today. It shows that inflation has been relatively low over the past year, despite the recent surge in gas prices, resulting in one of the smallest increases in Social Security payments since automatic adjustments were adopted in 1975.
Social Security payments for retired workers average $1,237 a month, or about $14,800 a year. A 1.7 percent increase will amount to about $21 a month, or $252 a year, on average.
Social Security recipients received a 3.6 percent increase in benefits this year after getting none the previous two years.
About 8 million people who receive Supplemental Security Income will also receive the cost-of-living adjustment, or COLA, meaning the announcement will affect about 1 in 5 U.S. residents.
Social Security also provides benefits to millions of disabled workers, spouses, widows, widowers and children.
More expensive gas pushes US consumer prices up
WASHINGTON (AP) — Higher gas costs drove up U.S. consumer prices in September for the second straight month. Outside of energy, there was little sign of inflation.
The Labor Department says that the consumer price index rose a seasonally adjusted 0.6 percent last month, matching the August increase. In the past 12 months, prices have increased 2 percent. That's in line with the Federal Reserve's inflation target.
Excluding volatile food and energy costs, prices rose just 0.1 percent. In the past year, so-called core prices have increased 2 percent.
The government report showed that food prices rose only 0.1 percent. The cost of meat, chicken and eggs fell. Dairy prices rose.
Gas prices rose sharply over the summer and into September, but have since come down. The average price for a gallon of gas nationwide was $3.77 on Tuesday, about 9 cents below last month's level.
US homebuilder confidence at 6-year high
LOS ANGELES (AP) — Confidence among U.S. homebuilders remains at its highest level in six years, reflecting improved optimism over the strengthening housing market this year. Builders are also reporting a pickup in visits by prospective buyers to builders' communities.
The National Association of Home Builders sentiment index is at 41 this month, up from 40 in September. That's the highest reading since June 2006, just before the housing bubble burst.
Any reading below 50 indicates negative sentiment about the housing market. The index hasn't been above 50 since April 2006, the peak of the housing boom.
Recent housing data continue to point to signs that the housing market is making a sustained comeback.
IMF: pace of austerity must depend on economy
PARIS (AP) — International Monetary Fund Managing Director Christine Lagarde says economic conditions must dictate the pace at which countries like Greece and Spain rein in their budget deficits via tax hikes and spending cuts.
Lagarde says the IMF insists that financially weak countries take austerity measures to heal their public finances, but adds that "conditions have changed" — notably the slowing global economy.
Lagarde says deficit reduction "must take place where possible" and must be "compatible with each country's circumstances."
Some economists argue that austerity measures in countries like Spain and Greece are proving counterproductive by worsening the recessions.
The head of the Washington DC-based IMF spoke to reporters during a stopover in Paris on her way back from the IMF's annual meeting in Tokyo last week.
US industrial output rises but factories stay weak
WASHINGTON (AP) — U.S. industrial production increased only modestly in September, held back by weak growth in factory output.
The Federal Reserve says that output at factories, mines and utilities rose 0.4 percent in September. That follows a 1.4 percent decline in August, which partly reflected precautionary shutdowns before Hurricane Isaac hit the Gulf Coast.
Factory output, the most important component of industrial production, edged up only 0.2 percent in September. And for the July-September quarter, factory production fell at an annual rate of 0.9 percent. That was the first quarterly decline since the spring of 2009, when the country was still in recession.
Mining output, which includes oil and gas drilling, rose 0.9 percent in September as companies resumed oil production in the Gulf of Mexico. Utility output increased 1.5 percent.
Manufacturing, which helped pulled the economy out of the Great Recession, has slumped since the spring. Europe's debt crisis and slower growth in China and other emerging markets have hurt demand for American exports.