ABC News - Business News

Markets Close with Big Sell-Off

Wed, 19 Jun 2013 20:54:00 GMT

Hemera/Thinkstock(NEW YORK) -- Stocks on Wall Street finished the Wednesday session at their lows for the day, with the major U.S. indices giving back nearly all of their gains from Monday & Tuesday’s rally.

The Dow Jones Industrial Average closed down 206 points, or 1.35 percent, at 15,112. The Nasdaq Composite closed down 39 points, or 1.12 percent, at 3,443. The S&P 500 index finished the session at 1,628, down 23 points.

The sell-off in stocks picked up steam in the final hour of trading on Wednesday after Federal Reserve chairman Ben Bernanke hinted that the central bank will start to slowly pull back on its stimulus program – its bond purchases – later this year.

The good news Wednesday is that the Fed believes the economy will grow somewhere between 3.0 to 3.5 percent next year – that’s a bit better than they previously thought. And the Fed also said it believes the unemployment rate could fall to 6.5 percent as early as 2014. Originally Chairman Bernanke didn’t think the rate would reach that level until 2015. The unemployment rate is currently 7.6 percent.

Copyright 2013 ABC News Radio

GM Passes Toyota in J.D. Power Quality Survey

Wed, 19 Jun 2013 20:53:00 GMT

GM/Toyota/iStockphoto/Thinkstock(DETROIT) -- General Motors passed Toyota Motor Corp. to lead J.D. Power & Associates’ Initial Quality Study for the first time since the survey started 27 years ago.

J.D. Power’s survey of new vehicles was redesigned for 2013 to measure the quality and problems related to new technologies, the marketing information services company said.

GM’s four American brands -- Chevrolet, Buick, GMC and Cadillac -- ranked above average in its study this year. GM’s truck brand GMC ranked second, the highest it has ever ranked, and Chevrolet was fifth while the Toyota brand ranked seventh.

GMC both jumped considerably from last year’s rankings. Last year, GMC ranked 12th while Chevrolet was 15th and Toyota was eighth.

General Motors as a corporation had eight model-level segment awards, five of which were for Chevrolet.

“That’s pretty impressive for any manufacturer,” said John Tews, a spokesman for J.D. Power.

Here are J.D. Power’s top 2013 Nameplate IQS Rankings, which are above industry average, based on the fewest problems per 100 vehicles:

1.   Porsche
2.   GMC
3.   Lexus
4.   Infiniti
5.   Chevrolet
6.   Acura
7.   Toyota
8.   Honda
9.   Jaguar
10. Hyundai
11. Kia
12. Mercedes-Benz
13. Audi
14. Cadillac
15. Buick
16. Chrysler
17. Lincoln

Copyright 2013 ABC News Radio

Cap’n Controversy: Cap’n Crunch Not a Real Captain?!

Wed, 19 Jun 2013 19:27:00 GMT

ABC News(NEW YORK) -- Beloved cereal icon Cap’n Crunch is involved in a soggy controversy.

It turns out the so-called Cap’n is not actually a captain at all. By the looks of his uniform, he may only be a commander. (Gasp!)

An eagle-eyed cereal eater and blogger on Foodbeast.com first spotted that the spokes-pirate, whose full name is Cap’n Horatio Magellan Crunch, has only three stripes on his sleeve, which, in naval terms, means he is a commander, not a Cap’n. It takes four stripes to become a captain, which is one rank above commander.

The news led to outcry across social media this week with cereal fans decrying they were heartbroken over the offense, with some even calling the Cap’n a liar and a traitor on Twitter.

Like all true celebrities, the cereal-selling star took to Twitter to refute the allegations and defend his image.

“It’s the Crunch -- not the clothes -- that make a man,” @realcapncrunch tweeted.

“All hearsay and misunderstandings!” @realcapncrunch wrote. “I captain the S.S. Guppy with my crew, which makes me an official Cap’n.”

“So much fuss about my name. O, be some other name. What’s in a name? That which we call Cap’n Crunch, by any other name would taste as sweet.”

The beloved character debuted in commercials in the 1960s and has amassed a huge following through the years. PepsiCo, whose Quaker Oats division makes the cereal, announced in April that the Cap’n would host his own YouTube talk show, along with his sea dog side-kick, featuring comedy sketches and topical banter.

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Federal Reserve Won't Change Interest Rates

Wed, 19 Jun 2013 18:41:00 GMT

iStockphoto/Thinkstock)(WASHINGTON) -- The Federal Reserve announced Wednesday that it won't be changing its $85 billion a month bond purchasing stimulus program, though labor market conditions have improved in recent months. It will keep its target interest near zero while unemployment remains above 6.5 percent.

The Fed, which has been injected trillions of dollars into the slowly recovering American economy, made an announcement on its intentions in three parts on Wednesday. This is the Fed's most closely watched announcement since a third round of its bond purchasing program, or "quantitative easing" in September last year.

Federal Reserve Chairman Ben Bernanke said the Federal Reserve may end its bond purchases in mid-2014 if its economic forecasts are correct.

The Federal Reserve said in its statement Wednesday that economic activity has been "expanding at a moderate pace" since its monetary policy-making group, the Federal Open Market Committee, met in May.

Stock investors are worried that an end to the stimulus program will mean a swoon in equity prices. Bond investors fear that higher interest rates will depress the value of their holdings. When interest rates go up, the value of bonds declines.

The agency lowered its unemployment forecasts for this year to 7.25 percent, slightly better than its previous projection of up to 7.5 percent. Its forecast for the unemployment rate next year is 6.65 percent.

The Labor Department reported earlier this month that the unemployment rate for May rose to 7.6 percent with the addition of 175,000 jobs.

After its two-day meeting, the committee decided to keep the target rate for the federal funds rate at zero to 1/4 percent. Between the next year or two years, inflation is projected to be more than a half percentage point above the committee's two percent long-term goal, the Fed said.

Bernanke held a press conference expanding upon the Federal Reserve's statement and economic outlook. But he didn't reveal anything about when he might step down as Federal Reserve chairman when a reporter asked about his future.

"I don't have anything for you on my personal plans," Bernanke said at the press conference.

He is widely expected to leave his post at the end of his term later this year. President Obama essentially confirmed this departure in an interview with PBS' Charlie Rose earlier this week.

Appointed by President George W. Bush, Bernanke became chairman of the Federal Reserve in Feb. 2006 and began his second term in Feb. 2010 after he was re-appointed by President Obama. Bernanke's second term as chairman ends Jan. 31, 2014 and his term as a board member ends on Jan. 31, 2020.

The Federal Open Market Committee consists of twelve people, consisting of members of the Board of Governors of the Federal Reserve System and Reserve Bank presidents.

The Fed's actions greatly impact the U.S. economy for investors, business owners, consumers and homeowners. Interest rates on loans, stock and bond markets, all react to Fed policy.

"The last thing the Fed wants to do is cause rates to move quickly enough to choke off recovery," says Gus Faucher, senior economist with PNC financial.

Americans have likely already seen the last of rock-bottom mortgage interest rates, but rates are still historically very low, creating a competitive period to buy a home and lock in a low rate.

Markets in recent weeks have been rife with speculation that the Fed will be pulling back sooner than previously expected.

Mortgage rates have also been moving higher, up nearly three quarters of a percent since March.

"The change in mortgage rates we've seen so far are not overly dramatic," Bernanke said during the press conference.

Despite Wednesday’s reassurance by the Fed that there will be no hasty exit from its stimulus efforts, there is no doubt that these efforts will have to come to an end at some point, maybe as early as next year. When the stimulus measures end, interest rates will rise.

"Rates are going higher, we are very close to the day and they are going to rise in a consistent way. If you are looking to buy anything that requires a loan, buy it now and lock in a low rate," says Mark Zandi, Chief Economist Moody's Analytics.

Copyright 2013 ABC News Radio

Best Toilet Papers Wipe Out Top Brands

Wed, 19 Jun 2013 18:35:00 GMT

Fuse/Thinkstock(NEW YORK) -- Consumer Reports revisited its toilet paper ratings after testing more than two dozen products, naming the worst and best brands. The results may be a surprise those who think the top national brands are always preferred.

Two Walmart products were named in Consumer Reports’ top-five winner’s circle: White Cloud, which is sold only in its stores, and Walmart’s Great Value Ultra Strong. The toilet papers rated highly in softness, though the top-rated White Cloud 3-Ply Ultra Soft and Thick “combines softness with superior strength and disintegration,” said Consumer Reports’ Daniel DiClerico.

The products are rated with machinery and “sensory panelists” on four criteria: strength, tearing ease, softness and disintegration.

The lowest-rated toilet paper brands included CVS Earth Essentials, getting dings on strength and softness, as well as Whole Foods’ 365 Everyday Value and Walgreen’s Big Roll. The eco-friendly toilet paper Seventh Generation was soft but not as strong as those in Consumer Reports’ recommended list.

Costco’s Kirkland toilet paper brand narrowly missed Consumer Reports’ recommended list with an overall score of 69 out of 100. Consumer Reports said Kirkland’s softness and disintegration were excellent but it’s not as strong, nor as easy to tear as other toilet paper brands.

Copyright 2013 ABC News Radio

Jackpot! Man Wins Lottery Twice in One Day

Wed, 19 Jun 2013 17:48:00 GMT

iStockphoto/Thinkstock(SEATTLE) -- Cary Collings of Puyallup, Wash., won two separate lottery jackpots last week just over 24 hours, according to the Washington Lottery.

Collings, 61, hit his first jackpot on June 13 after buying a few “Red Hot 5′s” scratch tickets at a local gas station. One of them was a top prize winner that made him $55,555 richer.

The next morning, Collings drove to the Washington Lottery’s regional office to claim his prize. On his way, he stopped at a local Fred Meyer grocery store and bought three “Bring on the Ben’s” scratch tickets.

On the first of those three tickets he scratched, Collings won the $200,000 grand prize.

Collings, who could not be reached Wednesday by ABC News, told the Washington Lottery he has been playing lottery since it started in 1982.

He told lottery officials he is unsure what he will do with his double winnings. According to the local Puyallup Patch, Collings is married and works for Boeing in Auburn, Wash.

Copyright 2013 ABC News Radio

United Frequent Flier Change Could Cost You

Wed, 19 Jun 2013 16:25:00 GMT

United Continental Holdings(CHICAGO) -- United Airlines has made a significant change to its frequent-flier program, MileagePlus.

The change requires, in addition to miles flown, a minimum amount of money spent in order to earn status in the MileagePlus program.

The program previously required a minimum of 25,000 miles flown in one year to qualify for its lowest-level status, Premier Silver. Now the program will also require a minimum spend of $2,500 in addition to the 25,000 miles.

Higher levels of status require a higher minimum spend: Premier Gold, 50,000 and $5,000; Premier Platinum, 75,000 and $7,500; and Premier 1K, 100,000 and $10,000.

The change will take place next year for status on flights in 2015.

"For three decades, airline loyalty programs have largely recognized members and offered elite benefits for the distance those members fly," airline spokeswoman Karen May said in a statement to ABC News. "This is a logical step toward acknowledging members also for the revenue they provide the company, an approach that is common among loyalty programs in many industries."

So who wins and loses with the new requirement?

George Hobica, founder of AirfareWatchdog.com, said fliers who already purchase expensive tickets -- first-class or fully refundable -- will win as those who fly on cheap fares are squeezed out of earning status. Fewer people qualifying means less competition for upgrades and other perks.

People who fly on cheap fares, Hobica said, will be negatively affected. It's the people who "in the past have 'gamed' the system by finding extremely cheap fares in order to rack up miles and gain status."

Taxes, often a significant portion of the cost of a flight, do not count toward the minimum spend. Baggage and other fees are also not counted toward the minimum dollar amount.

The move mimics one made by Delta Airlines in January. At the time, Jeff Robertson, vice president/SkyMiles, said in a statement, "These changes are a result of considerable research that we've conducted including conversations with hundreds of customers, many of whom expressed a desire to see the Medallion program truly target our best customers."

"Adding a revenue component to the SkyMiles Medallion program ensures that our most valued customers receive the best program benefits and a more exclusive experience," the statement continued.

Copyright 2013 ABC News Radio

Men's Wearhouse Founder Had 'Difficulty Letting Go,' Analyst Says

Wed, 19 Jun 2013 15:26:00 GMT

Patrick Fallon/Bloomberg via Getty Images(NEW YORK) -- Retailer Men's Wearhouse announced Wednesday that it "terminated" founder and executive chairman George Zimmer, best known to consumers for his hundreds of TV commercials pitching suits.

The company said that "in light of Mr. Zimmer's termination," it is postponing its annual shareholders' meeting, which had been scheduled for 11 a.m. Wednesday in California.

Men's Wearhouse, based in Fremont, Calif., was founded in 1973 by Zimmer. It is one of the country's largest specialty men's retailers with 1,143 stores across the country. The company operates Moores and K&G Stores in addition to its namesake stores.

Zimmer's famous tagline was, "You're going to like the way you look. I guarantee it."

Richard Jaffe, analyst with Stifel Nicolaus, wrote in a note that Zimmer had reduced his role at the company "significantly" over the past two years. Zimmer named a new CEO, Doug Ewert, two years ago while designer Joseph Abboud was named fashion director.

"We believe that despite Zimmer's planned transition to a smaller role at the company, he had difficulty letting go of the reins and the leadership of the business," Jaffe wrote in his note to investors. "We believe that this led to a conflict with the board and his subsequent termination."

While Zimmer has been the face of the company for decades, accumulating 500 hours of footage, Jaffe said, "The use of Zimmer as spokesperson has, coincidently been under review as management has been evaluating his effectiveness, particularly with the millennial consumer." Zimmer is 64 years old.

A spokesman for Men's Wearhouse declined to comment to ABC News.

The company said the annual meeting was postponed to re-nominate the existing slate of directors without Zimmer, and it will announce the meeting's rescheduled date "shortly."

Video Coming to Instagram?

Wed, 19 Jun 2013 15:09:00 GMT

THOMAS COEX/AFP/Getty Images(NEW YORK) -- Your Instagram feed of photos of your friends and their food might soon include video too.

According to various reports, Instagram will add video to its popular photo-sharing service. The announcement is expected at the Facebook event being held on Thursday.

Facebook, which bought Instagram for $1 billion in April 2012, sent mysterious invites to an event late last week via snail mail.

"A small team has been working on a big idea. Join us for coffee and learn about a new product," the press invitation read.

Technology websites All Things D and TechCrunch have both independently reported that the Instagram team is planning to add video capabilities to the app.

"The new video product is something that the service said it was planning to do for two years now, and there have been numerous rumors about it in recent weeks," Mike Isaac of All Things D reports.

When reached by ABC News, Facebook said it doesn't comment on rumors or speculation.

TechCrunch first reported that Facebook would release a new news reader app at the Thursday event, but now maintains that the event will be dedicated to just the new Instagram feature.

Details on how the service will work are slim. Though, Matthew Keys, the former social media editor at Reuters, reports on his blog that the feature would allow users to upload between five to 10 seconds of video.

The service, as described in the reports, would be a direct competitor to Twitter's Vine app, which allows user to upload and share six-second videos. The iPhone and Android app has quickly become very popular, with reports that Vines are being shared more on Twitter than Instagram photos.

Still, Instagram has a much larger built-in user base. The photo-sharing service has over 100 million active users, who upload around 40 million photos per day.

The Facebook event begins Thursday at 10 a.m. PT.

Boeing 787 Dreamliner Diverted over Oil Filter Problem

Wed, 19 Jun 2013 10:54:00 GMT

Duncan Chard/Bloomberg via Getty Images(SEATTLE) -- A month after returning to the skies, a Boeing 787 Dreamliner had to be diverted on Tuesday for repairs.

United flight 139, which was en route to Tokyo from Denver, was forced to land in Seattle over "an indication of a problem with an oil filter," United Airlines said in a statement.

The plane landed normally and without incident, the carrier added.

In a statement, Boeing said it was aware of the incident and "we are engaged with United to provide any support required. We are aware that this is an engine issue and we are coordinating with GE."

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Tuesday's mishap comes after Boeing's fleet of 787 Dreamliners resumed flying after being grounded in January due to problems with its lithium-ion battery system.

In one incident, a lithium ion battery caught fire on a Japan Airlines flight parked at Boston's Logan Airport. In another, smoke from a battery system on an All Nippon Airways flight in Japan forced an emergency landing.

U.S. and Japanese regulators responded by grounding all 50 Dreamliners while an investigation into the batteries took place and changes to the system were made.