A18
DOW 10,258.99
UP 284.54, 2.9%
NASDAQ 2277.68
UP 81.80, 3.7%
S
KLMNO
ECONOMY BUSINESS
&
S&P 500 1103.06
UP 35.11, 3.3%
GOLD $1,211.90
DOWN $1.50, 0.1%
CRUDE OIL $74.55
UP $3.04, 4.3%
10-YEAR TREASURY
UP $13.40 PER $1,000, 3.35% YIELD
CURRENCIES
$1 = 91.06 YEN; EURO = $1.236
Dow Jones industrial average
Daily intraday trading at 30-minute intervals, May 4 to Thursday
11,200 11,000 10,800 10,600 10,400 10,200 10,000 9,800 9,600
THE INTERNET
11,149.48
May 20: Germany gets tough on speculators, and the Dow falls 3.6 percent.
10,258.99
May 6: Markets are stunned by the mysterious “flash crash,” in which the Dow plunged nearly 1,000 points from its previous close.
4
May
5
SOURCES: Bloomberg, Google Finance
6 7
May 10: Stocks rally after the European Union announces a $1 trillion rescue package for Greece and other troubled countries.
10 11
May 14: Investors
remain jittery as concerns about Europe's aid effort grow.
12 13 14 17 18 19 20 21 24 25 26 27
THE WASHINGTON POST
Stocks rise on China’s euro promise
‘LONG-TERM COMMITMENT’
Intent to hold debt eases investors’ fears
by Tomoeh Murakami Tse
new york — Major stock in- dicators around the world fin- ished sharply higher Thursday as worries about the European debt crisis eased with reassurances from China that it would not sell its euro debt holdings. In the United States, the Dow
Jones industrial average of 30 blue-chip stocks gained 285 points, one of its best days this year. Investors shrugged off sub- par reports on the domestic econ- omy and welcomed the news from China’s State Administra- tion of Foreign Exchange. In a statement, SAFE, which manages the country’s $2.4 trillion in for- eign exchange reserves, called the reports that officials were review- ing the country’s holdings in eu- ro-zone debt “groundless” and ex- pressed its long-term commit- ment to Europe.
All major stock indicators fin- ished about 3 percent higher. The Dow soared 2.9 percent, or 284.54 points, to close at 10,258.99. The Standard & Poor’s 500-stock index, a broader meas- ure, rose 3.3 percent, or 35.11, to 1103.06. Leading the way were shares in the financial, energy and materials sectors. The tech- heavy Nasdaq composite index gained 81.80, or 3.7 percent, to 2277.68. The Euro Stoxx 50 index of eu- ro-zone blue-chip stocks closed
“The numbers were close enough that investors could ig- nore them safely,” said Christo- pher Low, chief economist at FTN Financial. The rally on Thursday comes
after a volatile month of trading that sent U.S. stocks into correc- tion territory, characterized as a decline of 10 percent or more. Traders and analysts said they ex- pected the market turbulence to continue, with investors keeping a close eye on the ability of lead- ers in Europe to contain their problems. “We’ll still have more volatil-
SETH WENIG/ASSOCIATED PRESS
Major stock indicators in the United States, Britain, Germany, France and Spain all gained more than 3 percent after China’s news.
up 3.5 percent. Major indicators in Britain, Germany, France and Spain — a country that has con- cerned investors as the debt crisis spread from Greece — all finished up higher by at least 3 percent. The euro, which has weakened
about 14 percent against the dol- lar this year, reversed its down- ward trend, rising to $1.237, from $1.219 late Wednesday. Investors regained some of their appetite for risk, sending oil and other commodities higher. The yield on 10-year Treasurys rose to 3.3 percent; earlier this week, the note’s yields had dropped to the lowest level in more than a year as investors sought safe-haven investments.
The rally in U.S. stocks came despite a report from the Com- merce Department that showed the pace of economic recovery was slightly slower than previous estimates.
During the first quarter, gross domestic product rose by an an- nual rate of 3 percent, a down- ward revision from the original estimate of 3.2 percent, the gov- ernment said. Economists had expected an upward revision, to 3.4 percent. In a separate report, the Labor
Department said that the num- ber of U.S. workers filing new claims for unemployment ben- efits fell last week but that the drop was less than expected.
ity,” said David Dreman of Dre- man Value Management. “Whether it’s a temporary rally or not it’s hard to say at his point. My general thought is that there’s just been an overreaction in mar- kets. . . . The European situation has unnerved a lot of people.” Low said Thursday’s rally was probably caused at least in part by professional investors’ efforts to cover their large short posi- tions before the long weekend. Short positions are bets that prices will go down. “We’re going into a long week-
end. It’s expected to be very, very light trading tomorrow, which means if you have a big position, it’s going to be difficult to get out of it,” he said. “And who knows what might happen over the weekend, especially in Europe. So the thinking is, if you’re short, you have to cover today. . . . As good as it feels for those of us who are seeing our stocks up a little bit today, you can’t take it for granted that the rally will contin- ue next week, unfortunately.” Major U.S. exchanges are scheduled to operate regular hours Friday and reopen Tuesday after the Memorial Day holiday.
tset@washpost.com
B
P is coming in for plenty of abuse these days, and certainly much of it is
deserved. Mistakes made by BP officials, or contractors and suppliers they engaged and supervised, led to a preventable explosion that killed 11 people and unleashed an environmental disaster of immense but still unknown proportion. Compounding those initial mistakes has been a failure to anticipate such a disaster and have an adequate response plan in place. It is now clear that the ecosystem in the Gulf of Mexico has been badly damaged, perhaps irreparably, affecting the livelihoods of hundreds of thousands of people in the region. The future of offshore oil drilling is now in question, with implications not only for the rest of the oil and gas industry but also for energy prices and energy policies here and around the world. So extensive is the damage, and so great are its potential liabilities, that BP’s very existence is now at stake — a company that until a few weeks ago was posting annual profits of $14 billion with amarket valuation in excess of $180 billion. As corporate screw-ups go, it just doesn’t get any bigger than this one — and the damn hole still isn’t plugged. My purpose today, however, is not to bury BP but to praise it. When confronted with such crises, corporate executives instinctively head for the bunker, withhold information, deny responsibility and drag their feet on efforts to clean up the mess they’ve created. That’s a natural
For all its blunders, BP didn’t cut and run
STEVEN PEARLSTEIN
human reaction, particularly when people have died, jobs are on the line, the stock price is plummeting and the whole thing is playing out 24/7 on cable television. This bunker mentality is further encouraged by the army of lawyers who inevitably show up on the scene, whose sole concern is preventing criminal sanctions and reducing civil damages.
But to their credit, rather than respond in ways you would expect them to, BP and its executives have generally responded in ways you’d want them to. From the start, the company has declared that it is ultimately responsible for what happened and responsible for making things right, waiving any liability limits it might be entitled to under federal law. The company’s chief executive,
Tony Hayward, moved from London to the gulf, personally overseeing operations, visiting with government officials and conducting regular news interviews where his contrition seemed genuine. At its own expense, the company mustered a private army, navy and air force to disperse the oil, contain the spill and clean up the damage on shore. It flew in experts from around the world to devise and execute
strategies for capturing the leaking oil and plugging the leak, sparing no expense. It opened multiple centers
where fishermen and business owners can file claims for lost income and walk out an hour later with a check. Those whose claims are denied will be able to appeal to an independent mediator. It initiated an internal
investigation into the causes of the explosion, waived any attorney-client privilege and shared with congressional committees its preliminary findings that BP officials made numerous mistakes that probably contributed to the explosion. It committed $500 million for research into preventing and mitigating oil spills. It sent checks for $25 million to each of five states along the Gulf Coast to jump-start their cleanup efforts, and $70 million in grants to tourist businesses, with promises of more to come. It promptly provided hundreds of thousands of internal documents to nine congressional committees investigating the disaster. Its top executives provided almost daily press briefings that, for the most part, were noteworthy for their lack of spin and defensiveness. After prodding from Congress, it also provided a continuous live video
FTC wants Google to retain home WiFi data
The Federal Trade Commission
has asked Google not to destroy any documents related to the data it collected from unsecured home wireless networks as it gathered images for its Street View photo-map archive, accord- ing to a person familiar with the matter. The company has not complied with a request from Germany to turn over Internet data and e-mail it collected from the net-
COPYRIGHTS
Dismissal of YouTube suit sought
Yahoo, IAC/InterActive, eBay
and Facebook urged a judge to dismiss Viacom’s copyright-in- fringement lawsuit against Goo- gle’s YouTube video-sharing Web site. The four Internet companies
filed friend-of-the-court legal briefs on behalf of YouTube Thursday in Manhattan federal
EARNINGS
court, where a judge is weighing YouTube’s and Viacom’s legal mo- tions in the 2007 lawsuit. “Plaintiffs’ legal arguments, if accepted, would retard the devel- opment of the Internet and elec- tronic commerce,” Asim Bhansa- li, a lawyer representing the four companies, said in the brief.
— Bloomberg News
works as its roving Street View cars collected images, citing legal issues. It also has not turned over information to Hong Kong. Google has said that its cars in-
advertently collected 600 giga- bytes of “fragmentary data” from WiFi networks in 33 countries and Hong Kong. It has not de- scribed the information in detail. It blamed the collection on a pro- gramming error.
— Los Angeles Times
DIGEST
FRIDAY,MAY 28, 2010
Signs point to splurges
Tiffany & Co., the world’s second-largest luxury jewelry retailer, raised its full-year forecast and posted a first-quarter profit that beat analysts’ estimates as an improving economy enticed consumers to splurge. The company’s shares rose 7.5 percent, the biggest one-day gain since Au- gust. The largest sales increase was in jewelry priced at $50,000 and higher, and demand climbed for engagement and celebration band rings. U.S. consumer spending, which accounts for about 70 percent of the economy, had its biggest jump in the first quarter since 2007, the Commerce Department said.
AUTOMOBILES
Ford said to plan
feed of the underwater leak. And, according to President Obama, all of this was done in coordination with, and under the direction of, the various federal agencies legally charged with overseeing the disaster response. BP’s response has not been
perfect. Almost from the beginning, the company has either underestimated or understated the amount of oil leaking from the underground well and the environmental damage it was likely to cause. It didn’t take long for Hayward to regret his comment that the damage would be “very, very modest,” or that the oil slick was small compared with the vastness of the oceans. And a House committee released an internal BP memo from a month ago estimating that the volume of oil leaking into the Gulf was anywhere from 1,000 to 14,000 barrels a day, well above the 5,000-barrel estimate that the company has clung to in its public statements.
Despite these missteps, BP’s handling of the gulf spill is looking far better than Exxon’s handling of the Valdez, Massey Energy’s handling of its deadly mine explosion or even Wall Street’s response to the recent financial crisis. Even the president was forced to acknowledge at his news conference Thursday that some of the criticism hurled at BP has been unfair or overly harsh. And while this crisis is far from over, it is possible that BP’s Deepwater disaster will one day replace Johnson and Johnson’s Tylenol scare as the classic business school case study on crisis management.
pearlsteins@washpost.com
end of Mercury
Ford is preparing to wind down the Mercury line, created in 1939 by Edsel Ford, after sales plunged 74 percent since 2000, said two people familiar with the plan. The automaker’s top execu- tives are preparing a proposal to kill Mercury to be presented to directors in July, said the people, revealing internal discussions on the condition of anonymity. Mer- cury, losing two of four models next year, will be starved of prod- ucts and promotion, the people said. Mercury would join Pontiac,
Saturn, Oldsmobile and Plym- outh among the departed Detroit brands of the 21st century. Sales will end within four years, one of
the people estimated.
— Bloomberg News
NEWSPAPERS
Ad revenue drops,
but at slower pace
Advertising revenue at U.S.
newspapers fell 10 percent in the first quarter from the year before, the smallest such drop since the recession began in late 2007. Newspaper ads brought in
$6 billion in the January-March period, down from $6.6 billion last year, according to numbers released Thursday by the News- paper Association of America. With the latest erosion, the in-
dustry is now subsisting on 46 percent less ad revenue than it was four years ago. Newspaper ad revenue totaled $11.1 billion in the first quarter of 2006.
— Associated Press
Post Tech
CECILIA KANG
Excerpt from
voices.washingtonpost.com/posttech
FCC survey shows confusion on cellphone fees
Sen. Amy Klobuchar (D-Minn.) said the Federal Communications Commission’s survey on consumer cellphone experiences supports her bill that would force wireless companies to better explain penalties for leaving contracts early. The FCC said Wednesday that half of all cellphone users were confused or unaware of the early-termination fees attached to their wireless service contracts. One of six users also said they had incurred surprising charges to their monthly fees. In December, Klobuchar and Sens. Russell Feingold (D-Wis.), James
Webb (D-Va.) and Mark Begich (D-Alaska) introduced a bill that would require wireless providers to prorate early-termination fees and clearly notify customers about the charges, not only at the time of purchase but for the duration of their contracts. The bill was introduced when Verizon Wireless increased the fees for certain smartphones to $350. AT&T recently increased its cancellation penalties for new and repeat smartphone customers, starting June 1, to $325 from $150. “The FCC’s consumer survey confirms what we have known for a long time — that confusing Early Termination Fees undermine competition and result in less consumer choice,” Klobuchar said in a statement. “Like a rigged carnival game, wireless providers bury these fees in the fine print and slam consumers if they try to find better service.”
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