Finance & Business World

Financial shares rallied Friday on relief that the new version of the Wall Street reform bill is less restrictive than had been expected, but the broader market was mixed at the end of a down week on Wall Street.

Dow Jones industrial average (INDU) lost 9 points or 0.1%. The S&P 500 (SPX) gained 3 points or 0.3% and the Nasdaq (COMP) composite gained 6 points or 0.3%.

Stocks seesawed in the morning after economic growth in the first quarter was revised lower. Initially, investors showed little reaction to the news that lawmakers in the House and the Senate finalized negotiations on the most sweeping financial reform since the New Deal. But as the session wore on, the tone improved and the rally in bank shares spread to the broader market.

However, markets turned mixed near the close and trading volume amped up amid the impact of the annual rebalancing of the the Russell indexes. They include the Russell 1000 index of the largest American companies and the Russell 200 index of smaller companies.

Banks, techs, drugmakers and energy shares were among the gainers on the day, but some of the consumer product names stumbled, leaving markets mixed on the session. Blackberry maker Research in Motion (RIMM) lost nearly 11% in very active trading after it reported a rise in fiscal first-quarter revenue and earnings that disappointed investors on the revenue side.

Stocks lost ground this week after a two-week advance, as economic worries resurfaced after a brief reprieve. The market has been firmly in "correction" mode - down at least 10% from the highs - for over a month now.

The recent attempt to erase those losses petered out this week amid worse-than-expected reports on housing, manufacturing and on Friday, GDP.

GDP: Economic growth in the first three months of the year progressed at a slower pace than originally reported, the government said Friday, with consumers spending less than originally thought.

GDP grew at a 2.7% annualized rate in the first quarter versus the previously reported 3%. Economists surveyed by Briefing.com thought growth would hold steady at 3%.

In other economic news, the University of Michigan’s final consumer sentiment index for June was revised up to 76 from the previous reading of 75.5. Economists thought it would hold steady, on average. The index stood at 73.6 in May.

Wall Street reform: After two weeks of negotiations following a year of work, lawmakers in Washington have combined two versions of a reform bill that will overhaul the financial system. The final bill won’t be passed for a few days payday loans.

Proposed in the wake of the financial market meltdown, the bill’s highlights include: the establishment of a consumer protection agency inside the Federal Reserve; mortgage help for the jobless; and the establishment of a council to look out for problems at major banks and throughout the financial system.

While most of the stock market was flat to lower, the financial sector rallied on relief that the part of the bill that regulates trading was not as strident as some had feared.

The government would be given the ability to regulate derivatives - complex securities that were used by speculators in a way that contributed to the collapse of the housing market. But the regulations are looser than initially proposed. Also, the government will be able to limit, but not stop, banks from making trades on their own accounts.

Financial shares rallied, with the KBW Bank (BKX) sector index adding 2.9%. Components Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Comerica (CMA) and PNC Financial Services Group (PNC, Fortune 500) were among the gainers.

Currency: The euro inched higher versus the dollar but remained well above the four-year low of $1.188 hit last week. The dollar was down 0.3% versus the yen. The direction of the euro and the state of global debt are expected to be in focus at this weekend’s G-20 meeting.

World markets: European markets slipped. Britain’s FTSE 100 lost 1%, Germany’s DAX gave back 0.7% and France’s CAC 40 fell 1%.

Asian markets slipped. Japan’s Nikkei fell 1.9%, Hong Kong’s Hang Seng fell 0.2% and China’s Shanghai Composite lost 0.5%.

Commodities: U.S. light crude oil for August delivery rose $2.11 to $78.62 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery gained $10.60 to $1,256.70 an ounce after closing at a record $1,258.30 last Friday.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.11% from 3.12% late Thursday. Treasury prices and yields move in opposite directions.

Market breadth: Market breadth was positive and volume was robust because of the rebalancing. On the New York Stock Exchange, winners beat losers seven to three on volume of 2.56 billion shares. On the Nasdaq, advancers topped decliners two to one on volume of 5.14 billion shares. 

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A Virginia real estate investment group has paid $4.4 million for the troubled River Haven Apartments complex in north Raleigh.

TGM Realty Investors, a subsidiary of Richmond, Va.-based Thalhimer Real Estate, purchased the property in early June after the property had gone into foreclosure January. The Community Investment Corporation of the Carolinas had taken over the property for $4 million in January. CICCAR is a consortium of 115 bank members that provide debt financing for affordable housing properties. It is a subsidiary of the North Carolina Bankers Association.

River Haven was built in 2000 with 112 two- and three-bedroom apartment units on 10.5 acres. It is located at 9310 River Haven Place off of Capital Boulevard in Raleigh. The property had a tax value of $6 million, according to Wake County records.

It is the third apartment complex TGM Realty has purchased in North Carolina. It also owns the Stonewood Apartments and Crystal Village Apartments in Durham.

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Swarovski will open in July a licensed boutique store at Hartsfield-Jackson Atlanta International Airport through a partnership with Areas USA.

The 567-square-foot space will sell Swarovski’s line of fashion jewelry, watches, home accessories and décor objects.

Swarovski already has eight licensed boutiques in the United States with locations at Foxwoods Resort Casino, John F. Kennedy Airport, Dover Downs Hotel & Casino, the Palazzo Resort Hotel & Casino, the Venetian Las Vegas Resort Hotel Casino and the Eldorado Hotel Casino among others. It is aiming to have between 20 to 25 licensed boutiques opened by the end of 2010.

Swarovski also runs more than 230 retail stores throughout the country.

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The Coosa Valley Water Supply District received a $1.5 million grant to connect several St. Clair County water systems.

The U.S. Economic Development Administration gave the grant to the district to connect Pell City, Odenville and Springville to a regional water system, said a news release.

The project will create 83 jobs and $5.7 million in private investment and build a water intake structure at the Coosa River and other improvements to support additional development and business expansion in the region.

“The Obama Administration is committed to helping communities stay competitive,” U.S. Commerce Secretary Gary Locke said in a statement. “This EDA grant will help make the vital infrastructure improvements these towns need to establish a regional water system that will support the business community and attract new jobs to the region.”

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Tesla Motors Inc. said Tuesday it expects its stock will sell in the $14 to $16 a share price range.

The Palo Alto-based electric car company said that it expects to raise up to $230 million between the 10 million shares it will sell in its initial public offering, the 3.3 million shares that Toyota Motor Corp. has agreed to buy and 1.1 million in additional shares its underwriters have the option to buy payday advance.

The company's market cap at the high end of the price range would be about $1.5 billion.

It has applied for the ticker symbol "TSLA" to trade on the Nasdaq exchange.

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Faced with uncertain winds in U.S. defense spending, Boeing’s Hazelwood-based defense unit is venturing into far less traditional markets like the power grid and cybersecurity.

The aerospace company will continue to build fighter jets and other military aircraft. Boeing learned in May that it had secured another multi-year order of locally built F/A-18 fighter jets.

But earlier this year, Defense Secretary Robert Gates said he would urge President Barack Obama to veto any legislation that continues production of the "unnecessary" C-17 Globemaster transport plane. Last year, the Pentagon scaled back Army modernization and missile-defense programs in which Boeing was a major player.

"We absolutely want to stay in those platform businesses if you want to call it that," said Chris Raymond, Boeing Defense, Space & Security’s vice president of business development. "We want to stay in the rotorcraft, airborne battle management, fighters and strike. Those are obviously core business for us. We are always trying to extend that and refresh the products in that."

But the nation’s second-largest military contractor also wants to "diversify and expand" into other realms that include energy and cybersecurity, he said.

Last fall, Boeing won an $8.6 million grant from the U.S. Department of Energy to help develop an advanced "smart grid" prototype for optimizing regional power transmission. Boeing also was subrecipient on two other Department of Energy grants with partners Consolidated Edison of New York and Southern California Edison.

In all, the Department of Energy awarded $620 million in federal stimulus to 32 demonstration projects aimed at modernizing and fortifying the nation’s electrical grid.

Boeing Chairman Jim McNerney told shareholders last month that while the company plans to "maintain a large and stable business" providing programs and services to the U.S. military, the defense contractor also is actively pursuing other opportunities for growth.

In January, Boeing formally changed the name of its defense unit from Integrated Defense Systems to Boeing Defense, Space & Security. The move was part of a realignment aimed at capturing business in adjacent markets within the United States and abroad, officials said.

Boeing and other defense contractors are making a push into the emerging homeland security market as well.

Raymond said the line is going to blur between classic defense and homeland security functions.

"I think you’ll see the big defense companies kind of morphing to defense and security, or global security," he said . "And that covers more than just what we’ve thought of as defense."

Last month, for instance, a Lockheed Martin-led team began development of a Next Generation Identification system capability to help law enforcement agencies better search the FBI database of wanted criminals and terror suspects. Lockheed Martin has opened a NexGen Cyber Innovation and Technology Center in Gaithersburg, Md.

In addition to energy and cybersecurity, those markets include intelligence and logistics, company officials said.

Philip Finnegan, director of corporate analysis at Teal Group, said Boeing and Lockheed reflect a trend among defense contractors that are focusing on adjacencies. It makes all the more sense with defense budgets reaching a plateau, he added.

"This fits within an overall drive we have seen in Boeing to really work to broaden itself beyond its defense core," Finnegan said.

James Carafano, a military and homeland security expert at the Heritage Foundation, said Boeing’s moves also reflect a realistic response to the cyclical nature of U.S. defense spending. But it also reflects the expertise the company has developed managing sophisticated manufacturing efforts with far-flung supply chains.

"When you put together a modern airplane, it is an incredibly large, complex system," Carafano said. "I think Boeing thinks it is in the business of systems integration, and systems integration is something that cuts across a lot of sectors."

Raymond agreed.

"We always want to be a large-scale systems integrator," he said. "That is one of our core DNA."

Boeing’s capabilities to handle complex systems engineering jobs and to manage complex supply chains, he said, are largely why the company was awarded such major contracts as the Future Combat Systems, missile defense and the country’s secure border initiative.

Nonetheless, Future Combat Systems — a major Army modernization effort — was another major Boeing contract that was scaled back. Last June, the Pentagon ordered a major restructuring of the $160 billion Future Combat Systems program to a series of acquisition programs extending high-tech battlefield equipment to all combat brigades.

Boeing was the lead contractor for the modernization program along with Science Applications International Corp. of San Diego.

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Chrysler Group is recalling about 285,000 model year 2008 and 2009 Dodge Caravan and Chrysler Town & Country cars in the U.S. because of possible fire hazards.

The National Highway Safety Administration said some of the vehicles, manufactured between February and September 2007, may have been built with "an improperly routed wire harness" that could short circuit and ultimately cause a fire.

"The company is not aware of any accidents or injuries related to this issue," said a company spokesman in a statement. Chrysler said it was conducting a voluntary safety recall for the vehicles "to inspect the sliding-door wire-track assembly for damage and repair or replace as necessary."

The recall marks the second one for Chrysler this month. Last week, the automaker recalled about 25,000 Dodge Caliber and Jeep Compass cars in the U.S. because of a problem that causes the gas pedals to stick. An additional 10,000 cars were being recalled in other countries.

Earlier this year, the automaker recalled more than 300,000 model year 2005-2006 Dodge Caravan, Grand Caravan and Chrysler Town & Country vehicles over front crash sensors that could cause air bag malfunctions during a crash. That recall pertained to vehicles in 29 states and the District of Columbia.

Chrysler will notify owners of vehicles affected by the recall. Dealers will inspect and, if needed, fix the vehicles for free. Owners who think their car may be involved can call Chrysler at 1-800-853-1403 or NHTSA at 1-888-327-4236. 

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The Epilepsy Foundation of the St. Louis Region is merging with the Epilepsy Foundation of Kansas and Western Missouri, which is based in Kansas City, Mo.

Both are affiliates of the national Epilepsy Foundation, which approved the merger.

The newly merged entity, named the Epilepsy Foundation of Missouri and Kansas, will have an administrative office in St. Louis and an office in Kansas City, with intention to expand into Kansas within the next two years, according to Darla Templeton.

Templeton, who was president and CEO of the St. Louis chapter, will take those roles in the new merged group.

Because of the economy, donations and funding are down, she said. “We thought if we merged, we could streamline and be more efficient and effective with just one executive director or CEO for both,” Templeton said.

She said the board of the Kansas City-based group had gone through a series of executive directors, and “from their perspective, without a very positive results.”

The Kansas City group has been without an executive director since April 2009.

In April, the Epilepsy Foundation of Kansas and Western Missouri sued its former executive director, Sean Taylor, claiming he diverted about $80,000 of foundation funds for his own use, according to the suit. Seema Chawla, an associate with Bryan Cave in Kansas City representing the foundation, confirmed Friday that the suit is pending.

David Gitt, formerly on the board of the St. Louis chapter, will chair the new, merged board, which will number 16.

The operating budget for the combined chapters is about $700,000, Templeton said.

The St. Louis affiliate is accredited by Commission for Accreditation of Rehabilitation Facilities and holds the seal of the Better Business Bureau, the group said. Both organizations are members of United Way.

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Toyota brought us the Venza last year, now Honda has the Crosstour. At first blush the two seem like rivals in the spirit of Camry and Accord, the popular sedans that form the basis for the new pair. Both further blur lines already crisscrossed by sedans, coupes, sport utilities etc.

But Venza is more of a wagon than a sport utility, kind of the opposite of most crossovers. Crosstour comes across as more of an oddity, a high-riding midsize hatchback rather than a wagon or SUV.

And that iteration of one of the market's best midsize sedans left me a little disappointed. First, the swoopy hatchback design cuts into rear vision, especially with the big spoiler crossing the rear window. And it didn't draw the compliments like the Venza — shades of Pontiak Aztek. Second, although cargo room may be more versatile than the sedan's trunk, the design limits a major gain.

Beyond those complaints, the Crosstour is another shining example of Honda finesse. The powertrain combines a five-speed automatic transmission with a 3.5-liter, 271-horsepower V-6 engine for a smooth, responsive ride. Gas mileage tops out at 27 miles per gallon on the highway with front-drive models. That's a leap over traditional crossovers such as Honda Pilot, but lags Venza, which gets up to 29, but only when outfitted with its 4-cylincer plant.

Crosstour EX starts at $30,450 and includes more than just the basics, including a power moonroof, remote entry, rear wiper, dual climate control, power seats, cruise control, CD changer, MP3 jack, and compass.

Side airbags and curtains, stability and traction control, fog lamps, antilock brakes with assist feature, and tire-pressure monitor make a nice safety package along with perfect fives in government crash tests.

Leather seats and navigation (which includes needed help in the form of a backup camera) are among extras. It costs at least $34,800 to get into an all-wheel Crosstour, but that also includes an upgrade to the EX-L trim payday advance lender.

That long list of features along with Honda's knack for fit and finish provide for an upscale interior. Front buckets are ultra comfy and rear seats are thick and supportive, but do not recline. Legroom is super front and back. As with Venza, there is no third-row seating option.

Despite its size limitations, the cargo bay offers some thoughtful touches. Rear seats easily flip down, not only from flip-switches in the back seat, but also at the touch of a handle in the cargo bay itself. There also are tie downs and three storage bins under the carpeted floor. The floor also can be flipped over with the plastic side up in case you need to haul a bunch of muddy gear.

Both Honda and Toyota have a full range of choices that make sense for family hauling - from the utilitarian compact Fit and Element to SUVs CR-V and Pilot in Honda's case. Both carmakers are skilled at hitting buyer sweetspots amid a growing and evolving field of competitors. Crosstour is likely to appeal to buyers wanting something a little meatier than the Accord sedan, without going for the full-fledged SUV.

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