The economy showed the depth of its twin problems Tuesday — slow growth and rising inflation — as the nation wrestled with a teetering financial system, a slumping dollar and rising prices for food and fuel. The Labor Department reported that soaring costs for gasoline and food pushed inflation at the wholesale level up by a bigger-than-expected 1.8 percent in June, leaving inflation rising over the past year at the fastest pace in more than a quarter-century.
Laptop chips help Intel stock
Intel Corp.’s second- quarter profit jumped 25 percent as blossoming sales of laptop chips helped the company cruise past Wall Street’s estimates Tuesday. Investors viewed the chip maker’s favorable results as a sign that global PC demand is healthy despite a sputtering U.S. economy that has depressed some domestic spending. Intel CEO Paul Otellini said demand for Intel’s chips remains strong “in all segments and all parts of the globe.” Three-quarters of Intel’s business is outside the U.S. Intel shares rose 23 cents, or 1.1 percent, to $20.94 in after-hours trading. They had risen 24 cents, or 1.2 percent, to $20.71 in the regular session before the Santa Clara-based company reported its results.
Sony announces download service
Sony is raising the curtain on a PlayStation 3 movie download service. The company announced at the E3 Business and Media Summit it will launch a downloadable movie service Tuesday featuring films from such studios as Disney, Fox and Warner Bros. The standard and high-definition videos can be downloaded to the console and transferred to a PlayStation Portable. Rentals will cost $2.99 to $5.99. Purchases will cost $9.99 to $14.99. Sony also announced it will sell an 80-gigabyte PS3 model for $399 beginning in September. Among the new games revealed were “God of War III” and “Massive Action Game,” which will allow up to 256 players to battle online.
Bank aid tied to local grants
House Democrats, moving to accomplish a top priority in exchange for quick approval of the Bush administration’s urgent rescue plan for Fannie Mae and Freddie Mac, intend to tie it to $3.9 billion in grants for neighborhoods hit hardest by foreclosures. President Bush, who on Tuesday called for swift enactment of the rescue for the troubled government-sponsored mortgage companies as part of a broad housing package, has threatened to veto the bill if it includes the grant money.
Most banks expected to be OK
In the nearly steady stream of bad news about banks, many consumers are likely wondering if any bank is really safe. Those companies that did not go heavily into the subprime mortgage market are generally in better shape. But financial institutions of all sizes are nonetheless facing problems with souring debt in a weak economy, even if they haven’t been hit hard like IndyMac Bancorp Inc., which was taken over by the government last Friday. Even so, earnings reports and an analyst’s assessment of Wachovia on Tuesday showed that financial companies are still suffering credit losses.
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