Blue Chip Stocks Set Record

Wall Street let out an exuberant cheer after the Federal Reserve passed on raising interest rates this week and it may have set the stage for a blowout summer rally. The inaction suggested that the Fed had joined the camp of those who believe the economy can grow without generating bad inflation. This perfect scenario has been at the root of the greatest bull market in history. On Friday, the Dow rose 87.78 points to close at a new high of 7,345.91, beating its last high of 7,333.55 set on May 15. For the week, it jumped 151.24 points. The Nasdaq rose 17.12 points Friday to close at a new high of 1,389.72, for a gain of 48.99 on the week.

Bulk of Libel Award Thrown Out

A U.S. district court judge in Texas has thrown out the bulk of a record $222.7 million libel award against Dow Jones & Co., the company said. U.S. District Court Judge Ewing Werlein threw out $200 million in punitive damages that had been awarded in a libel suit against the company's Wall Street Journal in connection with a story about a now-defunct Houston securities firm, Dow Jones spokesman Richard Tofel said. Tofel said the judge eliminated $200 million in punitive damages against the company, but kept the remainder, which included compensatory damages against Dow Jones and $20,000 in punitive damages against the reporter.

Boeing to Request Inspections

Boeing plans to ask airlines around the world to inspect their 747 jet aircraft for possible fuel tank problems in the latest effort to find out why TWA Flight 800 crashed last year. A Boeing spokesman said the aircraft manufacturer would issue a service bulletin next month asking for voluntary inspections of the center fuel tanks on all of the more than 1,000 jumbo jets in service. The cause of the crash is still unknown, but after nearly 10 months of investigation, authorities believe the plane exploded when something ignited fuel vapors in the nearly empty center tank between the wings.

Continental Negotiations

Continental Airlines has met initial demands from its pilots' union for a 38 percent wage increase as talks on a new contract heated up, a spokesman for the Houston-based carrier said. Under the airlines' proposal, the union said, pay for a 10-year Continental pilot flying narrow-body aircraft would rise from to $130 an hour in July 2002 to $112 an hour in July 1997. That's well short of the current $163 an hour for counterparts at American Airlines, who negotiated a 9 percent wage increase and stock options in a contract ratified on May 5, the union said.

May Results Disappointing

May Department Stores, which reported disappointing sales for the first quarter of this year, say business has improved in May, and it expects Father's Day sales to be good as well. The retailer, which is parent of Famous-Barr, Hecht's and Lord & Taylor department stores, also said it plans to open 150 children's shoe departments across all of its store divisions by this time next year. During the first quarter, May's same-store sales rose 1.9 percent, less than expected, the company said. The retailer's total sales rose 7.6 percent to $2.59 billion during the quarter.

Farmers Fight For Tax Break

American farmers are fighting to hang on to a tax break for ethanol that experts say is worth billions of dollars a year. Rep. Bill Archer, chairman of the powerful tax-writing House Ways and Means Committee, has zeroed in on the subsidy as a way to raise money to offset tax cuts called for in the balanced budget plan. Archer says Uncle Sam could get upwards of $600 million a year in tax revenue if the ethanol credit is scrapped. But ethanol producers say the move would pull the rug out from under a fledgling industry. Farmers fear it will send corn prices tumbling since ethanol, which is made from corn, accounts for more than 5 percent of their market.

Office Superstore Merger Hearing

The Federal Trade Commission has wrapped up oral arguments against the $4 billion Staples-Office Depot merger. Judge Thomas Hogan has listened to 30 hours of testimony about the deal and by mid-June, he's expected to decide whether to issue a preliminary injunction against the merger. The FTC contends the two office superstore chains will have the power to raise prices on pencils, pens, toner cartridges and other consumable office supplies if they merge. But an economist arguing on behalf of the companies says the combined chain would achieve new efficiencies that would permit it to cut prices and remain competitive.

Acquisition Runs into Opposition

First Bank System's proposed $8.5 billion acquisition of U.S. Bancorp has run into opposition from groups unhappy with the companies' community banking records, according to a Federal Reserve spokeswoman. A spokeswoman for the Minneapolis Fed, which regulates Minneapolis-based First Bank, says several community groups have filed letters of complaint about the merger. At least one of the groups, the Black United Front in Portland, accused the banks of doing a poor job of serving African-American consumers, according to the Oregonian newspaper.

Pact on Bribery Reached

The United States and its fellow industrial nations have agreed on a plan to criminalize business bribery of foreign public officials, U.S. officials say U.S. companies have been prohibited by law for two decades from paying bribes to foreign officials to win business in developing countries and elsewhere. But their competitors in other industrial nations have not been subject to such restrictions. The payment of kickbacks to government officials is rampant throughout much of the developing world. The United States believes U.S. companies lost out in some 100 business deals worth about $45 billion over the last two years because of bribes by their competitors.

Clinton Nominates 2 to FCC

President Clinton has nominated Democrat William Kennard and Republican Harold Furchtgott-Roth to fill two vacancies at the five member Federal Communications Commission, according to government officials. The White House has yet to officially announce the nominations. But the Clinton administration has forwarded the names to the Senate, which must confirm the nominees, the government officials said. Kennard currently is the FCC's general counsel, a post he has held since December 1993. Furchtgott-Roth currently is chief economist for the House Commerce Committee. By law, the FCC cannot have more than three members of one political party.

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