Executive Business Briefing

Here are some of Wednesday's top business stories:

Tech issues driving shares higher

NEW YORK, Oct. 30 (UPI) -- Shares were gaining strength in early afternoon trade Wednesday, buoyed in part by banking giant Citigroup Inc.'s decision to spin off its equities research department from its investment banking operations, while techs were climbing on bargain hunting.

The blue-chip Dow Jones industrial average was up 58.40 points, or 0.70 percent, at 8,427.34, having inched up 0.9 points Tuesday. The tech-heavy Nasdaq composite index was up 25.90 points, or 1.99 percent, at 1,326.44, after shedding 15.21 points in the previous session.

The broader New York Stock Exchange composite index was up 4.05 points at 475.54, while the Standard & Poor's 500 index was up 9.01 points at 891.16. The American Stock Exchange composite index was 7.75 points higher at 813.40, while the broad Wilshire 5000 was 86.70 points stronger at 8,394.37.

Volume on the NYSE was estimated at 616.56 million shares, while Nasdaq volume was estimated at 755.65 million shares.

Blue chips and banking shares were lifted in early trade by the announcement that Citigroup Inc. would separate its equities research department from the company's investing banking arm, thereby giving more independence to stock analysts.

Citigroup will be establishing a new unit under the Smith Barney name, to be headed by Sallie Krawcheck, and represents a move forward for the company, which has come under close scrutiny from financial regulators in recent months for its recommendations to buy telecommunication issues at the height of the tech stock boom.

The new unit is expected to have about 12,500 brokers.

Investors were little affected by the latest regional Federal Reserve survey that economic activity remains sluggish. The Federal Reserve Bank of Chicago reported Wednesday that its key gauge of measuring economic growth in the region for October remained low for the second consecutive month, even though it picked up slightly from the previous month. The national activity index came in at minus 0.35.

Bargain hunting has been active across the board as hopes for a rate cut next week continue to be high. The Federal Reserve Board's policymakers next meet Nov. 6, and many analysts expect the Federal Open Market Committee to cut the federal funds target rate by another 50 basis points to jump-start the lethargic economy. The key fed funds rate has stayed steady at 1.75 percent since last December.

Meanwhile, U.S. Treasury prices jumped as investors fled out of stocks. The 10-year bond rose 1 7/32 to 103 17/32. Its yield, which moves in the opposite direction of its price, was down to 3.93 percent from 4.09 percent Monday.

In Europe, stock prices were higher in all three major bourses. The London International Stock Exchange's blue-chip FTSE-100 index was up 66.80 points, or 1.70 percent, at 4,002.70, while the German DAX index was 89.20 points higher, up 2.95 percent, at 3,111.21, and the French CAC-40 index was 119.11 points, or 4.02 percent, stronger at 3,084.22.

West Coast longshoremen deny slowdown

LOS ANGELES, Oct. 30 (UPI) -- Leaders of the West Coast longshoremen's union officially informed the Justice Department Tuesday that there was no work slowdown under way on the docks that have been hopelessly cluttered with freight since a 10-day lockout ended earlier this month.

The International Longshore and Warehouse Union said in a letter to the agency's civil division that it was in legal compliance with a court order banning work slowdowns and other job actions while the union and the Pacific Maritime Association continue to attempt to reach a new contract agreement.

"We are working around the clock to ease the backlog in our ports, but instead of working in good faith to improve this situation, the PMA is trying to shift the blame," ILWU President James Spinosa said in a statement released late Tuesday. "Our workers are working hard on the docks, but the PMA is unwilling or unable to resolve the backlog."

In a sharply worded letter to Deputy Attorney General Shannen Coffin, the union's attorneys contended that operations on the docks were complicated by the overall crush of cargo as well as shortages of truck chassis, an increase in the number of trucks at the harbors and the PMA's alleged refusal to hire enough longshoremen to increase the pace of activity.

"Over the past several months, the work environment at West Coast ports has become increasingly hazardous, with five ILWU members killed on the job this year at California ports alone," the letter explained. "The congestion and increased traffic caused by the lockout has increased workers' exposure to hazardous conditions."

When the lockout ended Oct. 8, there were more than 200 loaded freighters in a flotilla anchored off the usually bustling West Coast ports such as Los Angeles-Long Beach, Seattle, Oakland and Portland. In addition, thousands of cargo containers and other freight littered the docks waiting to be either packed aboard outbound ships or on to trains and trucks for movement inland.

The lockout virtually paralyzed trans-Pacific trade and cost the U.S. national economy an estimated $1 billion to $2 billion a day. It was estimated that it would take two months to clear out the behemoth backlog.

The PMA, which represents the shipping companies that use the docks, estimated that productivity in the days after the lockout was down around 25 percent, and alleged in an Oct. 18 letter to the Justice Department that the dockworkers continued to drag their feet.

If the Justice Department finds a slowdown is indeed in effect, it could ask the judge who issued the injunction to levy Taft-Hartley Act sanctions against the ILWU, including charges against union officials. President Bush invoked the 1947 act -- for the first time since the Carter administration -- to end the lockout and force the two sides to return to the bargaining table for mediated talks during an 80-day cooling off period.

SBC's Calif. long-distance bid advances

WASHINGTON, Oct. 30 (UPI) -- The U.S. Department of Justice on Tuesday announced that it had signed off on a bid by SBC Communications Inc. to compete in California's long-distance market.

The Justice Department's decision clears the way for the Federal Communications Commission to rule on SBC's long-distance application in California.

SBC said it will file revised comments next week with the FCC, whose commissioners are expected to reach a final decision by Dec. 19.

The government determined that SBC has "succeeded in opening its local markets in California to competition."

Based in San Antonio, SBC operates in California through its subsidiary SBC Pacific Bell.

William Daley, president of SBC, said the company has 3.7 million lines in California being served by competitors.

"California's local telecommunications market is clearly one of the most competitive in the nation," Daley said in a statement.

"We now look forward to FCC approval, which will enable us to extend the benefits of true competition to the long distance market."

Daley said "this recommendation by the (Justice Department) sends the clear message that California's local markets are fully open and highly competitive."

The Telecommunications Act of 1996 requires dominant local telephone carriers like SBC to prove their local telephone networks in their home territory are sufficiently open to competition before they can enter long-distance markets.

California is the nation's second-largest phone market.

"The available evidence suggests that generally, SBC has succeeded in opening its local telecommunications markets in California," said Charles A. James, assistant attorney general for antitrust at the Justice Department.

"Competitors have made progress in penetrating the business markets, and the department believes there are no longer any material non-price obstacles to residential competition."

The news did little to boost SBC stock. Shares of the company lost 57 cents, or 2.27 percent, to close Tuesday at $25.25 on moderate volume of 7.3 million shares traded on the New York Stock Exchange.

SBC provides data voice and Internet services to customers in 13 states. Its subsidiaries include SBC Southwestern Bell, SBC Ameritech, SBC Pacific Bell, SBC SNET and Sterling Commerce.