Stocks slide Tuesday
NEW YORK, Oct. 9 (UPI) -- U.S. markets slumped early Tuesday after the International Monetary Fund warned a second global recession was a distinct possibility.
In its quarterly "World Economic Outlook" report, the IMF forecast the global economy's 2012 gross domestic product would grow 3.3 percent, down 0.2 percentage points from a prediction made in July.
For 2013, the IMF forecast growth of 3.6 percent, down from a previous prediction of 3.9 percent.
By close of trading the Dow Jones industrial average dropped 110.12 points, 0.81 percent, to 13,473.53. The Nasdaq composite index lost 47.33 points, or 1.52 percent, to 3,065.02. The Standard and Poor's 500 index gave up 14.40 points, or 0.99 percent, to 1,441.48.
On the New York Stock Exchange, 703 stocks advanced and 2,358 declined on a volume of 3.1 billion shares traded.
The benchmark 10-year treasury note rose 9/32 to yield 1.72 percent.
The euro fell to $1.2874 from Monday's $1.2969. Against the yen, the dollar fell to 78.24 yen from 78.34 yen.
In Japan, the Nikkei 225 index shed 1.06 percent, 93.71 points, to 8,769.59.
In London, the FTSE 100 index lost 0.54 percent, 41.49 points, to 5,810.25.
Walmart to start bank-like service
BENTONVILLE, Ark., Oct. 9 (UPI) -- U.S. retail giant Walmart said it would launch a low-cost financial service called Bluebird in partnership with American Express.
Forbes Magazine reported Tuesday that Walmart's program includes fees for using automatic teller machines outside of their system and for setting up accounts without direct deposit. Otherwise, the service is being categorized as a traveler's check type service, which avoids having it compete directly with retail banks.
Well-known bank analyst Richard Bove, however, is questioning the legitimacy of the service, given the possibility that Walmart is actually running a bank, but dodging banking regulations.
Part of the Dodd-Frank financial overhaul legislation -- the so-called Durbin Amendment -- set limits on fees banks can charge retailer firms for credit or debit card use.
But Walmart is not calling its service either of those, circumventing those rules, Bove said.
"Presumably, by using this technique, Walmart avoids Durbin and it can receive whatever "commission" American Express chooses to pay on these cards," Bove said.
"Walmart will be collecting deposits through direct deposit accounts. It receives fees as a consequence of its lending activities through its credit cards. Plus, it hedges its business operations in the financial markets," Bove said.
"Companies engaged in collecting deposits and lending money are by definition banks. Banks are not allowed to be involved in banking and commercial activities. It appears that Walmart is involved in both."
Bove also said there was no information about Walmart's bank-mimicking activities in the company's annual statement.
Social Security COLA less than 2 percent
GREAT BARRINGTON, Mass., Oct. 9 (UPI) -- A think-tank in Massachusetts said Social Security benefits will rise between 1.5 percent and 1.7 percent in 2013.
The Labor Department is scheduled to release figures on September's inflation rate in mid-October. That will be the last of 12 monthly inflation estimates used to calculate the cost of living adjustment for Social Security recipients, CNNMoney reported Tuesday.
The increase will be about half of the 3.6 percent increase of 2012, said the American Institute for Economic Research.
The cost of living calculation, however, is based on purchases that are not particularly typical of the elderly, who are the recipients of Social Security.
The price of motor-grade gasoline rose 2 percent, while medical care costs have jumped 4.1 percent. The costs of every day household goods also rose 2 percent over the past 12 months, the think-tank estimated.
With purchases made by seniors leaning more towards items that have faster price inflation, the increase in benefits is leaving seniors slightly behind, AIER said.
"They're falling behind by about a half a percentage point a year or so. It's not a huge amount, but over time that adds up," said AIER director of research and education Steven Cunningham.
Digital firm buys Hollywood's Variety
LOS ANGELES, Oct. 9 (UPI) -- Internet firm Penske Media Corp. has purchased the iconic Hollywood trade journal Variety for $25 million, the companies said.
The Los Angeles Times reported Tuesday Variety had been on the block for seven months and Penske, owners of Deadline.com, an online competitor of Variety, had only emerged as the leading bidder in the past two weeks.
Penske found financial backing from Third Point, a hedge fund controlled by Yahoo! Board member Daniel Loeb.
Moreover, the purchase is illustrative of the shifting news and publication landscape. Variety, owned by Reed Elsevier, is 107 years old. Its digital rival Deadline.com has been in operation for just six years.
Chief Executive Officer Jay Penske said it is not his intention to gut Variety, which has a staff of 120.
"Before we make any substantial changes, we need to spend more time with the current team. We need more data," he said in an email.
"We see an incredible opportunity for future collaboration while remaining editorially independent," he said.
Variety's fortunes have been on the wane. Revenue stood at $92 million and profits at about $33 million in 2006. For 2012, revenue is expected to drop to $45 million and profits have dropped to $6 million.
Nevertheless, Penske said he does not want to break up the successful team running Deadline.com. He also said he wanted to make Variety "absolutely fundamental and indispensable."
"We are not buying Variety to gut the newsroom. We are buying the business to build it. Are there going to be changes? Yes. Do we want to reduce our dependency on print revenues? Yes. How quickly that can happen, we'll know more in the coming months," he said.
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