Markets close with modest gains
NEW YORK, June 5 (UPI) -- U.S. market indexes closed higher Tuesday following upturns in Asia and Europe.
Markets posted gains despite weak economic data on European service businesses.
Researchers at Markit reported the Purchasing Managers Index for services in the 17-member eurozone hit a three-year low in May, coming in at 46.7 with numbers below 50 indicating a contraction.
Investors are also keeping an eye on Europe's financial crisis. German Chancellor Angela Merkel signaled a willingness to discuss integrating debt in Europe with a long-term payback plan.
By close of trading on Wall Street, the Dow Jones industrial average added 26.49 points, or 0.22 percent, to 12,127.95. The Standard & Poor's 500 gained 7.32 points, or 0.57 percent, to 1,285.50. The Nasdaq Composite added 18.10 points, or 0.66 percent, to 2,778.11.
On the New York Stock Exchange, 2,230 stocks advanced and 794 declined on a volume of 3.2 billion shares traded.
The benchmark 10-year treasury note fell 16/32 to yield 1.581 percent.
The euro fell to $1.2452 from Monday's $1.25. Against the yen, the dollar hit 78.76 from 78.35 yen.
In Tokyo, the Nikkei 225 index added 1.04 percent, 86.37 points, to 8,382.
CBO: U.S. debt could be double GDP by 2037
WASHINGTON, June 5 (UPI) -- The Congressional Budget Office said the federal debt could be twice the size of the U.S. gross domestic product by 2037 without monetary policy change.
The CBO said an extension of tax cuts enacted during the administration of former President George W. Bush and current Medicare spending without monetary policy change would put the debt at 200 percent of GDP in 25 years, The Hill newspaper reported Tuesday.
Under those conditions, the debt would exceed the GDP by 9 percent in 14 years, the CBO warned.
Congress can alter the outcome considerably by allowing the Bush era tax rates to expire in January and by holding the line in Medicare spending, the CBO said.
Federal debt would drop from 73 percent of the GDP this year to 61 percent, and would reach 53 percent of GDP, instead of 200 percent, by 2037, the CBO concluded.
"The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course," the CBO report said.
Google buys Meebo and Quickoffice
SANTA MONICA, Calif., June 5 (UPI) -- U.S. search engine firm Google said it had gone on a small shopping spree Monday and Tuesday, buying two Silicon Valley companies.
ABC News said Google purchased instant messaging firm Meebo for what All Things D estimated was about $100 million.
That was Monday. On Tuesday, Google made another purchase, buying Quickoffice, a firm that develops applications for both Android and Apple iOS operating systems.
"With the Meebo team's expertise in social publisher tools, we believe they will be a great fit with the Google+ team. We look forward to closing the transaction and working with the Meebo team to create more ways for users to engage online," a Google spokesman said.
In an online posting, Google Engineering Director Alan Warren said, "Today, consumers, businesses and schools use Google Apps to get stuff done from anywhere, with anyone and on any device. Quickoffice has an established track record of enabling seamless interoperability with popular file formats, and we'll be working on bringing their powerful technology to our Apps product suite."
Google did not release financial details of the purchases. Regardless, "the fact that Google realizes they need to buy instead of build is, in a sense, a refreshing sign of business maturity," said Patrick Moorhead, market analyst at Moor Insights & Strategy.
Firm sues Florida over ties-to-Cuba law
TALLAHASSEE, Fla., June 5 (UPI) -- A major construction firm in Florida is suing the state over a law that forbids working with firms with business ties to Cuba, court papers say.
The Florida subsidiary of Brazilian construction giant Odebrecht is contesting a law signed last month by Gov. Rick Scott in a building known as the Freedom Tower in Miami, The Miami Herald reported Tuesday.
Shortly after signing the bill, Scott said it was likely an unconstitutional law. He has since said the state would defend the law in court if need be.
Although the Florida subsidiary contends it has no ties with Cuba, a separate subsidiary of the parent company is doing work in the Cuban Port of Mariel, the newspaper said.
In papers filed in court, Odebrecht argues that it is unconstitutional for the state of Florida to engage in foreign affairs.
The company's attorney Raoul Cantero, a former Florida Supreme Court justice, pointed out that a federal court has already ruled against a state law requiring companies seeking contracts with the state sign a statement saying they have no business ties to Cuba.
The U.S. Supreme Court has also ruled against the 1996 Massachusetts Burma Law, saying states could not interfere with the federal government in matters of foreign policy.
"We think the [Florida] statute is illegal on its face, regardless of anybody bidding on anything," Cantero said.
State Sen. Rene Garcia, who sponsored the state law, said, "This is not about foreign policy."
"I see it as a states' rights issue. We have a right to decide who we want to do business with," Garcia said.
Pricing to follow trends in communication
NEW YORK, June 5 (UPI) -- U.S. telephone industry experts say pricing for voice calling is shifting to reflect what phones are less and less apt to do, which is to make phone calls.
"The industry's definitely moving towards unlimited [phone calls]," AT&T Mobility Chief Executive Officer Ralph de la Vega said.
"Especially as more people adopt smartphones that have voice capabilities over the Internet, segmented voice plans will become less relevant."
Placing a phone call to speak to someone else now has competition with Internet services, such as Skype. In addition, sending a text message is taking up more and more of a phone's function away from the basic voice-oriented phone call.
The Internet is also whittling away at reasons people make phone calls, The Wall Street Journal reported Tuesday.The Wall Street Journal reported Tuesday.
For example, why bother to place a phone call to ask for questionable directions from someone who might not answer the phone, when the Internet can supply flawless directions 24 hours a day by pressing a few buttons?
Experts say carriers are leaning toward unlimited phone call systems, because allowing customers to pay for limited phone calling is trimming their costs, in part because they are calling less often.
"I am just getting more and more rollover minutes now and there's no way I can use them," said customer E.C. Hurley of Farmville, Va., referring to his $50 per month plan.
Out of the 450 minutes of phone calling per month his plan allows, he often uses about 50, he said.
Data backs up the new culture of communication. The average phone call in 2006 lasted slightly over 3 minutes. Five years later, the average phone call is 1.78 minutes long, said CTIA, a trade group for communication companies.
"It's more important to offer a complete solution to consumers which is really, truly unlimited," T-Mobile USA Chief Executive Officer Philipp Humm said.
"The new world is a completely unlimited, worry-free world."