Finance and Economic

DETROIT — Retirement health care for as many as three-quarters of a million Americans will be placed at high risk if conditions proposed as part of auto rescue loans are enforced by the incoming Congress and Obama administration, labor experts say.

At issue is a condition of the loans that calls for General Motors Corp. and Chrysler to use company stock or the equivalent to pay half, or $10.5 billion, of the cash owed to a union retiree health care trust.

"It’s as if we, as a nation, learned nothing from Enron, essentially risking the health care of retired and active workers in such a cavalier fashion," said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues. "The great Enron lesson was: Don’t put all your eggs in one basket. … Putting half your eggs in the trust-fund basket is still a high level of risk."

Enron workers lost the lion’s share of their retirement savings when the company’s once fast-gaining stock became worthless. Workers received their matching contributions in Enron stock — then were prohibited from selling it until they were 50 — and many invested their 401(k) contributions in the shares.

Since Enron’s collapse, many corporations have limited the amount of company stock employees can hold in 401(k) accounts. Legislators and shareholder advocates argued for tougher regulations to protect individual investors.

That is why, Shaiken said, it is shocking that President George W. Bush "apparently bowed to political pressures from the Republican right in the Senate" and called for the retiree health care of so many Americans to be placed in jeopardy.

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Shaiken says he believes the new Democratic Congress and President-elect Barack Obama will revisit conditions placed on the UAW, and particularly on the funding of the voluntary employee beneficiary association when they take office next year.

But others say it may not be possible for the automakers to achieve the degree of cost-cutting required to meet conditions of the federal loans by the end of March without abiding by the terms set by Bush’s administration.

The White House agreed to provide as much as $17 payday cash loan.4 billion in loans to carry GM and Chrysler through the first three months of 2009. But the automakers must demonstrate viability by March 31 or they will be forced to immediately pay back the loans or file for bankruptcy. As part of the deal, the federal government set targets for restructuring including union wage concessions, the change in VEBA funding and cutting bond debt by about two-thirds.

While the automakers can deviate from these targets, "absent a near-term economic recovery," Citigroup auto analyst Itay Michaeli wrote in a note to investors this week, "we believe it would be difficult to deviate significantly from these targets and still demonstrate viability."

Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass., said that while the changes to VEBA funding are not optimal for the approximately 750,000 people for whom the new fund was supposed to provide health coverage beginning in 2010, it still may ensure more benefits than they otherwise would have received in retirement.

"I think this makes the best of a bad situation," Chaison said. "If they pay a portion of the VEBA now, they might have enough to pay for the health care benefits of the current retirees and they might get more later."

But, Chaison said, his impression even from the time the UAW and automakers agreed to the VEBA in late 2007 was that it was questionable whether the health care trust would last long enough to keep the commitments the UAW and automakers made.

Although the UAW described the VEBA as a solid plan to provide benefits to retirees and workers who were active as of the contract agreements last year, it was in part a defensive maneuver intended to protect workers from corporate bankruptcies that typically wipe out retiree benefits.

And it might not even have come to that, the UAW said when it pitched the VEBA to members. The automakers could have sought court approval to simply terminate retiree medical benefits.

At the time the UAW agreed to it, workers and analysts believed a VEBA would protect them from the risk of bankruptcy. While an automaker’s default seemed possible, just a year ago, few thought it would happen before the VEBA was funded and took effect in 2010.

But with the risk of illiquidity now an imminent possibility, the UAW on Dec. 3 agreed to postpone until 2012 the VEBA payments that were due from GM and Chrysler in 2010.

Now the government is asking the trust to accept half cash and half stock.

A UAW spokesman declined to comment.

GM retiree Ralph Herndon said he isn’t worried about getting half of the VEBA funding from GM stock — he has faith the company will survive.

"GM stock doesn’t bother me," he said. "I’m not going to worry about the VEBA, because all the worrying we do is going to change nothing. I’m cautiously optimistic it will work out. … But if you expect me to save for my own retirement, someone needs to manage the managers on Wall Street better."

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Gasoline prices increased for the fourth day in a row Friday, according to a daily survey of gas station credit card swipes.

The price of regular unleaded rose 0.3 cents to a national average of $1.6730 a gallon from $1.67 on Thursday, according to motorist group AAA.

Average gas prices ticked higher on Saturday for the first time in nearly three months, according to AAA. They briefly retreated for one day before resuming their upward climb.

The price of gasoline has fallen in tandem with the price of crude oil, which has shed more than $100 a barrel since July. Oil demand has declined rapidly as the world economy has slowed.

According to the Transportation Department, Americans drove 100 billion fewer miles between November 2007 and October 2008, compared with a year earlier.

Local prices: Gas is currently selling below $2 a gallon in nearly all states, with the exception of Alaska, where gas prices averaged $2.648 a gallon, and Hawaii, where gas was $2.402 on average.

Gas was cheapest on average in Wyoming, at $1.477 a gallon, according to AAA. Missouri, the first state to see average prices drop below $1.50 a gallon, saw prices bounce back above that mark on Friday to $1.513.

Out of major U.S. cities, Anchorage, Alaska, has the highest average gas prices, at $2.404 a gallon, according to GasBuddy individual health insurance.com, a service that lets motorists post local fuel prices online. Salt Lake City, Utah, had the lowest average, at $1.383.

Diesel: The price of diesel fuel, which is used in most trucks and commercial vehicles, fell Friday by 1 cent to a national average of $2.519 a gallon, according to AAA.

Diesel prices have fallen more than $2 a gallon since hitting a record high of $4.845 on July 17.

Ethanol: The price of E85, an 85% ethanol blend made primarily from corn, fell by nearly a penny to an average of $1.499 a gallon in Friday’s survey, according to AAA.

E85 can be used in place of regular gas in specially configured "flex-fuel" vehicles, but it is not readily available in some states.

The AAA figures are state-wide averages based on credit card swipes at up to 100,000 service stations across the nation. GasBuddy prices are averages of local regular unleaded gasoline prices that about 700,000 volunteer gas prices spotters have posted online. Individual drivers may see lower fuel prices in different areas of each state.

CNNMoney.com staff writer Kenneth Musante contributed to this report.  

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President George W. Bush bailed out automakers on Friday with $17.4 billion in emergency loans as he sought to stave off a collapse that would have cost hundreds of thousands of jobs.

Bush, seeking to bolster his legacy and bucking some fellow Republicans who would prefer the car industry to deal with its problems without government aid, said it would be irresponsible in a time of economic crisis to let carmakers die.

The government will offer up to $17.4 billion in loans to the U.S. automakers, reeling from a slump in consumer demand, and expects General Motors and Chrysler LLC to access the money immediately. The White House said the loan agreements had been signed.

Ford Motor Co, the other firm in Detroit’s storied Big Three, said its liquidity was adequate for now and it did not need a loan at this point.

“If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers,” Bush said, warning that to do nothing would deepen and prolong the U.S. recession.

U.S. stocks rose on the news of the lifeline to the sector, with GM shares jumping 10.9 percent.

The White House moved on its own after Republicans in the Democratic-controlled Congress blocked a deal last week. That plan followed weeks of negotiations that included desperate pleas on Capitol Hill from the auto chiefs.

Some $13.4 billion of the total package will be made available in December and January from a $700 billion Wall Street bailout fund originally designed to rescue struggling financial institutions savings account payday loans.

Bush attached a string of conditions to the three-year loans and set a deadline of March 31 for the companies to prove they can restructure enough to ensure their survival or have the loans called back.

But the White House opted against a “car czar” proposal that was a cornerstone of the failed bailout efforts in Congress, and handed oversight responsibility to Treasury Secretary Henry Paulson instead.

“We don’t think that’s something that we should impose … just for 31 days when the next administration may or may not have a different view about how they want to handle it,” deputy White House chief of staff Joel Kaplan said.

Democratic President-elect Barack Obama, who takes over from Bush on January 20 and will inherit the handling of the deal, welcomed the loan move as a necessary step. But he said he wanted to make sure workers did not bear the brunt of the restructuring.

“My top priority in this administration is to create 2.5 million new jobs and I want some of those jobs to be in the auto industry,” Obama said at a news conference.

Obama has been calling for short-term loans to the sector based on steps toward long-term viability.

LABOR TERMS 

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Chrysler, which is halting factory operations for at least a month as sales and cash dwindle, will not abandon its involvement in the NASCAR racing circuit but will reduce spending by about one-third, a top executive said on Thursday.

A day after the cash-strapped automaker said it will idle North American plants starting Friday, Mike Accavitti, director of Chrysler’s Dodge brand and head of motorsports, said the automaker will cut spending next year by more than 30 percent.

“We’re not going to pull out. We are going to throttle back,” he told Reuters. “NASCAR is not exempt from anything else that we do to market and promote vehicles.

“We have to reduce our spend. We have to get our expenses in line with our revenues,” he added in a telephone interview. “The market right now for automobiles is at a low point that hasn’t been seen in decades. As we resize the company and resize our expenses, our NASCAR spend is not exempt.”

While cutting spending, Chrysler will honor its contracts with three race teams it sponsors — Gillett Evernham, Penske Racing and Petty Enterprises — as well the track in Talladega, Alabama, Accavitti said.

Chrysler, along with General Motors Corp, is seeking a U.S. government bailout it says it needs to survive in the near term. Democratic lawmakers and industry sources have said any financial assistance would likely cover GM and privately held Chrysler, and total up to $14 billion.

GM has said it is cutting its marketing and promotions budget, which includes NASCAR, by about 20 percent. It has reduced advertising, walked away from expiring sponsorship deals with such teams as the New York Yankees and even ended its endorsement deal with popular pro golfer Tiger Woods faxless pay day loans.

Ford Motor Co said it plans to cut NASCAR spending by about 20 percent, while Japan’s Toyota Motor Corp has said its spending will be lower but has not said by how much.

“TURNING POINT”

“The show will go on, but it might be a reduced-fans-in-the-stand type of show,” said Michael Pitts, associate professor of strategic management at Virginia Commonwealth University.

“This is a real turning point,” he added. “Maybe we find out now the fans really don’t care about the brand of car.”

The automakers have been big backers of the sport in the belief it boosts their brand images as well as sales.

At NASCAR’s peak, GM spent as much as $130 million on the sport, Ford less than $100 million and Chrysler less than that, estimated Peter DeLorenzo, publisher of website www.autoextremist.com. Chrysler is probably spending around $50 million now and is heading toward $30 million, he added.

“Once corporate America starts walking away, what are they going to do?” DeLorenzo said of NASCAR officials.

One industry observer has said the sport should take a break because of the automakers’ struggles. In a column on Slate, self-described fan Robert Weintraub suggested “euthanizing” NASCAR. www.slate.com/id/2206711/ 

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U.S. stocks fell Monday, wiping out last week’s gains, after manufacturing showed a worsening economy that may hurt earnings at companies, including JPMorgan Chase & Co. and Apple Inc.

JPMorgan tumbled 7.5 percent on Merrill Lynch & Co.’s prediction that the biggest U.S. bank by assets may post a quarterly loss, while Apple slid 3.6 percent after the maker of iPods was downgraded to neutral at Goldman Sachs Group Inc.

Ingersoll-Rand Co. and Textron Inc. lost more than 3.1 percent as industrial production decreased for the third time in four months and the New York Federal Reserve’s regional economic index contracted the most on record.

"There’s a lot of uncertainty right now as we start the week," said John Wilson, co-director of equity strategy at Memphis, Tenn.-based Morgan Keegan, which manages $120 billion. "Right now, the concern is the depth and duration of the recession that we’re in."

The Standard & Poor’s 500 Index slipped 1.3 percent to 868.57 as financial and technology shares were the biggest drags on the gauge. The Dow Jones Industrial Average declined 65.15 points, or 0.8 percent, to 8,564.53. The Russell 2000 Index of small U.S. companies decreased 3.4 percent.

The first simultaneous recessions in the U.S., Europe and Japan since World War II have dragged the S&P 500 down almost 45 percent since its October 2007 record.

Apple slid $3.52 to $94.75 after being cut from buy at Goldman Sachs on concern that consumer spending will weaken further. David Bailey reduced his 12-month share-price estimate to $115 from $125 500 fast cash payday loan.

JPMorgan fell $2.31 to $28.63. The stock was cut to underperform from neutral at Merrill Lynch, which said it is increasingly clear that credit costs in the U.S. will get much worse. Merrill also slashed JPMorgan’s share-price target by 39 percent to $27. Merrill’s Guy Moszkowski is the only analyst tracked by Bloomberg to rate JPMorgan the equivalent of sell.

Financial companies in the S&P 500 lost 4 percent as a group, while computer-related shares retreated 1.7 percent.

Morgan Stanley and Goldman Sachs, which report earnings this week, both retreated. The firms, which have each lost more than 69 percent this year, probably will report fourth-quarter losses on shrinking asset values and a decline in fees for businesses such as merger advice, trading and money management, according to the average estimate of analysts surveyed by Bloomberg.

Morgan Stanley declined 1.5 percent to $13.64 after Deutsche Bank AG analyst Michael Mayo said earnings per share will drop 59 percent in 2009 as revenue declines to the same level as 2005.

Goldman Sachs fell 1.9 percent to $66.46. Bank of America Corp. slid 5.5 percent to $14.11, and Wachovia Corp. lost 3.4 percent to $5.11.

Telephone companies in the S&P 500 slid 3.1 percent as a group after AT&T Inc., the biggest U.S. phone company, was downgraded to neutral from buy at Goldman Sachs, which noted that the economic slowdown led to a drop in its employee pension fund. AT&T shares lost 3.7 percent to $27.13.

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The global downturn is forcing South Korea, Thailand and Indonesia to put on ice long-planned privatizations of banks which are either now needed as policy tools or look unattractively short of capital.

As crumbling financial markets hammer asset values of banks across Asia and with no sign of any quick recovery, governments are unlikely to dare loosen control over banks already in their charge and may well tighten their grip.

“In the current situation, governments have to take a leading role in stabilizing financial markets and that could be done through state-run banks,” said Park Jeong-hyun, a Hanwha Securities analyst in Seoul.

“Bank privatization should come once financial markets stabilize and we gain confidence in them.”

The delay also means retreating from attempts to reform and consolidate the region’s battered banking sector, which Asian governments spent hundreds of billions of dollars bailing out in the wake of the 1997-98 Asian financial crisis.

It also removes potential extra revenue just as governments want to boost fiscal spending to cushion the impact of a looming global recession.

Governments around the world have so far agreed to inject more than $4 trillion into banks, nationalizing some and guaranteeing deposits for many.

“In the short term, we should expect to see more government intervention in banks in order to support them through the credit crisis, not less,” said David Marshall, Managing Director of Fitch Ratings.

“In some other countries, banks are being wholly or partly nationalized as part of government support mechanisms cash advances pay day loan. I would not expect to see this happen on a significant scale in Asia but banks may well need liquidity support from central banks.”

DELAYS

The Bank of Thailand’s rescue arm, Financial Institutions Development Fund (FIDF), said last month market conditions meant it was not ready to sell stakes in Krung Thai Bank KTB.BK, Thailand’s No. 2 bank, or Siam City Bank SCIB.BK.

When South Korea’s chief financial regulator, Jun Kwang-woo, said the government would be flexible about the timing of privatizing Korea Development Bank (KDB), it was taken as a signal of a delay in what has been central to ambitious financial reforms President Lee Myung-bak wanted to wrap up by 2012.

South Korea has also put off cutting its 73 percent stake in Woori Finance Holdings (053000.KS: Quote, Profile, Research, Stock Buzz), the country’s No. 2 financial services group, and the Industrial Bank of Korea (IBK) (024110.KS: Quote, Profile, Research, Stock Buzz), citing market conditions.

Full privatization of the three banks is valued at more than 37 trillion won ($29 billion), according to a KDB estimate and market prices.

Instead, the government is now set to inject 1 trillion won in KDB and 500 billion won into IBK to give them room to expand lending to cash-strapped small companies. 

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Has your latest brokerage statement got you down? Maybe it’s time to try something completely different: a $96 billion market built entirely on the certifiable absence of a colorless, odorless gas.

That would be the curious and high-growth business of carbon finance. Its primary purpose is to curb global warming by stimulating the trade of a new commodity known as a carbon-emissions reduction credit. Scoff if you like, but know this: During 2008 (through Oct. 15), the value of an index of carbon credits - which you can now purchase on the New York Stock Exchange - grew 5.4%. Can you say that about anything in your portfolio?

What’s more, almost everyone expects carbon trading to really take off once the U.S. government regulates greenhouse gases, as both presidential candidates promise to do. Of course, if Washington doesn’t act, the market could vaporize. "These are political markets, and you can’t take the politics out," says V

The Federal Reserve and other countries’ central banks announced new steps Monday that makes billions of dollars available to squeezed banks here and abroad to battle a worsening credit crisis that threatens to unhinge the U.S. economy.

The Fed said the action is intended to "expand significantly" the cash available to financial institutions in an effort to relieve to the worst credit crisis since the Great Depression. In taking the action, the Fed cited "continued strains" in the demand for short-term funding.

Central banks will continue to work closely and are prepared to take "appropriate steps as needed" to ease the crisis and get banks lending again, the Fed said.

Under one new step, the Fed will boost the amount of 84-day cash loans available to U.S. banks. The Fed is increasing the amount to $75 billion, up from the current $25 billion starting on Oct. 6. Banks bid on a slice of the loans at an auction.

That move will triple the supply of 84-day loans to $225 billion, from $75 billion, the Fed said.

Meanwhile, the Fed will continue to make $75 billion worth of shorter, 28-day loans available to banks.

All told, the total amount of cash loans - 84-day and 28-day - available to banks will double to $300 billion from $150 billion, the Fed said.

Moreover, the Fed will make a total of $620 billion available to other central banks, expanding ongoing currency "swap" arrangements with them where dollars are traded for their currencies cash advance loans. That’s up from $290 billion previously in such arrangements.

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Swiss National Bank and the central banks of Denmark, Norway, Australia and Sweden are involved in those swap arrangements.

The move comes as the U.S. financial meltdown’s tendrils have ensnared banks in Britain, the Benelux and Germany. 

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The International Monetary Fund's No. 2 official urged policy makers in the U.S. and elsewhere to consider sweeping, “more proactive'' solutions to a financial market crisis that has reached “historic proportions.''

“The essentially reactive and inevitably case-specific nature of many of these measures raises the questions whether broader and more proactive approaches have become warranted,'' said IMF First Deputy Managing Director John Lipsky in a speech in Washington.

Lipsky, the former chief economist at JPMorgan Chase & Co., said the credit crunch and financial turmoil in markets has “expanded suddenly to historic proportions'' and there is now “an almost universal consensus that the global economy is set to weaken.'' Still, a worldwide recession may be avoided.

“This storm can be weathered without a damaging global recession, but attaining such an outcome will require clear and coherent policy responses,'' Lipsky said.

In the U.S., lawmakers are weighing responses to a crisis that prompted Treasury Secretary Henry Paulson to seize Fannie Mae and Freddie Mac and caused the bankruptcy of Lehman Brothers Holdings Inc. in the past two weeks. Earlier this week, the Federal Reserve announced an $85 billion takeover of American International Group Inc.

`More May be Needed'

“Notwithstanding the recent use of innovative and unconventional measures, more may be needed,'' Lipsky said http://payday-faxless.com. “The implication is that a more systematic approach may be needed to deal with such basic issues as the disposition of distressed assets, the degree of protection offered to depositors, and the scale and scope of liquidity support that is offered to institutions and markets.''

Lipsky said “it would not be surprising if some additional'' banks disappear. The challenge for policy makers is to “strike the right balance'' between bailouts and letting markets resolve the instability, he said.

The IMF is forecasting global growth will average 4 percent in 2008 and “somewhat under 4 percent'' in 2009, he said. Lipsky warned that the financial services sector was “facing the prospect of a much-reduced revenue stream.'' Pessimism in the financial sector, he added, should be partly offset by promising indications of recovery in the U.S. housing market starting next year.

“It is plausible to anticipate that the U.S. housing market will find a bottom in 2009,'' Lipsky said. “Already the inventory overhang is diminishing, while affordability measures are returning to levels that appear much more consistent with past experience.''

He said the U.S. dollar is “still somewhat on the strong side'' relative to economic fundamentals.

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Stocks ended higher Wednesday as investors scooped up shares battered in the previous session’s selloff and sorted through Lehman Brothers’ steep quarterly loss and restructuring plans.

Strong earnings forecasts from FedEx and Texas Instruments, a firmer dollar, and lower oil and gold prices lent additional support. But continued worries about the financial sector limited gains for the blue chips.

The Dow Jones industrial average (INDU) gained 0.3%. The Nasdaq composite (COMP) rose 0.9% and the Standard & Poor’s 500 (SPX) index advanced 0.6%.

Stocks slumped Tuesday, with the Dow sinking 280 points, as speculation about Lehman’s ability to raise capital and AIG’s mortgage-related losses sparked worries about another Bear Stearns - the bank that the government had to rescue in March.

Lehman sought to manage those fears Wednesday, announcing its third-quarter results early and addressing the liquidity issues.

The news seemed to give a boost to a variety of stocks, with investors finding some reassurance in the announcement. However, the stock market was also being lifted by technical factors, with investors scooping up recently beaten-down shares, said Robert Loest, portfolio manager at Integrity Funds.

The news coming out of Lehman was "better than nothing, but not enough," Loest said.

"You have institutions like Lehman announcing a writedown or a restructuring and people think they’re getting a handle on the balance sheet, but they’re not," he said. "These solutions are near-term pieces of hope that aren’t going to solve long-term problems."

Lehman Brothers: Lehman reported a nearly $4 billion fiscal third-quarter loss, its biggest quarterly loss since it went public in 1994. The company also said it will spin off part of its commercial real estate assets and slash its dividend. Additionally, Lehman plans to sell a 55% stake in its investment management division, which includes profitable money manager Neuberger Berman.

Wall Street had been betting on Lehman selling all or part of the investment division for weeks. However, investors became nervous Tuesday when reports said Lehman’s talks with the state-run Korea Development Bank had dried up, with no partnership announced. That sent Lehman shares down 45%.

Lehman calmed some of those fears Wednesday when it said it was in advanced talks with a number of potential partners.

"I think there’s relief that they are at least addressing the issues and that there are potential buyers out there," said Joe Arnold, wealth manager at Dawson Wealth Management.

Lehman (LEH, Fortune 500) shares were choppy on the news, ending lower after rising nearly 10% in the morning and almost 30% in pre-market trading.

But other firms that made bad mortgage bets and are potentially in need of capital saw their shares pummeled. They included Washington Mutual (WM, Fortune 500) and Wachovia (WB, Fortune 500). (Full story)

In addition, Arnold said stock investors were continuing to respond to the government bailout of troubled mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), announced Sunday.

"You look at the buyout of Fannie and Freddie and that has actually sent mortgage rates lower already, which is positive," he said payday loans online.

(However, the lower rates don’t necessarily make getting a loan any easier.)

On the downside, regional banks and insurers continued to struggle in the wake of the government takeover of the two mortgage giants.

Company news. FedEx (FDX, Fortune 500) offered some encouraging news late Tuesday, saying it expects higher fiscal first-quarter earnings of $1.23 per share versus current expectations for a profit of 95 cents, largely because of lower commodity costs. FexEx is often seen as a proxy for the economy. Shares gained 3.7% Wednesday.

Texas Instruments (TXN, Fortune 500) shares inched higher after the chipmaker narrowed its earnings and sales forecast to a range that meets or beats analysts’ forecasts. The announcement was part of its scheduled mid-quarter update late Tuesday.

Research in Motion (RIMM) shares jumped after it introduced a flip phone version of its popular Blackberry Pearl phone.

The Pentagon said it’s delaying its decision on a $35 billion Air Force refueling tanker contest until the next administration takes office. Northrop Grumman was initially awarded the deal, which Boeing contested as unfair. The government agreed, initially reopening bidding, before deciding to end the current contest and have the decision made by the next administration.

Northrop (NOC, Fortune 500) and Boeing (BA, Fortune 500) shares both declined. (Full story)

In other news, ImClone (IMCL) said it has received a $70-per-share buyout offer from a large pharmaceutical company, topping an earlier offer of $60 per share from Bristol-Myers Squibb (BMY, Fortune 500). Bristol already owns a 20% share in the company. ImClone stock gained 6.7%.

Among other movers, a variety of airlines, railroads and truckers bounced on the lower oil prices, lifting the Dow Jones Transportation (DJTA) average up by 2.5%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers on volume of 1.55 billion shares. On the Nasdaq, advancers topped decliners four to three on volume of 2.32 billion shares.

Fuel prices: Oil prices as the government indicated weaker demand for gasoline, even as supplies of crude and gas dipped more than expected last week.

U.S. light crude oil for October delivery fell 68 cents to settle at $102.58 a barrel on the New York Mercantile Exchange, the lowest close since April 1.

Gas prices rose overnight, breaking a nine-day losing streak, according to a national survey of credit-card activity.

Other markets: In global trade, European and Asian markets ended lower.

In the bond market, Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.63% from 3.57% late Tuesday. Prices and yields move in opposite directions.

The dollar rallied versus the euro and yen.

COMEX gold for December delivery fell $29.50 to $762.50 an ounce. 

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