BUSINESS BRIEFS
Kraft will replace AIG on Dow list
Advertiser News Services
Kraft Foods Inc., the world's second-largest foodmaker, will replace American International Group Inc. in the Dow Jones Industrial Average after the biggest U.S. insurance company was taken over by the government, Dow Jones Indexes said yesterday.
Kraft, whose top shareholder is Warren Buffett's Berkshire Hathaway Inc., will replace AIG on Monday. News Corp.'s Dow Jones Indexes said it declined to add another financial company to the 112-year-old stock average "because of the extremely unsettled conditions" in global markets.
AIG lost 80 percent this week after the U.S. government said it will get a 79.9 percent stake in return for an $85 billion loan that analysts said will be repaid by liquidating the company.
The ouster of AIG leaves the Dow average with an 8.4 percent weighting in financial companies, compared with 14.4 percent for the Standard & Poor's 500 Index, another U.S. stock benchmark. Kraft becomes the only food products company in the Dow index.
MONEY MARKET FUND SHUTS DOWN
BOSTON — Putnam Investments yesterday suddenly closed a $12 billion money-market fund and announced plans to return investors' money after institutional clients pulled out cash despite the fund's lack of exposure to troubled financial firms such as Lehman Brothers Holdings Inc.
The move, believed to be unprecedented in the nearly $3.4 trillion money-market fund industry, came a day after asset managers sought to reassure investors in the wake of a massive pullout from large retail fund Reserve Primary Fund. The run on that fund caused its assets to plunge in value, exposing investors to losses of 3 cents on the dollar.
SHORT SELLERS FACE NEW YORK PROBE
NEW YORK — New York state is launching an investigation into whether some traders used illegal tactics to drive down the stock price of several Wall Street firms.
Attorney General Andrew Cuomo told reporters yesterday his office has received a "significant number" of complaints about short sellers, or investors who hope to profit by placing bets that a financial company's stock will fall.
Short-selling is not illegal. But Cuomo said he will focus on whether short sellers engaged in conspiracy or spread rumors and bad information to influence the stock prices of Lehman Brothers Holdings Inc., American International Group Inc., Goldman Sachs Group Inc., Morgan Stanley and other firms that have been hammered in the continuing financial crisis.
JOBLESS CLAIMS SURGE AFTER STORM
WASHINGTON — New applications for unemployment benefits rose unexpectedly last week, largely due to Hurricane Gustav, the government said yesterday, adding further strain to the economy.
The Labor Department reported that initial jobless claims rose to a seasonally adjusted 455,000, up 10,000 from the week before.
Wall Street economists had expected claims to fall slightly to 440,000.
Layoffs can worsen the nation's economic woes as newly unemployed workers and those that fear for their jobs cut back on their spending and fall behind on their debts.
ACTORS UNION INSURGENTS WIN
LOS ANGELES — An upstart group of actors has won a majority of Hollywood seats up for re-election on the national board of the Screen Actors Guild.
The Unite for Strength group, led by actor Ned Vaughn, won six of 11 Hollywood seats up for grabs, breaking the incumbent Membership First majority on the 71-member board.
Membership First, which had controlled 39 of 71 seats, won just five of 11 Hollywood seats it once commanded.
The change could affect stalled talks between the guild and major Hollywood studios over a contract that expired June 30.
