Oil near $143 on Israel-Iran Tensions

Oil rose more than $2 a barrel on Monday towards a new record high of $143, propelled by heightened tensions between Israel and Iran over Tehran's nuclear program.

A fall in the U.S. dollar to three-week lows versus the euro helped boost the market.

U.S. light crude was up $2.42 at $142.63 a barrel by 5:29 a.m. EDT, within reach of the record $142.99 struck on Friday.

London Brent crude was up $2.39 cents to $142.70.

"The U.S. dollar is down and there are many high-level geopolitical news items, particularly in the Middle East, that are pushing prices up," said Mark Pervan, a senior commodities analyst at the Australian & New Zealand (ANZ) Bank in Melbourne.

Iran's Revolutionary Guards have said Iran would impose controls on shipping in the Persian Gulf and Strait of Hormuz if it were attacked.

The Strait of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula, accounts for roughly 40 percent of the world's traded oil flows.

Iran's foreign minister said on Sunday he did not believe Israel was in a position to attack his country over its nuclear program.

Oil prices have jumped more than 40 percent this year, extending a six-year rally, in response to Middle East tensions, plus expectations that supply will struggle to keep pace with rising demand from emerging economies such as China and India.

The market is sensitive to any supply disruptions.

A succession of militant attacks on Nigeria's oil facilities that have shut a fifth of the country's output since early 2006 has helped drive the market higher.

A flood of cash from investors moving into commodities away from sagging global equity markets and to hedge against inflation and the weak dollar has also contributed to oil's rise.

Some blame these "speculators" for the market's rapid climb since the start of this year, others say it is more to do with supply/demand fundamentals.

Tony Hayward, chief executive of international oil company BP Plc (BP.L) said: "This is a fundamental signal, this is not about speculation."

The market will watch U.S. economic indicators due later on Monday as well as the European Central Bank's interest rates decision on Thursday for further guidance on the U.S. dollar.

Stocks Tumble as More Bad Economic News Piles up

Wall Street has suffered a huge loss, with the Dow Jones industrials plunging more than 350 points as investors contended with a barrage of bad news. A surge in oil prices past $140 a barrel and warnings of trouble in the key financial, automotive and high-tech industries created a gloomy mood across the market.

The day's news included analysts' negative comments about brokerages and General Motors Corp. It made clear to investors how much U.S. companies stand to be hurt from the fallout of the prolonged housing slump, the nearly year-old credit crisis and the soaring price of oil.

All the major indexes dropped around 3 percent. The Dow is at its lowest point in nearly two years.

Architect Hopes New Skyscraper Keeps us Spinning

An Italian architect said he is poised to start construction on a new skyscraper in Dubai that will be "the world's first building in motion," an 80-story tower with revolving floors that give it an ever-shifting shape.

The spinning floors, hung like rings around an immobile cement core, would offer residents a constantly changing view of the Persian Gulf and the city's futuristic skyline.

A few penthouse villas would spin on command using a voice-activated computer. The motion of the rest of the building would be choreographed in patterns that could be altered over time.

Speaking at a news conference in New York on Tuesday, the building's designer, David Fisher, declared that his tower will revolutionize the way skyscrapers are made — a claim that might strike some as excessively bold.

Fisher acknowledges that he is not well known, has never built a skyscraper before and hasn't practiced architecture regularly in decades.

But he insisted his lack of experience wouldn't stop him from completing the project, which has attracted top design talent, including Leslie E. Robertson, the structural engineer for the World Trade Center and the Shanghai World Financial Center.

"I did not design skyscrapers, but I feel ready to do so," Fisher said.

Twisting floors are just one of several futuristic features in the building, the first of several Fisher hopes to build with a similar design.

Giant wind turbines installed between every floor, he said, will generate enough electricity to power the entire building, and lifts will allow penthouse residents to park their cars right at their apartments.

A second version of the tower, to be built in Moscow, would have a retractable helicopter pad. Both structures, at over 1,300 feet, would be taller than the Empire State Building.

Even the method of construction would be unorthodox.

Fisher said each floor will be prefabricated in an Italian factory, then shipped to the site to be attached to the core. Assembling a building in this fashion, he said, will require only 80 technicians and take only 20 months, saving tens of millions of dollars, for a total cost of $700 million to build.

On its face, the project seems to pose a number of complicated engineering puzzles.

How would the plumbing hookups work in an apartment that is constantly moving? Fisher said the pipes will connect to the core via attachments similar to the ones used by military aircraft for in-flight refueling.

Wouldn't people get dizzy? No, says Fisher. The rotations will be slow enough that no one will notice.

With so many moving parts, wouldn't the building be a maintenance nightmare? Fisher said the building's modular construction will allow easy access to parts that need to be replaced.

Robertson, who attended Tuesday's news conference, said that the skyscraper might be unusual, but is "absolutely" buildable.

"You can build anything," he said, smiling.

Fisher declined to say exactly where in Dubai the tower will be built or when site work might begin. He insisted, however, that factory production is set to start within weeks and that the tower, which will contain office space, a luxury hotel and apartments, will be complete by 2010.

Sales of individual apartments will begin in September, with asking prices of around $3,000 per square foot. The smallest, at 1,330 square feet, would cost about $4 million and the largest, a 12,900-square-foot villa, $38.7 million.

Skeptics might question Fisher's credentials to pull off the job.

In a biography he had been distributing for months, he said he graduated from the University of Florence in 1976, came to New York in the mid-1980s and later developed hotels and ran a company that specialized in stone and prefabricated construction materials.

The biography also said he received an honorary doctorate from "The Prodeo Institute at Columbia University in New York." No such institution exists, however, and Columbia said it had never awarded Fisher an honorary degree.

Asked to explain the discrepancy, Fisher said, through his New York publicists, that he had been awarded the degree by the Catholic University of Rome during a ceremony in 1994 held at the Cathedral Church of St. John the Divine, which is near Columbia's campus.

Asked again to clarify the name of the school that conferred the degree, Fisher's publicists said in an e-mail that the information has been removed from his bio "because he wants to be entirely accurate and cannot be with this information."

Philip Morris USA Pulls New Filter Cigarettes

Philip Morris USA, the nation's No. 1 tobacco company, said Monday it has ended test markets of Marlboro-branded cigarettes that use a high-technology filter.

The operating company of Altria Group Inc. said it pulled the plug on Marlboro Ultra Smooth and Marlboro Ultra Light cigarettes, which used an activated carbon filter to deliver nicotine with potentially less exposure to carcinogens than in conventional cigarettes.

Philip Morris said it stopped making new shipments of Marlboro Ultra Smooth to wholesalers on April 1. Those cigarettes were being tested in Atlanta, Tampa, Fla., and Salt Lake City for more than three years. Marlboro Ultra Lights in Phoenix and North Dakota, and Basic Ultra Lights in Washington state also were discontinued, the company said.

"We did see lower consumer acceptance of those products in some of the test markets," said spokesman Bill Phelps. "These are test markets and they're designed to help us learn a lot of things. In the case of Ultra Smooth, it was designed to help us understand consumer acceptance of those particular products' taste and flavor."

Phelps said the company had made no claims that the products reduced health risks.

Shares of Altria rose 18 cents to $20.96 in midday trading.

Philip Morris saw a 4.6 percent decline in cigarette sales volume last year, but said that is estimated to be down 3.6 percent when adjusted for calendar differences and other factors. The industrywide decline is estimated at 4 percent in the United States.

The company has projected that cigarette sales volume will fall between 2.5 percent to 3 percent in the U.S. over the next few years because of concerns about health, smoking bans and price increases.

In turn, Philip Morris is looking to growing its business in other tobacco categories and reduced-risk products, Phelps said.

"We remain committed to our overall objective of reducing the harm caused by cigarette smoking," Phelps said. "That work will continue both for conventional lit-end cigarettes as well as what we would describe as noncombustible tobacco products."

Last year, the company began testing of its Marlboro-branded moist smokeless tobacco product — cut tobacco placed in the mouth — in Atlanta and recently expanded to counties in the surrounding metropolitan area. It also began testing a moist powdered tobacco called Marlboro Snus in Dallas last year, and also has expanded the test to Indianapolis.

Stocks Drop as Credit Woes Continue, Oil Rises

Stocks tumbled Friday on escalating worries about the financial sector and rebounding oil prices. The major indexes fell more than 1 percent, with the Dow Jones industrials dropping more than 200 points.

An afternoon downgrade of automakers helped draw out sellers and put the Dow on pace for its lowest close since March. Treasury prices jumped as investors sought the safety of government debt.

And among financials, Merrill Lynch — which slashed earnings estimates for regional banks Friday — was the target of market rumors that it may issue its own profit warning. Merrill Lynch spokeswoman Jessica Oppenheim declined to comment. Merrill shares dropped $1.89, or 5 percent, to $35.80.

The rumors added to the market's anxiety, which ballooned Thursday when Citigroup Inc. warned of significant debt markdowns for the second quarter, Washington Mutual Inc. announced 1,200 job cuts and Moody's Investors Service decided late in the day to downgrade the two biggest bond insurers.

Troubling news about the financial sector has been piling up all week, driving the stock market back toward the levels it plummeted to in March. Earlier this week, investment banks posted profit declines, Fifth Third Bancorp said it need to raise $2 billion in capital, and two Bear Stearns hedge fund managers were charged with lying to investors — causing many investors to flee from stocks.

"There has to be reticence about getting back in," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. "It's definitely an ugly end to the week."

In late afternoon trading, the Dow slumped 210.06, or 1.74 percent, to 11,853.03. The blue chips haven't closed below 12,000 since March 17, when the market was worried about Bear Stearns Cos. collapsing.

Broader stock indicators also dropped Friday. The Standard & Poor's 500 index fell 24.40, or 1.82 percent, to 1,318.43, and the Nasdaq composite index fell 60.05, or 2.44 percent, to 2,402.01.

Declining issues outnumbered advancers by more than 5 to 1 on the New York Stock Exchange, where volume came to a heavy 1.42 billion shares.

The session also saw "quadruple witching" — the simultaneous expiration of four types of options contracts — that can lead to heavy trading near the start and end of the session. It could be contributing to the steepness of the day's pullback and was adding to volume.

Bond prices jumped as stocks sank. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.14 percent from 4.21 percent late Thursday.

As the economy faces a tight lending climate, it also struggles with surging fuel costs. Crude oil futures jumped $2.69 to settle at $134.62 a barrel on the New York Mercantile Exchange, recovering some of Thursday's drop of nearly $5 per barrel on news of a fuel price hike in China.

Investors are awaiting this weekend's meeting in Saudi Arabia of oil producers and consumer nations, which could bring some relief to the problem of soaring oil prices. But many analysts believe the gathering might end up being a mere finger-pointing session.

Bond insurer MBIA Inc. shares fell 83 cents, or 13 percent, to $5.63, and competitor Ambac Financial Group Inc. fell 10 cents, or 5 percent to $1.93, after losing their "AAA" rating from Moody's.

Moody's had already warned of a possible downgrade, and the move followed similar actions by rival agencies Standard & Poor's and Fitch Ratings. But it nevertheless underscored the troubles that the nation's money centers face.

Another ratings move hit stocks of automakers. Standard & Poor's Ratings Services placed the corporate credit ratings of General Motors Corp., Ford Motor Co. and Chrysler LLC on watch with negative implications. The classification means ratings have a one-in-two chance of being downgraded in the next three months.

S&P believes high fuel costs will hurt the U.S. auto market through 2009.

GM fell $1.05, or 7 percent, to $13.74, while Ford lost 50 cents, or 7.9 percent, to $5.82.

The dollar fell against most other major currencies, while gold prices fell.

The Russell 2000 index of smaller companies fell 15.61, or 2.12, to 722.22.

Overseas, Japan's Nikkei stock average dropped 1.33 percent. Britain's FTSE 100 fell 1.53 percent, Germany's DAX index declined 2.12 percent, and France's CAC-40 fell 1.79 percent.

Jobless Claims Decline by 5,000 following Surge

The number of newly laid-off workers filing applications for unemployment benefits dropped slightly last week but remained at a level showing the strains of a weak economy.

The Labor Department reported Thursday that jobless claims fell by 5,000 last week to 381,000 after having surged by 27,000 the previous week.

The small improvement was not enough to keep the four-week average from rising to 375,250, pushing it close to the level reached in early April, when the average had jumped to highs not seen since the wave of layoffs following the 2005 Gulf Coast hurricanes.

The nation's unemployment rate soared to 5.5 percent in May, up from 5 percent it April. That represented the biggest one-month jump in 22 years and served as a stark reminder of the pressures the labor market is facing from the weak economy.

Economic growth slowed dramatically late last year, reflecting a prolonged housing slump and a severe credit crisis which hit the financial system last August.

While there had been concerns that the country could slip into a recession, analysts now believe a full-blown downturn can be avoided with the help of 130 million economic stimulus payments which are being mailed out currently.

The drop of 5,000 claims for last week was slightly smaller than had been expected. For the previous week ending June 7, a total of 44 states and territories reported an increase in claims and nine states reported declines.

The states with the biggest increases were California, up by 10,778, a rise attributed to higher layoffs in service industries, and Florida, up 6,164, an increase that reflected more layoffs in construction, trade, services, manufacturing and agriculture.

The state with the biggest drop in layoffs was Wisconsin, which experienced a decline of 1,382, reflecting fewer layoffs in construction, trade, services and manufacturing.

FedEx Swings to Loss, Guides Lower

Parcel delivery company says high fuel prices and slowing demand hurt quarterly earnings and forecasts a follow-on quarter and full-year below estimates.Shares of FedEx declined Wednesday after the package shipping company reported a larger-than-expected quarterly loss and forecast full-year profit below Wall Street expectations.

FedEx (FDX, Fortune 500) shares fell $2, or 2.4%, to $82.33 in morning trading.

The Memphis, Tenn., shipper said record-high fuel prices and a weaker U.S. economy drove it to a fiscal fourth-quarter loss of $241 million, or 89 cents per share. Excluding one-time items, FedEx said it earned $1.45 per share - missing analysts' $1.47 per share average forecast by 2 cents.

The company's profit estimates also came in below expectations. FedEx predicted 2009 earnings of between $4.75 per share and $5.27 per share, compared with Wall Street's $5.92 per share forecast.

For the first quarter, the company guided for earnings between 80 cents and $1 per share, well below analysts' projected $1.27 per share.

Shares of FedEx have weakened significantly over the past year, losing nearly a third of their value from a 52-week high of $119.10 last July.