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Posted: Wednesday, June 25, 2014 1:28 pm

WALL STREET

Stocks edge higher despite reports that show sluggish economy

NEW YORK (AP) — Stocks are recovering a small portion of the losses they posted yesterday despite two disappointing economic reports this morning.

In a revised estimate, the Commerce Department said the U.S. economy shrank at annual rate of 2.9 percent in the first three months of the year. The government also said orders for long-lasting goods sank 1 percent in May.

But shares in Monsanto have jumped after the company announced a big stock buyback plan and posted earnings that beat analysts' estimates. And CBS and other broadcasters are up after the Supreme Court ruled in favor of them over a startup Internet company, Aereo, in a closely watched copyright case.

The Dow was up 35-40 points in afternoon trading, while the S&P 500 has added five points, and the Nasdaq composite index is up about 15.

ECONOMY-GDP

US economy shrank at steep 2.9 percent rate in Q1

WASHINGTON (AP) — The U.S. economy shrank at a steep annual rate of 2.9 percent in the January-March quarter as a harsh winter contributed to the biggest contraction since the depths of the recession five years ago. But the setback is expected to be temporary, with growth rebounding solidly since spring.

The Commerce Department says the first-quarter contraction was even more severe than the 1 percent annual decline it estimated a month ago. Two-thirds of the downward revision reflected a decline in health care spending. Another major factor was a bigger trade deficit than initially estimated.

Despite the plunge in economic activity last quarter, many analysts think the economy is expanding at a strong rate approaching 4 percent growth in the current second quarter.

DURABLE GOODS

Orders for US durable goods drop 1 percent in May

WASHINGTON (AP) — Orders for U.S. durable goods tumbled 1 percent in May as demand for military equipment fell sharply. But excluding defense-related goods, orders actually rose, and orders in a key category that signals business investment also increased.

The gains outside of military goods suggest business spending is picking up, which could give the economy a much-needed boost.

The Commerce Department says orders, excluding defense, rose 0.6 percent in May, after falling 0.8 percent in April. Orders in core capital goods, which reflect business investment, increased 0.7 percent, after a 1.1 percent drop.

Factories reported higher demand for steel and other metals, computers, and autos.

The figures come as a separate report showed that the U.S. economy contracted sharply in the first three months of the year, mostly because of bad weather.

SUPREME COURT-TV ON THE INTERNET

Supreme Court rules against Internet startup Aereo in copyright fight with broadcasters

WASHINGTON (AP) — The Supreme Court has ruled that a startup Internet company has to pay broadcasters when it takes television programs from the airwaves and allows subscribers to watch them on smartphones and other portable devices.

The justices said Wednesday in a 6-3 decision that Aereo Inc. is violating the broadcasters' copyrights by taking the signals for free. The ruling preserves the ability of the television networks to collect huge fees from cable and satellite systems that transmit their programming.

Aereo is available in New York, Boston and Atlanta among 11 metropolitan areas and uses thousands of dime-size antennas to capture television signals and transmit them to subscribers who pay as little as $8 a month for the service.

BARNES & NOBLE-SEPARATION

Barnes & Noble wants to separate retail, Nook

NEW YORK (AP) — Barnes & Noble says it wants to split its retail bookstores and Nook media business into two separate public companies as it looks to boost shareholder value.

Barnes & Noble has been trying to turn itself around as competition from discount stores and online retailers toughens, and as readers shift away from traditional books to digital formats.

The New York-based chain, which announced earlier this month that it was teaming with Samsung to develop Nook tablets, said that its board has approved the separation plans. It hopes to complete the separation by the end of 2015's first quarter.

Barnes & Noble Inc. also reported its fourth-quarter loss narrowed, but the performance still missed Wall Street's expectations.

Still, shares in the bookseller are up in afternoon trading.

EARNS-MONSANTO

Monsanto earnings dip on lower biotech seed sales

WASHINGTON (AP) — Monsanto says its earnings fell more than 5 percent in the third fiscal quarter as sales of the agricultural giant's biotech corn seeds slipped.

But its overall earnings topped Wall Street estimates and its shares are up about 5 percent in afternoon trading.

The St. Louis company says it earned $858 million, or $1.62 per share in the three months ended May 31. That's down from $909 million, or $1.68 per share, a year ago. Revenue was virtually flat at $4.25 billion

The company raised the low end of its 2014 forecast to between $5.10 and $5.20 per share.

Monsanto also announced plans to repurchase $10 billion in shares over two years.

SUPREME COURT-CELLPHONE SEARCHES

Justice limit cellphone searches after arrests

WASHINGTON (AP) — A strong defense of privacy in the digital age is coming today from the Supreme Court.

In a unanimous ruling, the justices say police may not generally search the cellphones of people they arrest, unless they have a search warrant. The court chose not to extend earlier rulings, in which they allowed police to empty a suspect's pockets and examine whatever they find.

Chief Justice John Roberts says cellphones aren't just a "technological convenience" -- they hold "the privacies of life." Roberts says the message to police is simple: Before rummaging through a cellphone's contents, "get a warrant."

The chief justice acknowledged that barring searches would affect law enforcement, but says: "Privacy comes at a cost."

US-EU-DATA PROTECTION

US to seek data protection for EU citizens

ATHENS, Greece (AP) — U.S. Attorney General Eric Holder says the Obama administration will seek to introduce legislation granting European citizens the same privacy protection rights available to US citizens, when their data is being transferred from the European Union to the U.S. for law enforcement purposes.

The U.S. and EU have been negotiating for more than four years on the protection of personal data. Holder made the announcement Wednesday after an EU-U.S. Justice and Home Affairs ministerial meeting in Athens. Greece currently holds the six-month rotating EU presidency.

European Commissioner for justice Viviane Reding said in a statement that Holder's announcement was "an important step in the right direction," but that it must be "swiftly translated into legislation." She added that: "Words only matter if put into law."

SUPREME COURT-RETIREMENT INVESTING

Court sides with employees in retirement fund case

WASHINGTON (AP) — The Supreme Court says a lawsuit can proceed against Fifth Third Bancorp that accused management of irresponsibly investing employee retirement money in the bank's then-failing stock.

The unanimous ruling came Wednesday in a case involving a retirement fund that's invested primarily in the bank's stock.

Here's the issue: Do those in charge of investing in the fund have the freedom or the duty to direct investment money elsewhere when they have reason to believe the stock price is inflated.

The employees say management knew that borrowers were increasingly defaulting on risky, subprime loans, but concealed that information or misled investors.

The bank continued to invest in the stock-ownership fund even when the problems came to light and the share price plummeted.

ABBVIE-SHIRE OFFER

AbbVie cites tax break as motivator for Shire deal

U.S. drugmaker AbbVie says it sees a compelling tax break behind its roughly $46 billion bid to buy British counterpart Shire, and it expects the deal to expand Shire's global reach as well.

Leaders of the North Chicago, Illinois, company laid out their reasoning behind their unsolicited, cash-and-stock offer during a call with analysts two days after Shire PLC explained why it wasn't interested.

AbbVie Inc. says it expects the combined company to pay a tax rate of about 13 percent by 2016. That compares to its present rate of roughly 22 percent.

Several other U.S. companies are using mergers to reincorporate overseas in countries with lower tax rates. These moves raise concerns among some lawmakers since they can cost the federal government billions in tax revenue.

AbbVie shares rose more than 2 percent in morning trading.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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