Business Highlights

Stocks mixed after retail sales report, spiking oil

NEW YORK (AP) _ Wall Street turned in a mixed performance Tuesday after a fresh report on retail sales and a new oil price record told investors the same old story: The economy is hurting and costs are rising, but things could be worse.

The Commerce Department's latest report showed that retail sales fell by 0.2 percent in April, as expected.

Oil prices, meanwhile, spiked to a trading record of $126.98 a barrel on the New York Mercantile Exchange.

Tuesday's wavering trading in the stock market reflected its ongoing uncertainty about the economy.

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HP taking aim on IBM with risky $13.2B acquisition of EDS

SAN FRANCISCO (AP) _ Hewlett-Packard Co. is buying Electronic Data Systems Corp. for $13.2 billion in a deal that will create the second largest technology services provider behind IBM.

Under the terms announced Tuesday, Palo Alto-based HP will pay $25 per share in cash for EDS, which pioneered the concept of running computer systems and providing other high-tech help for large companies and government agencies.

It's a field dominated by IBM Corp., which generated $54 billion in revenue from technology services last year. HP's technology services revenue will more than double to more than $38 billion with the addition of EDS, which had $22 billion in revenue last year.

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Wal-Mart and TJX report solid 1st-quarter profit gains

NEW YORK _ Solid first-quarter profits from discounters Wal-Mart and TJX show that more Americans are hunting for bargains as they struggle to cover their monthly credit card payments, put food on the table and gas in the family car.

Wal-Mart Stores Inc., the world's largest retailer, posted a 6.9 percent increase in first-quarter profits, helped by improved customer service, better inventory control and strong international sales.

The results beat Wall Street's projections by a penny, but the company issued a cautious outlook for the current quarter and warned that the economy would be a "critical factor" in 2008.

TJX Cos., which operates stores under the T.J. Maxx, Marshalls, HomeGoods names, said its first-quarter profits rose almost 20 percent, meeting analysts' projections. But lower investment income and costs from European expansion left TJX's profit margin slightly below the company's expectations.

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Reports: Carl Icahn considering attempt to oust Yahoo board

SAN FRANCISCO (AP) _ Billionaire investor Carl Icahn reportedly is snapping up Yahoo stock in preparation for a possible attempt to replace the Internet company's board after the directors turned down Microsoft's $47.5 billion takeover offer.

Icahn has bought as many as 50 million Yahoo shares, both CNBC and The Wall Street Journal reported Tuesday. That would give Icahn a 3.6 percent stake in the Internet pioneer.

The financier is known for shaking up slumping companies. He could spearhead a campaign to oust Yahoo's 10 directors for not accepting Microsoft Corp.'s final offer of $33 per share.

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IAC, Liberty resolve spinoff legal skirmish

NEW YORK (AP) _ IAC/InterActiveCorp and Liberty Media Corp. say they resolved a legal skirmish regarding IAC's plans to break into several parts.

Liberty is dropping an appeal it filed disputing a March ruling by a Delaware judge who sided with IAC head Barry Diller on the breakup plans.

Liberty owns about 30 percent of IAC's equity and was fighting with IAC for months over the breakups.

The companies agreed on various arrangements regarding operations of the spun-off companies. These include Liberty's right to board representation at each company and a limitation on Liberty's ability to raise its ownership stakes.

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Iran report pushes oil to new record, gas jumps above $3.73

NEW YORK (AP) _ Oil prices shot to a new record near $127 a barrel Tuesday on concerns that Iran may consider cutting crude oil production.

Gas prices, meanwhile, rose to a new record over $3.73 a gallon Tuesday, and their advance shows little sign of slowing with Memorial Day weekend, the traditional start of the summer driving season, just 10 days away.

Light, sweet crude for June delivery rose as high as a record $126.98 a barrel in midday trading on the New York Mercantile Exchange Tuesday before retreating to settle up $1.57 at $125.80.

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Median home prices drop in many cities

WASHINGTON (AP) _ Median home prices fell in two-thirds of the cities surveyed during the first three months of this year while 46 states experienced declining sales, a real estate trade group reported Tuesday.

The National Association of Realtors said that median prices for existing single-family homes dropped in 100 of 149 metropolitan areas in the January-March period, while 48 metropolitan areas saw prices increase and one reported no change.

The price declines in 67 percent of the areas surveyed was the largest percentage of areas reporting declining prices in the history of the Realtors' survey, which goes back to 1979.

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Corporate Express rebuffs sweetened Staples bid

BOSTON (AP) _ Hours after saying it was open to holding talks, Corporate Express NV said Tuesday a sweetened $2.47 billion hostile takeover bid from its larger office products rival Staples Inc. is still too low.

Despite a 10 percent hike above the initial buyout proposal rejected in February, the latest bid "still significantly undervalues the business of Corporate Express," the Netherlands-based firm said after its supervisory and executive boards met Tuesday.

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Fewer fliers for summer, but packed planes persist

WASHINGTON (AP) _ Fewer Americans are expected to fly this summer, but don't expect more empty seats as carriers park planes to help offset surging fuel costs.

The trade group for the nation's largest airlines on Tuesday forecast 211.5 million passengers will travel on domestic carriers between June 1 and Aug. 31. That would be a 1.3 percent drop from last summer.

Airlines are reducing their carrying capacity amid slower economic growth and rising jet fuel prices, the Air Transport Association said.

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Bernanke: Financial turmoil in markets easing

WASHINGTON (AP) _ Turmoil in financial markets has eased somewhat, but the situation is still "far from normal," Federal Reserve Chairman Ben Bernanke said Tuesday.

The central bank has taken a number of unconventional steps _ especially since March, when the credit crisis intensified _ to help squeezed banks and big investment firms overcome problems and try to get credit flowing more freely again.

Those efforts appear to be paying off and "have contributed to some improvement in financing markets," the Fed chief said in prepared remarks delivered via satellite to a financial markets conference sponsored by the Federal Reserve Bank of Atlanta in Sea Island, Ga.

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By The Associated Press

The Dow Jones industrial average fell 44.13, or 0.34 percent, to 12,832.18, having soared 130 points on Monday.

Broader indexes closed mixed. The Standard & Poor's 500 index fell 0.54, or 0.04 percent, to 1,403.04, and the Nasdaq composite index rose 6.63, or 0.27 percent, to 2,495.12.

Light, sweet crude for June delivery rose as high as a record $126.98 a barrel in midday trading on the New York Mercantile Exchange Tuesday before retreating to settle up $1.57 at $125.80.

June gasoline futures rose 3.58 cents to settle at $3.20 a gallon, and June heating oil futures rose 13.91 cents to settle at $3.6989 a gallon after earlier rising to a record $3.7146.

June natural gas futures rose 12.1 cents to settle at $11.422 per 1,000 cubic feet.

In London, June Brent crude futures rose $1.19 to settle at $124.10 a barrel on the ICE Futures exchange.