1) Stocks fall on inflation data, financial worries

Wall Street fell sharply for a second straight session Tuesday after a hefty jump in wholesale inflation and a drop in new home construction gave investors more reason to believe an economic recovery is far off. The Dow Jones industrial average dropped 130 points.
The Labor Department said its Producer Price Index rose by 1.2 percent in July, more than double the expected rate, and lifting the current annual rate to the loftiest level in 27 years. Even after stripping out food and energy, core prices rose by a higher-than-expected 0.7 percent, the biggest increase since November 2006.
A rebound in oil prices added to investors' anxiety, which had abated slightly in recent weeks as crude tumbled from its July record above $147 a barrel to three-month lows.
And the financial sector took another hit after a JPMorgan Chase & Co. analyst estimated that Lehman Brothers Holdings Inc. will have to write down its investments during the third quarter by $4 billion, and a Goldman Sachs analyst advised against buying the stock of American International Group Inc
The Dow fell 130.84, or 1.14 percent, to 11,348.55, after losing 180 points on Monday. It was the worst two-day performance for the blue-chip index since late June.
The dollar fell against other major currencies, driving up oil. Gold prices also turned higher. Crude rebounded Tuesday by $1.66 to $114.53 a barrel on the New York Mercantile Exchange.
Lehman fell $1.96, or 13 percent, to $13.07. There have been reports that the investment bank might have to sell part of the company to raise cash.

2) FDA warns General Electric over lax record keeping
Federal regulators have warned General Electric Co. over lax quality control standards at a plant that makes computer software for medical imaging. The warning letter from the Food and Drug Administration released Tuesday lists a dozen record-keeping violations uncovered at a GE facility in Barrington, Ill., between April and May.
FDA inspectors found that GE did not have procedures for reviewing customer complaints, product changes and other information about its Centricity Imaging software that it used to schedule, manage and archive medical images.
GE responded to the FDA's citation in a June 2 letter, but the company's plan for addressing the problems was "inadequate," according to the warning letter posted to the agency's Web site. The FDA demands the company provide a revised plan within 15 working days "to prevent these violations from recurring."
Shares of Fairfield, Conn.-based GE fell 64 cents to close at $28.71 Tuesday

3) California home sales surged in July, prices fell
California homebuyers sprung to life in July, pouncing on foreclosed homes and deeply discounted properties but largely ignoring pricier homes that have been languishing on the market, a research firm said Tuesday.
Buyers drove sales up more than 12 percent from July 2007, resulting in the biggest jump in sales in four years, according to MDA DataQuick.
The surge in sales was welcome news for the state's beleaguered housing market, which remains bloated with the nation's highest number of foreclosed homes and caught in a spiral of falling home prices.
The flood of foreclosure sales helped drag down the statewide median home price -- or the midpoint between the highest and lowest price -- to $318,000, a drop of 33.5 percent from July 2007.
The July median price was down 3 percent from June. It peaked in May 2007 at $484,000.

4) Oil rises above $114 after dollar weakens vs euro
Oil prices rebounded Tuesday, jumping back above $114 barrel after the dollar weakened against the euro and a rally in heating oil pulled new buyers into energy markets.
Light, sweet crude for September delivery rose $1.66 to settle at $114.53 on the New York Mercantile Exchange, after alternating between positive and negative territory earlier in the day. The September contract expires Wednesday, adding to the volatility.
Crude began the day lower after Tropical Storm Fay missed oil and gas installation in the Gulf of Mexico, easing concerns about a disruption in supplies. But prices later spiked more than $3 a barrel, apparently driven higher by a surge in heating oil futures that triggered technical buy orders in energy markets, analysts said.
Also supporting prices Tuesday was a slightly weaker dollar compared to the euro. The 15-nation euro traded at $1.4783, up from $1.4697 late Monday in New York. A falling greenback encourages buying among investors seeking commodities like oil as a hedge against inflation or weakness in the U.S. currency.
Crude's rally came despite the easing threat from Tropical Storm Fay. The sixth named storm of the 2008 Atlantic hurricane season swept over southwest Florida early Tuesday, bringing heavy rain and wind but staying well clear of oil and gas platforms scattered across the Gulf. The storm was moving to the north and was expected to gradually weaken during the day. Fay steamed through the Caribbean over the weekend and was blamed for at least 14 deaths in Haiti and the Dominican Republic.
Regarding oil fundamentals, Jakob said it was worth keeping an eye on how China's import of oil products will develop after the buildup of stocks for the Beijing Olympics. Reports of lower demand there could put further downward pressure on prices.