US wholesale costs rose last month on gas prices

WASHINGTON — U.S. wholesale prices increased in December, pushed up by rising gasoline prices and energy costs. But overall inflation remained mild.

The Labor Department said Wednesday that the producer price index, which measures costs before they reach the consumer, rose 0.4 percent last month from November. That ends three straight months of falling wholesale prices.

Gas prices increased 2.2 percent after recent declines. Home heating oil costs grew at the fastest pace in 10 months, while diesel fuel prices increased at the biggest clip in almost four years.

Excluding volatile energy and food costs, so-called core prices increased 0.3 percent in December. That was partly because of a one-time bump in tobacco costs.

Over the past 12 months, overall prices have risen a modest 1.2 percent and core prices are up just 1.4 percent. Both are well below the Federal Reserve's 2 percent inflation target.

Businesses have struggled to raise prices because of historically high levels of unemployment and meager wage growth. Low inflation has also allowed the Fed to pursue extraordinary stimulus programs to try and boost economic growth.

In December, prices for alcohol, tobacco, pharmaceuticals and autos all rose. The 3.6 percent jump in tobacco prices caused by state and local government tax hikes.

Food costs fell 0.6 percent, led by a 13.4 percent drop in vegetables and declining prices for pork, chicken, beef and dairy products.

The increase in gasoline prices reversed two months of sharp declines. Still, prices are relatively low.

The average price of a gallon of gas was $3.31, according to AAA's Daily Fuel Gauge Report. That's up from $3.23 a gallon one month ago.

Falling gas prices through much of 2013 has limited inflation.

Raw material costs have also tumbled, keeping inflation in check for producers. Prices for corn, wheat, soybeans, cane sugar, coal and iron ore have each dropped over the past 12 months. Raw material costs increased in December, but the previous declines suggest that overall inflation should be tame in the months ahead.

Last month Fed officials trimmed the size of their monthly bond purchases $10 billion to $75 billion. But Fed Chairman Ben Bernanke warned that extremely low inflation was a concern. He said that the central bank could continue to pump money into the economy to stabilize inflation at target.

The bond purchases are aimed at lowering long-term interest rates to encourage more borrowing and spending.

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US stocks head higher for a second day

NEW YORK — Bank stocks are leading an early rise in the stock market after Bank of America reported a surge in earnings.

Bank of America rose 3 percent after reporting that loans on its balance sheet continue to improve.

The Dow Jones industrial average climbed 38 points, or 0.2 percent, to 16,410 in early trading Wednesday.

The Standard & Poor's 500 index rose five points, or 0.3 percent, to 1,844. The Nasdaq composite was up 21 points, or 0.5 percent, at 4,203.

Technology stocks were also among the early gainers. Apple rose 2 percent. Intel rose 1.3 percent, the most in the Dow, followed by Microsoft with a gain of 1.2 percent.

Bond price fell. The yield on the 10-year Treasury note rose to 2.91 percent.

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Stocks rise in early trading on Wall Street

NEW YORK — Stocks are rising Wednesday on optimism over bank earnings after Bank of America reported that profit surged to $3.44 billion in the fourth quarter. Technology stocks are also climbing fast, with Apple up 2 percent.

KEEPING SCORE: The Dow Jones industrial average is up 101 points, or 0.6 percent, to 16,474 at 11 a.m. Eastern time. The Standard & Poor's 500 index gained eight points, or 0.4 percent, to 1,847. The Nasdaq composite rose 22 points, or 0.5 percent, to 4,204.

BANK EARNINGS: Bank of America climbed 2.5 percent after reporting that loans on its balance sheet continue to improve. The bank's provision for credit losses fell to $336 million, from $2.2 billion in the same period a year earlier. Even its mortgage division, which took huge losses after the housing bubble popped, improved.

TECH SURGE: Technology stocks were among the early gainers. Apple and Microsoft both rose 2 percent.

FASTENAL DROP: The industrial supply company dropped the most in the S&P 500, down 5.2 percent, after reporting missing fourth quarter earnings by a penny. The stock slumped $2.22 to $45.99.

3-D PRINTER TUMBLE: Shares of 3-D printer company ExOne fell $4.99, or 8 percent, to $57.27 after cutting its revenue forecast for the year. The North Huntington, Pa., company cited deferred orders from international customers.

WHOLESALE PRICES UP: U.S. wholesale prices increased in December, pushed up by rising price for gasoline prices and other energy costs. Overall inflation remained mild. The Labor Department says the producer price index, which measures costs before they reach the consumer, rose 0.4 percent last month.

TREASURIES AND COMMODITIES: The yield on the 10-year Treasury note rose to 2.91 percent from 2.87 percent on Tuesday. The price of oil climbed 90 cents, or 0.9 percent, to $93.49 a barrel. Gold fell $7.50, or 0.7 percent, to $1,237.80 an ounce.

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SolarCity turns to retail investors for cash

NEW YORK — Solar panel installer SolarCity is turning to retail investors for cash. The company said Wednesday that it plans to sell securities directly to individuals and others interested in investing in its rooftop solar systems.

The move is a novel way for the San Mateo, Calif., company to finance the enormous cost of installing panels on thousands of roofs — a typical residential system costs $25,000 — while appealing to retail investors who are on the hunt for better rates of return than they can find in savings accounts and government bonds.

The securities will likely be similar to bonds or certificates of deposit. But instead of being backed by SolarCity, they would be backed by hundreds or thousands of contracts with rooftop solar customers. Wall Street has long created such products, called securitizations, which bundle assets such as mortgages or other loans into securities that can then be bought and sold.

Now SolarCity wants to offer its own version through its website.

SolarCity CEO Lyndon Rive said in an interview that he expects the company will offer several types of products that investors could hold for different lengths of time, or even trade. He expects eventually to raise "billions" of dollars this way.

"We are constantly asked, 'When are you coming to my state?' or 'When are you coming to our country?' People everywhere want to participate in this transformation," says Rive. "With our investment platform, even if we can't put panels on everyone's roof today, we can still give many of them an opportunity to participate in solar's growth."

SolarCity said Wednesday that it has purchased privately held financial technology company Common Assets LLC to provide the investment platform.

SolarCity pays to install and maintain rooftop solar systems for homes or businesses in exchange for monthly payments for the power that the panels produce. The company has raised money to pay for these systems several different ways.

Mostly, SolarCity has turned to big investors, such as Google, Bank of America or U.S. Bank, to create large funds that SolarCity has used to finance systems. These deals are set up in a way so that the investing company reaps the renewable energy tax credits generated by the projects. But these deals, called tax-equity deals, are relatively expensive to structure and only a small number of companies appear interested.

Late last year, SolarCity raised $54 million by creating a series of notes backed by solar power contracts and selling them to institutional investors. The notes were rated BBB+ by Standard & Poor's, a low investment-grade rating. The notes pay 4.8 percent and mature in 2026.

Common Assets CEO Tim Newell, who has joined SolarCity to run the financial products, says that while SolarCity has successfully raised money in more traditional ways, a more diverse stream of funding could lower the company's overall cost of capital.

For investors, it won't be as safe as betting that the sun will come up again tomorrow. If enough customers don't pay, if the panels' performance degrades more quickly than expected over time, or if power prices go out of whack the investments could go south.

The specific financial products — and the risks — will be unveiled and offered likely in the first half of the year, Rive said. Until then, SolarCity won't comment on how exactly the products will be structured or their specific risks. But in explaining past deals, SolarCity has argued that an investment backed by many small solar installations offers more safety than an investment backed by a single asset that could be more vulnerable to a disaster or dramatic change in markets.

Rive also suggested that some of the company's financial offerings may include guarantees on investors' principal.

"Once this gains momentum, consumers will love it and then over time we'll deploy billions," he said.

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Jonathan Fahey can be reached at http://twitter.com/JonathanFahey.

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Local parenting company Isis shutting down

A popular Brookline-born parenting company  has informed its clients that it is suddenly closing, sparking shock among an avid customer base that swiftly erupted  on social media.

Heather N. Coughlin, CEO of Isis Parenting, sent out an email last night informing clients, "Isis Parenting is sorry to announce we will soon close our doors and, effective immediately, we will no longer be able to conduct classes or consults."

No explanation was given for the closing and Coughlin could not immediately be reached for comment this morning.The email said a "skeleton crew" would remain in place to help parents through the transition.

Isis Parenting has stores locally in the Prudential Center, Arlington, Hanover and Needham that will maintain "limited hours" for the time being, Coughlin said.

The company, which offers parenting classes, services and baby products, recently branched out to Georgia and Texas.

The Isis Facebook page was swiftly besieged with comments from clients.

One mother posted on Facebook, "I'm in tears right now (and I'm not a crier.) Mostly I'm sad for the future parents-to-be that won't have the opportunity I had."

In her email, Coughlin invited customers to come to the stores "for drop-in playgroups, and most importantly to say goodbye to a gathering place that has meant so much to so many."

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Obama to nominate Calif. businesswoman to lead SBA

WASHINGTON — Rounding out his Cabinet, President Barack Obama intends to nominate Maria Contreras-Sweet, the founder of a Latino-owned community bank in Los Angeles and a former California cabinet secretary, to be head of the Small Business Administration.

Obama will announce Contreras-Sweet's selection at an event Wednesday afternoon.

Contreras-Sweet, who was born in Guadalajara, Mexico, has a history of working with small businesses and has been an advocate for Hispanics. As California's secretary of the state's Business, Transportation and Housing Agency from 1999 to 2003, she was the first Latina to serve as a cabinet secretary in the state and oversaw 40,000 state employees and a $12 billion budget.

In 2006, she founded ProAmerica Bank, a financial institution that aimed to assist small and mid-size businesses. Before that, she was president and co-founder of a private equity firm that provided capital to small California businesses.

"If you look at her remarkable career you can see that she is an excellent candidate for this position," White House spokesman Jay Carney told reporters aboard Air Force One, as Obama traveled to North Carolina to promote a new manufacturing innovation hub.

If confirmed by the Senate, Contreras-Sweet would fill the last vacant Obama Cabinet slot, filling the SBA administrator's position formerly occupied by Karen Mills who left in August.

Contreras-Sweet would become the second Hispanic in Obama's second term Cabinet. The other is Labor Secretary Thomas Perez. She would also become the eighth woman in Obama's current Cabinet. Obama's selection had been the subject of intense interest among Hispanic leaders who wanted to ensure they had a high-profile presence in the administration.

Her pick comes as some small business advocates have questioned the Obama administration's commitment to that broad segment of the private sector.

"Hopefully, upon confirmation, she will reach out to small business organizations and the entrepreneurs themselves to listen to their ideas and concerns," said Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council. "For the past year or more, the SBA has gone dark in terms of outreach."

Rep. Sam Graves, the Republican chairman of the House Small Business Committee, said the time it took Obama to nominate a successor to Mills "showed us that small businesses really aren't valued much by this administration."

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Associated Press writer Joyce Rosenberg in New York contributed to this article.

Follow Jim Kuhnhenn on Twitter: http://twitter.com/jkuhnhenn

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Pope cleans house at bank with new cardinals

VATICAN CITY — Pope Francis made another move to clean house at the troubled Vatican bank on Wednesday, naming a new roster of cardinal advisers to replace the ones who were in place during its latest brushes with scandal.

Only one cardinal from the previous commission overseeing the bank's operations, Cardinal Jean-Louis Tauran, survived the cut.

Francis on Wednesday named four others to round out the commission, including his hand-picked secretary of state, Cardinal-elect Pietro Parolin, and Francis' close friend Cardinal Santos Abril y Castello.

The other members include Cardinal Christoph Schoenborn, archbishop of Vienna, and Cardinal Thomas Collins, archbishop of Toronto.

On Feb. 16, 2013, just days after announcing his resignation, Pope Benedict XVI confirmed the existing members of the bank's supervisory body for another five years. The members included Benedict's longtime deputy and secretary of state, Cardinal Tarcisio Bertone, who was widely blamed for many of the Vatican's administrative shortcomings during Benedict's papacy.

Francis has now essentially undone Benedict's decree, relieving Bertone and the other commission members of their jobs as he moves forward with his reform of the bank, formally known as the Institute for Religious Works.

Over the summer, Francis named a trusted friend, Monsignor Battista Ricca, to fill a vacant supervisory position and appointed an independent commission of inquiry to look into the bank's activities and legal status.

Those decisions were taken in the days surrounding the July 1 ouster of the bank's top two managers and the arrest of a Vatican accountant with several Vatican bank accounts on charges he plotted to smuggle 20 million euros ($26 million) into Italy from Switzerland. The accountant, dubbed "Monsignor 500" for the types of euro notes he purportedly favored, is currently on trial in Rome on the smuggling charge and is also under investigation in his native Salerno, a city in southern Italy, in a money-laundering case involving his Vatican accounts.

Prior to that affair was the controversial 2012 ouster of the bank's then-president, Ettore Gotti Tedeschi. The board accused Gotti Tedeschi of incompetence and failing to do his job.

And before that, in 2010, Italian police seized 23 million euros from an IOR account and Rome prosecutors placed the IOR's then-president, Gotti Tedeschi, and general director Paolo Cipriani under investigation for alleged violations of anti-money laundering norms in conducting a routine transaction from a Vatican account at an Italian bank. The money was eventually unfrozen. Gotti Tedeschi was subsequently exonerated as a suspect. Cipriani hasn't been charged.

In 2012, under pressure from the Bank of Italy, U.S. bank JPMorgan closed its IOR accounts. And in December of 2012, again under pressure from the Bank of Italy, Deutsche Bank Italia halted its 15-year term providing electronic payment services to the Vatican, leaving the tiny city state cash-only for months.

The five-member Cardinal's Commission, as it is known, names the lay board of the Vatican bank and its top two general managers and makes sure they adhere to the bank's mission to administer money for works of charity.

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Follow Nicole Winfield at www.twitter.com/nwinfield

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House ready to OK government-wide $1.1T budget

WASHINGTON — Shunning the turmoil of recent budget clashes, Congress is ready to approve a massive $1.1 trillion spending bill for this year, a compromise financing everything from airports to war costs and brimming with victories and setbacks for both parties.

The huge bill furnishes the fine print — 1,582 pages of it — for the bipartisan pact approved in December that set overall federal spending levels for the next couple of years. With that decision behind them and lawmakers eager to use the election year to show they can run a government, there was little suspense about the spending bill's fate.

Reinforcing that was their desire to avoid the potential alternative — a replay of last fall's 16-day federal shutdown, which disgusted voters.

"There's a desire to show people we can do our job," said Rep. Mike Simpson, R-Idaho.

The Republican-led House was expected to approve the sweeping measure Wednesday, with the Democratic-run Senate following suit by the end of the week.

The bill heads off an additional $20 billion in automatic cuts to the Pentagon's budget — on top of $34 billion imposed last year — and cuts to many domestic programs as well. The reductions were being triggered by a 2011 law that forced the cuts after President Barack Obama and Congress failed to negotiate budget savings.

By its sheer size and detail, the measure had plenty for liberals and conservatives to dislike. Conservative groups like Club for Growth and Heritage Action were urging lawmakers to oppose it, but the White House urged its passage.

"We met compelling human needs. We certainly preserved national security," said Senate Appropriations Committee Chairwoman Barbara Mikulski, D-Md., chief author of the spending bill with her House counterpart, Rep. Hal Rogers, R-Ky.

She added, "We also met the mandate of the American people who told us to work together."

The measure provided money for Obama's 2010 health care overhaul and his revamping of federal oversight of the nation's financial markets — though not as much as he requested. It continued age-old restrictions on federal financing of most abortions, but lacked new ones. Democrats also blocked GOP-sought curbs on the Environmental Protection Agency's power to regulate utilities' greenhouse gas emissions.

"It's funding Obamacare, and I pledged a long time ago I absolutely wouldn't vote for anything that has financing for Obamacare," said Rep. Phil Gingrey, R-Ga., who said he'd vote "no."

Overall, the measure provides about $20 billion more for defense and domestic programs this year than was spent in 2013, excluding the costs of war and natural disasters. Even so, it still leaves defense and domestic spending on a downward trend since 2010, a number that troubles many Democrats.

"For several years we've been cheating Americans of a number of things we should be doing for infrastructure, science research, education, to make our country stronger," said Rep. Rush Holt, D-N.J., who said he hadn't decided how he would vote.

The bill would provide nearly $92 billion for U.S. military operations abroad, mostly in Afghanistan, plus about $7 billion for disasters and other emergencies. That was just slightly less than last year's war spending but about $44 billion less than was provided in 2013 for disasters, after Hurricane Sandy ravaged the Northeast in October 2012.

One widely supported provision would roll back a reduction in annual cost-of-living increases for wounded military personnel who retire early or for their surviving spouses. That language was part of the savings included in the budget compromise by Ryan and Murray enacted last month, money that was used to help soften cuts in other programs.

Some Western lawmakers were angry that the bill would block federal payments to communities near government lands to compensate for the taxes the government is exempt from paying them. Top lawmakers promised the payment would be restored in a separate measure.

The Internal Revenue Service, a pariah agency for Republicans after revelations that it targeted tea party groups for tough examinations, would get $500 million less than last year. It also was receiving none of the $440 million extra Obama wanted so the agency could help enforce Obama's health care law, another favorite GOP target.

Democrats won extra money for Head Start's preschool programs, enough to serve another 90,000 young children. The Federal Aviation Administration would get less than Congress enacted last year, but enough money was included to avoid 2013's furloughs and hiring freezes for air traffic controllers.

The FBI won extra money, including almost twice as much to help it conduct background checks on firearms purchasers. The National Institutes of Health would get $29.9 billion, about $1 billion above last year's budget.

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Associated Press writer Andrew Taylor contributed to this report.

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Raytheon CEO Swanson plans to step down in March

WALTHAM, Mass. — Raytheon CEO William Swanson plans to step down from his post at the big defense contractor in March.

Swanson, who will turn 65 in February, has served as CEO of the Waltham, Mass.-based company since 2003. He will remain as chairman while the company completes the transition process.

Raytheon Corp. said Wednesday that Swanson will be succeeded by Executive Vice President and Chief Operating Officer Thomas Kennedy. The CEO appointment is effective on March 31.

The 58-year-old Kennedy was also named as a board member, effective Wednesday.

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Bank of America 4Q earnings jump nearly five-fold

NEW YORK — Bank of America Corp. said Wednesday that its fourth-quarter profit jumped from a year earlier, as the loans on the bank's balance sheet continued to improve.

The nation's second-largest bank earned $3.44 billion in the October to December period, up from $732 million a year earlier. On a per-share basis, the bank earned 29 cents, beating the 26 cents expected by financial analysts. Fourth-quarter revenue rose to $22.32 billion from $19.6 billion, exceeding analysts' forecasts of $21.2 billion.

FEWER BAD LOANS: The bank's profits got a big boost because Bank of America was able to significantly reduce the amount of money it holds on its balance sheet to protect itself from bad loans. The bank's provision for credit losses fell to $336 million from $2.2 billion in the same period a year earlier. Even BofA's mortgage division, which took huge losses after the housing bubble popped, improved. The number of mortgages that were delinquent 60 days or more fell 58 percent from a year ago. "We enter this year with one of the strongest balance sheets in our company's history," Bank of America Chief Financial Officer Bruce Thompson said in a prepared statement.

MORTGAGE DEMAND SLOWS: Like JPMorgan Chase and Wells Fargo, Bank of America saw a slowing in its mortgage origination business last year. Mortgage-originations fell by 46 percent in the fourth quarter from a year ago. Over the summer, mortgage rates started to rise, which stopped consumers from refinancing their home loans. Mortgage giant Freddie Mac said last week that the average 30-year fixed rate mortgage had an interest rate of 4.51 percent, compared to 3.35 percent in May of 2013.

STABILITY IN MOST BUSINESSES: Most of Bank of America's businesses saw profits improve or remain flat during the quarter. Its consumer and business banking division, by far BofA's biggest business, earned $1.97 billion in the fourth quarter, up from $1.45 billion in 2012.

MORE COST CUTTING: Since the financial crisis, Bank of America has been slimming itself down, cutting businesses and reducing headcount. The number of bank employees fell to 242,100 in the fourth quarter, from 267,200 employees in the same period a year ago.

SHARES RISE: Bank of America rose 60 cents, or 3.6 percent, to $17.37 in early trading Wednesday. The stock is up roughly 11 percent so far this year.

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