Earnings help stocks post gains for 3rd week in a row

NEW YORK — Stocks on Wall Street rose Friday, posting gains for a third consecutive week after strong earnings from General Electric and encouraging news about the U.S. debt ceiling.

News from Washington provided a jolt of optimism. Majority Leader Eric Cantor said Friday that the House will vote next week to authorize a three-month increase in the debt ceiling in order to give Congress time to pass a budget.

The Dow Jones industrial average gained 53.68 to close at 13,649.70. The S&P 500 rose 5.04 to 1,485.98. The Nasdaq composite fell 1.29 to 3,134.71.

Transcripts show Fed underestimated crisis

WASHINGTON — Federal Reserve officials in 2007 badly underestimated the scope of the approaching financial crisis and how it would tip the U.S. economy into the deepest economic downturn since the Great Depression, transcripts of the Fed’s policy meetings show.

The meetings occurred as the country was on the brink of its worst financial crisis since the 1930s. As the year went on, Fed officials shifted their focus away from the risk of inflation as they slowly began to recognize the severity of the problem.

Beginning in September 2007, the Fed cut interest rates and took extraordinary steps to try to ease credit and shore up confidence in the banking system. Throughout the year, the housing crisis deepened, home prices weakened and subprime mortgages soured.

China’s economy growing again, but still vulnerable

BEIJING — China’s economy is finally rebounding from its deepest slump since the 2008 global crisis, but the shaky recovery could be vulnerable to a new downturn in global trade.

Growth rose to 7.9 percent in the three months ending in December, up from the previous quarter’s 7.4 percent, data showed Friday. For the year the economy grew by 7.8 percent, which was China’s weakest annual performance since the 1990s.

Retail spending and factory output rose, but analysts said China could suffer a setback if exports weaken or the government fails to maintain investment spending that is propping up the recovery.

Morgan Stanley’s profit surges, its stock soars

NEW YORK — Profits roared back at investment bank Morgan Stanley in the fourth quarter, reversing a loss in the same period a year ago, when results were weighed down by a costly legal settlement.

Earnings increased sharply across the bank’s business lines, and its stock jumped about 8 percent. Morgan Stanley’s investment bank underwrote more stock and bond offerings and brought in more fees from advising companies on mergers and other deals. Financial advisers in the wealth management unit, who work with individual investors, generated more revenue per worker.

TSA ditching revealing airport X-ray scanners

WASHINGTON — Those airport scanners with their all-too revealing body images will soon be going away.

The Transportation Security Administration said the scanners that used a low-dose X-ray will be gone by June because the company that makes them can’t fix the privacy issues. The other airport body scanners, which produce a generic outline instead of a naked image, are staying.

Congress ordered that the scanners either produce a more generic image or be removed by June. On Thursday the maker acknowledged it wouldn’t be able to meet the deadline.

Wire reports