NEW YORK (AP) -- Oil prices tumbled below $67 a barrel to 16-month lows Wednesday after the government reported big increases in U.S. fuel supplies -- more evidence that the economic downturn is drying up energy demand.

The Energy Information Administration said crude inventories jumped by 3.2 million barrels last week, above the 2.9 million barrel increase expected by analysts surveyed by energy research firm Platts. Gasoline inventories rose by 2.7 million barrels last week, and inventories of distillates, which include heating oil and diesel, rose by 2.2 million barrels.

Over the last four weeks, the EIA said, motor gasoline demand was down 4.3 percent from the same period last year. Distillate fuel demand was down 5.8 percent, and jet fuel demand was down 9.2 percent.

"The main theme here that's driving this market into new low ground is demand deterioration," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "As we begin to see evidence that demand is leveling -- it doesn't have to increase, just level -- then we can start discussing a possible price bottom. But it appears premature at this point."

Light, sweet crude for December delivery fell $5.43 to settle at $66.75 on the New York Mercantile Exchange, after falling as low as $66.20. It was the lowest close for a front-month contract since June 13, 2007, when crude settled at $66.26.

The energy markets have also been weighed down by the weak stock market, as investors grow more pessimistic about how long it will take the economy to recover from the current global financial turmoil.

EW YORK (AP) -- How could a $24 billion loss possibly be good news? When it comes from Wachovia as an effort to primp itself for its acquisition by Wells Fargo.

Wachovia Corp.'s staggering loss for the third quarter resulted primarily because it wrote down the value of intangible assets by almost $19 billion and built up its loan loss reserves by $4.8 billion, moves that seemed to please its suitor.

"It was prudent for Wachovia to put these losses behind them," said Wells Fargo Chief Financial Officer Howard Atkins in a release. "The asset write-downs, reserve build, and other items are consistent with our acquisition assumptions."

The moves tidy up Wachovia's balance sheet so that it is more in line with that of the more conservative Wells Fargo, analysts said. At the same time, Wells Fargo can use the losses reported by Wachovia to shelter years of profits after it acquires the Charlotte, N.C.-based bank.

Late last month, the Internal Revenue Service issued a surprise ruling that boosts banks' ability to offset the losses from loans and other bad debts held by banks they acquire. The guidance allows banks to take larger tax write-offs against future profits and makes the bargain-basement $14 billion all-stock Wachovia deal all the more attractive for San Francisco-based Wells Fargo.

The ruling removes any limitation on how much a company can offset its income with the losses of an acquired company, said Walter Pagano, a partner at Eisner LLP and a former IRS revenue agent. Under the old ruling, companies could only write off a small portion of the losses, limiting how much of a tax

Apple Inc. said its profit jumped 26 percent in its fiscal fourth quarter as the newest iPhone outsold the market-leading BlackBerry from Research in Motion Ltd.

Despite the blockbuster performance, which sent Apple's shares soaring in after-hours trading, the company issued what it called "prudent" predictions for the current quarter, because of broader economic uncertainty.

For the three months ended Sept. 27, Apple's profit climbed to $1.14 billion, or $1.26 per share, from $904 million, or $1.01 per share in the same period last year.

Sales jumped 27 percent to $7.9 billion from $6.22 billion in the year-ago quarter.

Cupertino, Calif.-based Apple's profit topped Wall Street's expectations, but sales missed. Analysts had expected the company to sell $8 billion worth of Macintosh computers, iPods, iPhones and other gadgets, for a profit of $1.11 per share, according to a Thomson Reuters poll.

On a conference call with analysts, Chief Executive Steve Jobs addressed concerns that economic weakness will eat into Apple's business through the holidays and beyond.

Jobs said Apple's customers are more likely to put off buying a new computer than to defect to other brands of PCs with lower prices. Apple, which is sitting on about $25 billion in cash, could use the downturn to invest in research and development, he said.

"We may get buffeted around by the waves a little bit, but we'll be fine," Jobs said.

SAN FRANCISCO (AP) -- Yahoo Inc. will fire at least 1,500 workers to cope with a crumbling economy that dented its third-quarter profit and turned up the heat on the slumping Internet company's management as investors stew over a missed opportunity to sell to Microsoft Corp. for $47.5 billion.

The purge outlined Tuesday represents a 10 percent reduction in Yahoo's payroll of about 15,000 employees. It's the second time in nine months that Yahoo has resorted to mass layoffs in what so far has been an ineffectual effort to rebound from a financial funk that has left its stock price near a 5 1/2-year low.

Yahoo's housecleaning, to be completed by the end of the year, provides the latest example of how a credit crisis that has already rocked banks and retailers is starting to rattle Silicon Valley, the nation's high-tech heartland.

Online auctioneer eBay Inc. is jettisoning 1,600 jobs while an array of startups are letting go workers to squirrel away more cash as venture capitalists become more cautious with their money. Even Google Inc., a company renowned for its free-spending ways, is starting to cut corners.

"We are going into what is very clearly a recession mode," Blake Jorgensen, Yahoo's chief financial officer, said in a Tuesday interview.

Yahoo felt the squeeze in the third quarter as the Sunnyvale, Calif.-based company earned $54.3 million, or 4 cents per share. That was a plunge of 64 percent from $151.3 million, or 11 cents per share, at the

SAN FRANCISCO (AP) -- IBM Corp.'s third-quarter profit jumped nearly 20 percent, surpassing analyst estimates, as the technology company overcame slumping hardware sales and signed a healthy number of new services contracts.

Armonk, N.Y.-based IBM had released partial results for the July-September period last week to try to reassure investors who had been driving down the company's stock price. The move helped stop a steeper decline, but Wall Street was still waiting for word about how much new business IBM brought in during the period.

In a closely watched indicator, IBM signed $12.7 billion in new services contracts in the quarter, down 4 percent, which still showed it was able to lock in lots of new business despite the tough economic times. Short-term contract signings were up 13 percent to $6.1 billion.

IBM gets about half its revenue from annuity-like payments flowing from contracts it may have inked months or years ago for services like consulting or technology outsourcing.

Profit came in two cents per share ahead of analysts' recently revised estimates.

IBM earned $2.82 billion, or $2.05 per share, in the three months ended Sept. 30. That compares with net income of $2.36 billion, or $1.68 per share, in the year-ago period.

Analysts surveyed by Thomson Reuters were expecting $2.03 per share.

IBM continues to get better at wringing out more costs to improve its profit margins. Gross profit margin,

NEW YORK (AP) -- Citigroup Inc., suffering its fourth straight quarterly loss and forfeiting the title of largest U.S. bank by assets, is falling behind in the historic reshuffling of the U.S. banking system.

Of the four major U.S. banks left standing -- Citigroup, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. -- Citi has been on the shakiest footing for a while. Its peers have managed to keep turning profits, albeit dampened ones, and they've made acquisitions while Citi has shrunk.

Many observers believe now is the time for banking companies to snap up low-priced rivals to better position themselves in advance of an eventual economic turnaround.

But Thursday's results heightened concerns that Citi -- drubbed by the relentless downturn in housing and turmoil in the financial markets -- may not be the capable acquirer it hopes to be.

"I personally don't think they can do it (an acquisition) unless it's really on the cheap," said Donn Vickrey, co-founder of Gradient Analytics, pointing to Citi's recent losses and losses that appear to be in the pipeline. "To me, this looks pretty concerning."

The New York-based bank said Thursday it lost $2.8 billion, or 60 cents per share, in the third quarter, compared with a profit of $2.2 billion, or 44 cents per share, a year ago. The deficit for the July-to-September period brings Citi's total losses over the past 12 months to $20.2 billion.

The shortfall for the quarter was narrower than anticipated. Analysts polled by Thomson Reuters expected a loss of 70 cents per share; Standard & Poor's Ratings Services called the results

SAN FRANCISCO (AP) -- Google Inc. shook off the economic turbulence to deliver a third-quarter profit that topped analysts' forecasts, supporting the Internet search leader's theory that its advertising system will prosper even in tough times.

The reassuring performance lifted Google shares by more than 10 percent late Thursday, even though the company's executives made some of their most sober remarks yet about the worst financial crisis since the stock market crashed in 1929.

It's been bad enough to prompt Google -- renowned for its free-spending ways -- to hunker down and start scrimping more than it has in the past because the economy has entered "uncharted territory," Chairman Eric Schmidt told analysts in a conference call.

Google navigated through the economic shoals in the third quarter, earning $1.35 billion, or $4.24 per share. The profit rose 26 percent from $1.07 billion, or $3.38 per share, at the same time last year.

Excluding costs for employee stock compensation, Google said it would have made $4.92 per share. That figure surpassed the average estimate of $4.75 per share among analysts polled by Thomson Reuters.

Revenue climbed 31 percent to $5.54 billion. After subtracting advertising commissions, Google's revenue totaled $4.04 billion -- about $20 million below analyst estimates.

Analysts had been decreasing their projections amid waves of investor pessimism that pounded Google's stock price to a three-year low of $309.44 earlier Thursday. The shares subsequently rebounded with the

WASHINGTON (AP) -- The country has sunk deeper into an economic rut, the Federal Reserve reported Wednesday, reflecting mounting damage from the financial and credit crises.

The Fed's new snapshot of business conditions around the nation showed economic activity weakened across all of the Fed's 12 regional districts. Consumer spending -- which accounts for more than two-thirds of economic activity -- slumped in most Fed regions. Manufacturing also slowed in most areas.

Some businesses had become more pessimistic about the economic outlook, the Fed said.

The survey was released shortly after Fed Chairman Ben Bernanke, in a speech in New York, warned that it would take time for the country's economic health to mend even if badly needed confidence in the U.S. financial system returns and roiled markets stabilize.

In an unprecedented action last week, the Fed and other major central banks sliced interest rates to prevent the financial crisis from plunging the U.S. -- and the global economy -- into a long and painful recession.

Many economists believe the Fed might lower its key rate -- now at 1.50 percent -- again later this month at its regularly scheduled meeting.

Consumers are pulling back, raising the odds the economy will contract later this year and early next year. Some think the economy may have jolted into reverse in the recently ended third quarter. One classic