Morning Business Memo:
The housing market is revving up and gaining strength in some parts of the country. Average US home prices rose 1.3 percent in the third quarter - the biggest quarterly gain since 2006, according to the third quarter Zillow Real Estate Market Reports. But the pace of the recovery is uneven. Home values are growing rapidly in some areas. Zillow says prices compared with the year before shot up more than 20 percent in the Phoenix metro area. But in the Atlanta region home values dropped nearly 5 percent and continued to fall. "We're likely seeing home values fall back into the negative range in some markets due to the close of the traditional home-buying season," said Zillow Chief Economist Dr. Stan Humphries. "While that doesn't mean the recovery has come off the rails - in fact, most markets have hit bottom - it does present a confusing environment for consumers." Zillow's forecast shows a modest rise for next year with values increasing 1.7 percent.
Yahoo's new CEO Marissa Mayer appears to be doing a good job as company cheerleader. Despite a so-so quarterly report Yahoo shares gained more than 4 percent after Mayer announced earnings. Yahoo's net revenue barely grew at all at a time when advertisers are spending more money marketing their products and services online. Mayer spoke in general terms of her plans to revive Yahoo's business model, boosting website views, social content and search. "I came to Yahoo to grow and help redefine one of the Internet's most beloved companies," the 37-year-old former Google exec said. "The mobile wave is a huge wave for us to ride." Yahoo earned $3.2 billion, though most of this was a one-time gain from selling its stake in China's Alibaba Group. The quarterly numbers were slightly better than analysts projected. Yahoo hired Mayer in its latest turnaround attempt in mid-July, shortly after the quarter started.
The Federal Reserve begins two days of meetings this morning, and no change is expected to be announced on its third round of bond buying. The likely message from the Fed will be: give it time. The plan includes purchasing mortgage bonds and keeping short-term interest rates at record lows. Fed officials may discuss ways to expand bond buying in the future.
The rapidly growing energy drink industry is facing more questions about the health effects of its products. Federal officials are looking into reports five people have died since 2009 after drinking Monster energy products. News of the government inquiry and a lawsuit against the company triggered a 14 percent drop in the value of Monster Beverage shares. Monster was named in a lawsuit that claims a 14-year-old girl died of caffeine toxicity after drinking two 24-ounce cans. Monster released a statement saying it would fight the suit. The company says in a statement that it does not believe Monster was in any way responsible for girl's death or any other deaths. The Food and Drug Administration says it has not established a link between Monster energy drinks and the reports it has received concerning five deaths and another non-fatal heart attack. Some members of Congress are calling for tougher regulation of high-caffeine energy drinks.