Lilly halts Alzheimer's drug's developmentEli Lilly & Co. will stop development of one of two Alzheimer's drugs the company has in final testing after trials showed the treatment didn't work. Two studies showed the experimental medicine, called semagacestat, didn't slow disease progression, Indianapolis-based Lilly said in a statement Tuesday. The drug was also linked to a worsening of the ability to perform daily activities and a higher risk of skin cancer.

Factories manufacture a rise in fortunesU.S. manufacturing activity grew in July at the fastest pace since last August, according to government data released Tuesday. Auto plants stayed open when they normally close for summer renovations, and businesses replaced worn-out equipment. That helped boost factory output 1.1 percent. Overall output at U.S. factories, mines and utilities rose 1.0 percent last month, the Federal Reserve reported. That followed a decline of 0.1 percent in June, the first drop in more than a year.

Multi-family homes drive housing increaseConstruction of new homes and apartments rose 1.7 percent last month, the Commerce Department said. But the gains were driven by a 32.6 percent surge in apartment and condominium construction, a small fraction of the market. Single-family home construction, nearly 80 percent of the market, fell 4.2 percent. Requests for building permits slid 3.1 percent.

Local Fed head: Outlook not that gloomyThe Federal Reserve's Aug. 10 policy statement may have led investors to inaccurately believe the U.S. economy is in worse shape than presumed, said Narayana Kocherlakota, the central bank's newest policymaker, who added a "modest" recovery appears to be underway. The Federal Open Market Committee's move to reinvest proceeds from mortgage-backed securities into Treasuries "had a larger impact on financial markets than I would have anticipated," the head of the Minneapolis Fed said Tuesday in a speech in Marquette, Mich. The Fed bought $2.551 billion of Treasuries Tuesday in the first outright purchase of U.S. government debt since October.

Americans continue to shrink their debtsThe debts of American households shrank for a seventh straight quarter, the Federal Reserve said Tuesday in a new report documenting how the easy-money boom has given way to a powerful contraction in borrowing. Total household debt has tumbled 6.5 percent from its peak in 2008, reflecting a retrenchment that has been both voluntary and involuntary.

Mazda recalls 300,000 cars for steering issueMazda Motor Corp. is recalling more than 300,000 Mazda3 and Mazda5 vehicles in North America to fix problems with the power-steering assist that could lead to a crash. The Japanese automaker told the government the recall involved model year 2007-2009 Mazda3 and Mazda5 vehicles built from April 2007 through November 2008. The recall involves 215,000 vehicles in the United States and 100,000 vehicles in Canada and Mexico. The company said it has not received any reports of crashes or injuries tied to the problem.

Delta attendants may vote on unionFlight attendants at Delta Air Lines Inc. may have the chance to vote on joining a union now that the National Mediation Board has decided to recognize its merger with Northwest Airlines Corp. The Association of Flight Attendants-CWA said Tuesday in an e-mail that it has 14 days to prove there is sufficient interest in a union among Delta's 20,000 attendants. If the mediation board is convinced, it will set a date for a vote.

FROM NEWS SERVICES