Stocks plunge amid uncertainty over virus impact; Amazon soars
NEW YORK (AP) — Stocks are plunging in afternoon trading on Wall Street amid ongoing uncertainty about the potential economic impact of the virus outbreak that originated in China.
The World Health Organization has declared the pandemic a “global emergency”, a designation that signals the virus is now a significant risk to other countries and requires a global response. Cases have spiked in China, along with deaths there, and the U.S. is now advising against all travel to the world’s second largest economy.
Technology stocks are leading the losses. Apple, which relies on Chinese consumers for sales and factories for supplies, fell 2.3%. Nvidia slid 2.9% and other chipmakers slipped.
Amazon was the standout after issuing a blowout earnings report.
Airlines are also among the biggest losers. American Airlines fell 3% and Delta Air Lines slipped 2% as both companies suspend flights to and from China.
Banks and energy companies also broadly fell. Exxon and Chevron both fell after issuing fourth-quarter results.
Bond prices rose. The yield on the 10-year Treasury fell to 1.52% from 1.55% late Thursday.
US consumer spending slows to 0.3% gain in December
WASHINGTON (AP) — U.S. consumer spending slowed in December as Americans spent more on prescription drugs and health care services but those gains did not offset a sharp slowdown in spending on new cars.
The Commerce Department said Friday that consumer spending rose a moderate 0.3% after a stronger 0.4% gain in November. Income growth also slowed in December, rising by 0.2%, just half the 0.4% increase in November.
Inflation as measured by a price gauge preferred by the Federal Reserve was up 0.3% in December compared to a 0.1% November increase.
However, for the full year, prices rose just 1.6%, well below the Fed’s 2% target. The modest inflation readings gave the Fed the leeway last year to cut its benchmark interest rate three times to protect the economy from a global slowdown and manufacturing disruptions caused by the U.S.-China trade war.
Consumer spending is closely watched because it accounts for 70% of economic activity.
US workers’ compensation growth slowed a bit in 2019
WASHINGTON (AP) — Americans’ pay and benefits rose at a solid pace last year, but at a slower rate than in 2018, the Labor Department said Friday.
Total salaries and benefits such as health insurance rose 2.7% in 2019, according to the government’s employment cost index, down from 2.9% in the previous year. In the final three months of last year, workers’ compensation grew 0.7%, matching the third-quarter’s increase.
The slowdown in salary and benefit growth has been a surprise to economists, since the unemployment rate, currently 3.5%, is at a half-century low and has hovered near that level for most of last year. Businesses typically are forced to pay more and offer better perks when the labor market is so tight.
Some economists speculate that the slowdown in hourly wage growth in the jobs report reflects an increase in the number of lower-paid workers.
Delta, American Airlines suspend flights between US, China
NEW YORK (AP) — Delta Air Lines and American Airlines said Friday they will suspend all flights between the U.S. and China, making them the first U.S.-based airlines to do so and joining several international carriers that have stopped flying to China as the coronavirus outbreak continues to spread.
American said it will halt the flights starting Friday and running through March 27. Delta plans to wait until Feb. 6 to suspend China operations to help travelers in China leave the country. Delta said it will stop the flights through April 30.
United Airlines, the only other U.S. carrier with direct flights to China, has announced it will reduce but not stop service to China.
All three of the U.S. carriers had reported a steep decline in bookings to China.
For American and Delta, their decisions to suspend all flights there might have been forced when international experts labeled the coronavirus a global public-health emergency. American was under extra pressure after the union representing its pilots sued to halt the flights and told its members not to fly to China because of the health risks.
Several major international airlines, including Air France, British Airways and Scandinavian Airlines, had already suspended service to China.
Facebook working to provide helpful coronavirus information
UNDATED (AP) — Facebook says it’s working to limit the spread of misinformation and potentially harmful content about the coronavirus as bogus claims about the ongoing outbreak circulate online.
Kang-Xing Jin, Facebook’s head of health, announced that the social media platform will begin removing posts that include false claims or conspiracy theories about the virus that have been flagged by health authorities. The company said it will focus on posts that discourage peopple from getting medical treatment, or that make potentially dangerous claims about cures.
The company will also limit the spread of posts debunked by its third-party fact checkers, and sent users who shared the post a notification.
Users who search for information on the virus on Facebook, or who click on certain related hashtags on Instagram, will receive a pop-up providing authoritative information on the virus. In addition, information about the outbreak will also appear at the top of Facebook users’ news feeds based on guidance from the World Health Organization.
Exxon profit slips in the fourth quarter on weak margins
UNDATED (AP) — Exxon Mobil’s profit slid more than 5% in the fourth quarter of 2019, as the oil giant dealt with weak margins in its chemical and retail fuel operations.
The country’s largest oil producer posted $5.69 billion in profits, or $1.33 per share, for the quarter. But those profits were boosted by a one-time sale of non-strategic assets in Norway, which lifted earnings by 92 cents per share. Removing the asset sale, per-share profit was 41 cents, shy of the 44 cents analysts polled by Zacks Investment Research were looking for.
A year earlier the Irving, Texas, company earned $6 billion, or $1.41 per share.
Revenue reached $67.17 billion, which was down from $71.9 billion a year earlier.
FAA staff and tour co. ties alleged after 3 chopper crashes
WASHINGTON (AP) — The chairman of a key Senate committee is asking the Transportation Department’s Inspector General to investigate misconduct allegations at the Federal Aviation Administration’s Hawaii field office.
They involve an allegedly close relationship between an FAA manager and a helicopter tour company involved in three crashes during the past two years. Three people were killed in one of the crashes, which happened in April of last year.
Transportation Committee Chairman Roger Wicker, a Republican from Mississippi, says in a letter dated that a whistle blower reported the allegations to the committee staff.
In a letter calling for the probe, Wicker said the allegations include managers directing that investigative reports be altered, and management retaliation against an employee who reported the problems.
The committee says in a fact sheet on the case that its own investigation isn’t complete, but it “raises significant concerns about the efficacy of FAA oversight in Hawaii.”
The FAA said Friday that it has been investigating on its own and already is taking steps to address problems that have been substantiated. It pledged to cooperate with the office of Inspector General Calvin Scovel.
France agrees to end Airbus corruption probe in $4 bln deal
PARIS (AP) — A French court has approved an agreement with Airbus that would see the plane maker pay up to $4 billion to end years of corruption investigations by three countries.
Courts in the U.S. and Britain were considering Friday their own parts of the deal with the company as part of an unusually large, international investigation.
French national financial prosecutor Jean-Francois Bohnert said Airbus had “acknowledged acts of corruption” in negotiating the deal.
British and French authorities are investigating alleged fraud and bribery related to Airbus’ use of outside consultants to sell planes. U.S. authorities are also investigating Airbus’ compliance with American arms trafficking regulations.
The settlement was among the biggest-ever in both France and Britain in a company corruption case.
While costly, the settlement could allow Airbus to turn the page on a period that damaged its reputation and led to management and policy changes.
EU’s blue flag taken down at UK mission in Brussels
LONDON (AP) — Britain is leaving the European Union Friday night after 47 years of membership and 3 ½ years of wrangling, rancor and political drama.
In a symbolic move, the EU’s blue flag has been taken down from the U.K.’s permanent representation in Brussels, near EU headquarters. The U.K.’s Union Jack flag is set to be taken down from the EU Council and Parliament buildings.
But Britain’s departure from the 28-nation bloc at midnight, Brussels time, will be just the first stage of a journey that still has many twists in store. The two sides have negotiated a divorce deal that includes an 11-month “transition period,” in which relations will stay much as they were before. That means Britain and the EU have until the end of the year to forge a new relationship covering areas including trade and security.
Sealing a deal will require compromises and trade-offs — but for now both sides are talking tough.
UK’s health chief slams Gwyneth Paltrow’s lifestyle brand
LONDON (AP) — The chief executive of Britain’s National Health Service has criticized Gwyneth Paltrow’s lifestyle brand Goop and her new Netflix series, warning it carries “considerable risks to health.”
At an event in Oxford on Thursday, NHS chief Simon Stevens slammed Paltrow’s brand for giving prominence to “quacks, charlatans and cranks” in promoting untested treatments like vampire facials and unusually scented candles.
Stevens warned about the potential of misinformation to undermine public health, citing the recent surge in measles across Britain. Scientists have attributed the disease’s rise in part to falling vaccination rates, first prompted by skepticism about the vaccine suggested in a discredited scientific study in a 1998 medical study that linked the shot to autism.
A spokeswoman for Goop said the company “takes efficacy and product claims very seriously” and noted it has a legal and compliance team that works with their science and research group to vet product claims.
Paltrow’s six-part series, “The goop lab with Gwyneth Paltrow,” was recently made available on Netflix in the U.K.