Update on the latest business


Stocks go on a wild ride as virus threatens economic damage

NEW YORK (AP) — Stocks took an early nosedive on Wall Street Thursday before recovering much of the ground they lost as investors struggle to anticipate how wide the economic damage from the coronavirus outbreak will be.

More companies including Microsoft and Budweiser maker InBev are warning their results will be hurt. Goldman Sachs said earnings for companies in the S&P 500 index might not grow at all this year, after predicting earlier that they would grow 5.5%. Strategist David Kostin also cut his growth forecast for earnings next year.


Thursday’s losses extended a weeklong rout that has brought the S&P 500 8.8% below the record high it set just a week ago.

Bond yields edged higher, reversing a sharp drop in the early going, as demand for ultra-safe assets waned somewhat. The yield on the 10-year Treasury edged up to 1.32%. Gold prices also fell after rising earlier.

The price of crude oil fell 3.2%. The price has been falling sharply as investors anticipate that demand for energy will wane as the economy slows.


US economy grew at 2.1% rate in Q4 but virus threat looms

WASHINGTON (AP) — The U.S. economy grew at an annual rate of 2.1% in the final quarter of last year, but damage from the spreading coronavirus is likely depressing growth in the current quarter and for the rest of the year.

The overall pace of growth in the October-December quarter was unchanged from its initial estimate a month ago, though the components were slightly altered, the Commerce Department said Thursday. A slowdown in business restocking was less severe than first believed. But a cutback in business investment in new equipment was more of a drag on growth than initially thought.

Economists have been downgrading their forecasts for the first quarter of this year as fears of the impact of the virus has escalated. Stock markets have plunged this week on news that the number of coronavirus cases worldwide has now topped 81,000.


US orders for durable goods slip 0.2% in January

WASHINGTON (AP) — Orders to U.S. factories for big-ticket manufactured goods dipped in January, pulled down by decreased demand for cars, auto parts and military aircraft.

The Commerce Department said Thursday that orders for durable goods slipped 0.2% last month after climbing 2.9% in December. Excluding volatile transportation orders, durable goods orders rose 0.9%, fastest growth since April 2018.

Economists had expected a bigger drop in overall orders for durable goods, which are items such as appliances and industrial machinery meant to last at least three years.

Over the past year, the orders are down 2.3% and are flat excluding transportation.

The numbers have been especially volatile in recent months because of Boeing’s decision to suspend production of its troubled 737 Max airliner. Orders for civilian aircraft surged 346.2% in January after dropping 66.7% in December. Orders for military aircraft plunged 19.6% last month, and orders for cars and auto parts slid 0.8%. Excluding orders for military goods, orders climbed 3.6%, most since June 2017.

Orders for computers were up 8% and orders for machinery were up 2.1%.

A category that tracks business investment — orders for nondefense capital goods excluding aircraft — rose 1.1% in January after falling December and being flat in November.


US mortgage rates decline; 30-year loan at 3.45%

WASHINGTON (AP) — Long-term mortgage rates declined this week as growing concern over the economic impact of China’s viral outbreak spurred a steep downturn in global stock markets.

Mortgage buyer Freddie Mac said Thursday the average rate for a 30-year fixed-rate mortgage fell to 3.45% from 3.49% last week. Rates are far below year-ago levels: the benchmark 30-year loan averaged 4.35% a year ago.

The average rate on a 15-year fixed mortgage slipped to 2.95% from 2.99% last week. The average rate for a five-year adjustable-rate mortgage fell to 3.20% from 3.25% last week.


US pending home sales climbed 5.2% in January

WASHINGTON (AP) — There was a 5.2% jump in Americans signing contracts to buy homes in January from the previous month as lower mortgage rates and a solid economy are pushing up demand for housing.

The National Association of Realtors said Thursday that its index of pending sales climbed to 108.8 last month. These contract signings — a barometer of finalized purchases over the next two months — have risen 5.7% over the past year.

Homebuyers have benefited from a steady drop over the past year in the average interest charged on a 30-year mortgage. This has improved affordability for buyers with sufficient savings. But sales growth might also be restricted by a historically low inventory of homes for sales and prices that climbing faster than wages.


Officials: Chinese industry recovering, more aid coming

BEIJING (AP) — Small, mostly private companies that are the engine of China’s economy are back to operating at one-third of normal levels after anti-virus controls shut factories, shops and restaurants, regulators said Thursday, and they promised more low-cost loans and other aid.

The ruling Communist Part has ordered areas that are at lower disease risk to revive manufacturing and other businesses that have been shut for a month. That comes at a time when outbreaks in South Korea, Italy and Iran are leading to travel bans and other controls abroad.

At a news conference, officials expressed confidence China’s 18 million small and medium-size enterprises are recovering quickly. The category includes most of the privately owned restaurants, factories, stores and other companies that generate its new jobs and wealth.

Activity overall is back to 33% of normal levels, while manufacturing reached 43%, said an official of the Cabinet’s planning agency, Zhang Kejian, at a news conference. He said activity was increasing by about 1% per day.

Forecasters say automakers and other manufacturers won’t return to normal production until at least mid-March. Auto and other sales are expected to rebound, but tourism and other service industries might not be able to recover lost sales.


Kia recalls over 193K vehicles; fuel leaks can cause fires

DETROIT (AP) — Kia is recalling more than 193,000 cars and minvans in yet another move to fix nagging problems that could cause engine fires.

The largest of two U.S. recalls released by the government Thursday covers nearly 142,000 2013 and 2014 Optima midsize cars. They have 2.4-liter direct fuel injection or 2-liter direct injection turbocharged engines.

Kia says a fuel hose can deteriorate and crack due to engine heat. The hoses can leak and cause fires.

A fix is still being developed. The recall is expected to start April 16.

The second recall covers about 51,000 2011 and 2012 Sedona minivans. The fuel injector rail can crack from exposure to heat, causing a gas leak.

Dealers will replace the injector part starting April 16.

No fires or injuries have been reported in either recall. But Kia has eight reports of fuel leaks in Optimas and 24 reports in Sedonas.


Best Buy posts strong quarterly sales during holiday season

NEW YORK (AP) — Best Buy Co. reported strong fourth-quarter results as shoppers bought appliances, mobile phones and tablets during the holiday season.

The robust results, announced Thursday, beat Wall Street expectations, and came as many of its big box peers like Target and Walmart had wrestled with sales shortfalls.

Best Buy, which is facing increasing competition from Amazon, is holding its own after aggressively expanding its online operations, speeding up deliveries and making visits to its stores for customers a better experience. That effort was led by Hubert Joly until he stepped down in 2019 after seven years as CEO. Corie Barry took over the job in June.

The Richfield, Minnesota, company is also expanding into technology aimed at older customers. Last May, Best Buy acquired Critical Signal Technologies, a provider of personal emergency response systems and telehealth monitoring services for at-home seniors. In August, it bought the predictive health care technology business of BioSensics and hired its data science and engineering team. In 2018, it purchased Great Call, which provides emergency response devices for the aging.


Delivery giant DoorDash takes step toward public offering

NEW YORK (AP) — Food delivery giant DoorDash has taken a first formal step toward a stock market debut.

The San Francisco-based company announced Thursday that is has confidentially filed a draft S-1 form with the Securities Exchange Commission outlining its proposed public stock offering. There was no proposed date for an initial offering, which could be a long way off. Last year, rival Postmates delayed plans for an IPO, citing unfavorable market conditions.

DoorDash Inc. has overtaken Grubhub as the top digital food delivery company in the U.S., according to data analytics firm Second Measure, capturing 38% of monthly food delivery sales in January, compared to 31% for Grubhub.

Analysts have said both DoorDash and Postmates are burning cash and need money-raising options as the third-party delivery business becomes more fragmented and competitive.

Wall Street has been wary of fast-growing, money-losing companies. Ride-hailing company Uber — another major delivery player through Uber Eats — has traded well below its IPO price since going public last year, as has rival Lyft.

Besides Uber, Grubhub is the only publicly traded digital food delivery company. Grubhub saw its stock plunge last fall after slashing full-year revenue expectations, citing costs associated with gaining customer loyalty in a crowded field.


Britain opens EU trade talks with a threat to walk away

LONDON (AP) — Britain laid out its opening demands for upcomingtrade talks with the European Union on Thursday,including a blunt threat to walk away from the negotiating table if there is no progress within four months.

The two sides appear headed for a rocky first round of negotiations as they try to forge a new relationship following the U.K.’s departure from the now 27-nation bloc.

Britain and the EU both say they want to reach a free trade agreement, but have starkly divergent views on how it should be overseen and what constitutes fair competition between their two economies.

The EU says Britain must agree to follow the bloc’s rules in areas ranging from state aid to environmental protections, and give European boats access to U.K. fishing waters, if the two sides are to strike a good deal.

But the U.K. is demanding the right to diverge from the bloc’s rules in order to strike new trade agreements around the world, and to give the British government a freer hand to intervene in the U.K. economy.


UK court blocks Heathrow expansion over climate concerns

LONDON (AP) — Heathrow Airport’s plans to increase capacity of Europe’s biggest travel hub by over 50% were stalled Thursday when a British court said the government failed to consider its commitment to combat climate change when it approved the project.

The ruling throws in doubt the future of the 14 billion-pound ($18 billion) plan to build a third runway at Heathrow, the west London hub that already handles more than 1,300 flights a day.

While Heathrow officials said they planned to appeal, Prime Minister Boris Johnson’s government indicated it wouldn’t challenge the ruling by the Court of Appeal.

At stake is a project that business groups and Heathrow officials argue is crucial for the British economy as the U.K. looks to increase links with countries from China to the United States after leaving the European Union. Heathrow has already reached the capacity of its current facilities, and a third runway is needed to serve the growing demands of travelers and international trade, they say.

Environmental campaigners, however, challenged the project because of concerns that a third runway would encourage increased air travel and the carbon emissions blamed for global warming. The British government has committed to reducing greenhouse gas emissions as a signatory to the 2016 Paris Agreement, which seeks to limit temperature increases to 1.5 degrees Celsius over pre-industrial levels.

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