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Update on the latest business

October 5, 2018

FINANCIAL MARKETS

Stocks tumble

NEW YORK (AP) — U.S. stocks are tumbling in midday trading on Wall Street as investors continue to worry about rising bond yields and interest rates.

The Labor Department said the economy continues to add jobs at a strong pace, which makes it likely rates will keep rising.

The yield on the 10-year Treasury note rose to 3.22 percent, a seven-year high.

Stocks plunged on Thursday, with the S&P 500 suffering its worst loss since June.

ECONOMY-JOBS REPORT

US unemployment rate falls to 49-year low of 3.7 percent

WASHINGTON (AP) — The U.S. unemployment rate fell to 3.7 percent in September, the lowest level since December 1969, as the longest streak of hiring on record has put millions of Americans back to work since the Great Recession.

The Labor Department says employers added just 134,000 jobs, the fewest in a year, though that figure was likely lowered by Hurricane Florence. The storm struck North and South Carolina in the middle of September and closed thousands of businesses. A category that includes restaurants, hotels and casinos lost jobs for the first time since last September, when Hurricane Harvey had a similar effect.

Even with unemployment at a historic low, average hourly pay increased just 2.8 percent from a year earlier, one tick below the yearly gain in August.

ECONOMY-TRADE GAP

Record imports push US trade gap to $53.2 billion in August

WASHINGTON (AP) — Record imports drove the U.S. trade deficit up for the third straight month in August. The politically sensitive deficits in the trade of goods with China and Mexico hit records.

The Commerce Department says the trade gap — the difference between what America sells and what it buys abroad — rose to $53.2 billion in August from $50 billion in July. The August reading was the highest since February.

Imports rose 0.6 percent to a record $262.7 billion. Exports slid 0.8 percent to $209.4 billion.

President Donald Trump campaigned on a pledge to bring down U.S. trade deficits and has slapped taxes on imported steel, aluminum and on many Chinese products.

But the sanctions have yet to have an impact on the deficit, which is up 8.6 percent this year.

COMMERCIAL SPACE

Debut of SpaceX, Boeing crew capsules off until next year

CAPE CANAVERAL, Fla. (AP) — The debut of SpaceX and Boeing crew capsules is off until next year.

NASA said this week that the first commercial test flights have slipped from late this year into next. SpaceX is shooting for a January shakedown of its Dragon capsule, without anyone on board. Boeing is aiming for a March trial run of its Starliner capsule, also minus astronauts.

Those tests would be followed by flights with crews next summer. SpaceX is targeting June and Boeing, August. That would be eight years after astronauts last rocketed into orbit from the U.S.

Since the retirement of NASA’s shuttles in 2011, U.S. astronauts have had to rely on Russian capsules to get to and from the International Space Station.

NASA stresses these latest launch dates are still subject to change.

GAS EXPLOSIONS

Senators: Utility “woefully” unprepared for gas explosions

LAWRENCE, Mass. (AP) — Massachusetts’ two U.S. Senators say the natural gas company at the center of the explosions north of Boston last month was “woefully unprepared” for the unfolding disaster.

Democratic senators Elizabeth Warren and Ed Markey said Friday a review of internal Columbia Gas documents found the utility didn’t have adequate safety and response measures in place before the Sept. 13 incident.

The senators said the company only instituted “commonsense” measures like knowing the location of control lines days after more than 80 natural gas explosions and fires rocked Lawrence, North Andover and Andover.

Company spokesmen didn’t immediately comment.

Gov. Charlie Baker and local officials also announced Friday they’re offering hotel rooms and other temporary housing for those without gas service. The incident killed one teen and injured 25 others people.

MATTRESS FIRM-BANKRUPTCY

Mattress Firm files for bankruptcy, closing up to 700 stores

HOUSTON (AP) — Mattress Firm, Inc., the nation’s largest mattress retailer, is filing for bankruptcy protection and plans to close up to 700 stores around the country.

The Houston-based company filed for Chapter 11 bankruptcy protection Friday in federal court in Delaware.

According to court documents, Mattress Firm has more than $1 billion in liabilities and has more than 50,000 creditors. It owes its largest creditor, mattress maker Simmons Manufacturing Co., nearly $65 million.

In a statement, CEO and president Steve Stagner says the bankruptcy filing will allow the company to “strengthen our balance sheet” and close stores in certain markets with “too many locations in close proximity to each other.”

The company has more than 3,000 stores in the U.S. and in recent years had been aggressively expanding as it purchased competitors.

CHICAGO HOTELS STRIKE

Deals reached to end strike at most downtown Chicago hotels

CHICAGO (AP) — New contract agreements have been reached at four more downtown Chicago hotels, nearly a month after strikes began at about two dozen locations.

Workers union Unite Here Local 1 and Hyatt Hotels say the new deals reached Thursday include three of the company’s hotels and meet the union’s major demand of year-round health insurance for employees who are laid off during slower months. The fourth agreement was with the Holiday Inn Mart Plaza.

The strike by housekeepers, doormen, servers, cooks and others began Sept. 7 after contracts expired for about 6,000 hotel workers. At its peak, the strike involved 26 downtown hotels. Hilton and Marriott hotels were among those affected that previously reached new contract deals.

The union says the strikes are ongoing at four hotels. The new contracts cover some 5,500 workers.

FACEBOOK-KAVANAUGH

A rift at Facebook after exec attends Kavanaugh hearing

WASHINGTON (AP) — The appearance of a Facebook executive behind Supreme Court nominee Brett Kavanaugh during recent and contentious hearings has created some rifts at the company.

Joel Kaplan, Facebook’s vice president for global public policy, is a friend of Kavanaugh’s and several media outlets published excerpts from a note he sent to the staff saying that he is aware that this is a “deeply painful” moment.

According to those reports, some within Facebook took his appearance as an endorsement of Kavanaugh, who is facing an investigation into allegations of at least one sexual assault decades ago.

On the day Kaplan circulated his note, CEO Mark Zuckeberg held a staff meeting to say that Kaplan didn’t break company rules. Facebook plans another meeting Friday to address the matter.

CHINA-HACK REPORT-TECH STOCKS

China tech stocks Lenovo, ZTE tumble after chip hack report

HONG KONG (AP) — Chinese tech stocks Lenovo Group and ZTE Corp. have tumbled in Hong Kong following a news report Chinese spies might have used chips supplied by another company to hack into U.S. computer systems.

Lenovo shares fell 20 percent on Friday but recovered some of that to be off 15 percent at mid-afternoon. ZTE was off 11 percent.

Bloomberg News cited unidentified U.S. officials as saying Chinese spies inserted malicious chips into equipment supplied by Super Micro Computer Inc. to American companies and government agencies.

Lenovo said in a statement Super Micro “is not a supplier to Lenovo in any capacity.”

Super Micro denied its products contained malicious chips.

RUSSIA-CYBERATTACKS

Germany calls on Russia to halt campaign of cyberattacks

BERLIN (AP) — Germany has become the latest European country to blame the Russian military for a worldwide campaign of cyberattacks against businesses and media.

Government spokesman Steffen Seibert said Friday that Germany shares the assessment of British and Dutch officials earlier this week and “condemns the attacks in the sharpest possible manner.”

He said Germany believes, based on its own sources, that “with almost absolute certainty that the Russian military intelligence agency is behind the APT28 campaign.”

Advanced Persistent Threat 28 is another term used to describe the Sofacy or Fancy Bear hacking group.

Seibert said Germany believes successful attacks “could directly threaten free society, public safety and in principle our democracy” and urged Russia “to meet its responsibilities and cease such actions.”

Russia denies involvement in the attacks.

GERMANY-DIESEL

German government urges automakers to pay diesel upgrades

BERLIN (AP) — The German government is calling on automakers to pay for upgrades to diesel vehicles with excessively high emissions, as part of a deal to avert driving bans next year.

A spokesman for the environment ministry said Friday that the government “can’t tolerate this refusal” by German automakers to shoulder the cost of fixing diesel cars.

The head of Germany’s powerful auto lobby group VDI, Bernhard Mattes, had told Deutschlandfunk radio that manufacturers favor giving car owners rebates to buy new vehicles over hardware upgrades to millions of diesel vehicles.

The ministry spokesman, Nikolai Fichtner, told reporters in Berlin that the upgrades have to start “very, very quickly” otherwise car owners may find themselves banned from driving in certain cities from October 2019.

TESLA-ACCIDENT RECORDS

Tesla releases first quarterly safety report

NEW YORK (AP) — Tesla says it recorded one accident for every 3.34 million miles driven in the third quarter when the autopilot was engaged on its vehicles.

That rises to 1.92 million when autopilot is not on.

It’s the first quarterly autopilot safety report released by Tesla. The accident rates fall far below the U.S. average.

The most recent National Highway Traffic Safety Administration data shows one auto crash for every 492,000 miles driven in the U.S.

The one-page report did not include any details on the collisions but follows some crashes that were highly publicized, just because there is so much interest in the cars and their autonomous systems, as well as the company’s eccentric CEO, Elon Musk.

Tesla says it’s now going to start publicly releasing accident data every quarter.

FLINT WATER-ELON MUSK

Musk, foundation to donate water stations to Flint schools

FLINT, Mich. (AP) — Elon Musk and the Musk Foundation are donating water stations and filtration systems to schools in Flint, Michigan, which is still recovering from a lead-tainted water crisis. The Flint Journal reports that Flint Community Schools thanked the tech billionaire for “investing” in students’ health and future in a tweet Thursday. Musk responded via tweet that he hoped “to do more to help in the future.”

The Associated Press left messages Friday seeking comment from Musk and district officials.

Lead leached from old water pipes into homes and buildings after Flint began using water from the Flint River in 2014 without adding corrosion-control chemicals. Flint returned to Detroit’s water system in 2015.

In July, Musk tweeted that he would organize an effort to add filters to homes that need them.

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