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Update on the latest business

September 27, 2018

FINANCIAL MARKETS

Stocks climb

NEW YORK (AP) — Stocks are moving broadly higher in midday trading on Wall Street as several big technology companies including Apple post solid gains. Health care companies are also doing well.

Bed Bath & Beyond plunged after reporting earnings that fell far short of analysts’ estimates and slashing its outlook for the year. Packaged food company Conagra fell after reporting weak results of its own.

Bond prices fell. The yield on the 10-year Treasury note rose to 3.07 percent.

MORTGAGE RATES

US mortgage rates up; 30-year at 7-year high 4.72 percent

WASHINGTON (AP) — Long-term U.S. mortgage rates are up for the fifth straight week, with the key 30-year rate reaching its highest level in more than seven years.

Costs for would-be homebuyers continue to climb. Mortgage buyer Freddie Mac said Thursday that the average rate on 30-year, fixed-rate mortgages jumped to 4.72 percent from 4.65 percent last week. The average benchmark rate has risen from 3.83 percent a year ago.

The average rate on 15-year, fixed-rate loans increased to 4.16 percent this week from 4.11 percent last week.

The Federal Reserve signaled its confidence in the economy on Wednesday by raising a key interest rate for a third time this year, forecasting another rate hike before year’s end.

PENDING HOME SALES

US pending home sales fell in August

WASHINGTON (AP) — Pending home sales slipped in August as fewer Americans signed contracts to purchase a house, the fourth decline in the past five months.

The National Association of Realtors says that its pending home sales index fell 1.8 percent last month to 104.2. This measure of contract signings has tumbled 2.3 percent in the past year, with the sharpest annual decline of 11.2 percent in the West where homes generally cost more.

The recent setbacks suggest that the combination of rising prices, higher mortgage rates and a limited number of sales listings are hurting affordability.

In August contract signings slipped on a monthly basis in the four major geographic regions: Northeast, Midwest, South and West.

Pending sales are a barometer of home purchases that are completed a month or two later.

DURABLE GOODS

Orders for US durable goods jumped 4.5 percent last month

WASHINGTON (AP) — Orders for long-lasting U.S. factory goods rose at a healthy pace last month, though the increase was mostly driven by a surge in aircraft demand.

The Commerce Department says orders increased 4.5 percent in August, the most in six months. Excluding aircraft, cars, and other transportation equipment, however, orders increased just 0.1 percent.

U.S. manufacturing is expanding at a solid pace, with orders up 9.2 percent year-to-date. Consumers are confident and spending more, and businesses have stepped up investment in machinery and equipment. Still, President Trump’s trade battles with China, Europe, and Canada pose a risk in the coming months.

A category of orders that is a proxy for business investment fell 0.5 percent last month, but that follows two strong months and those orders are up 7.4 percent year-to-date.

BED BATH & BEYOND-STOCK

Bed Bath & Beyond nosedives after cutting forecasts

NEW YORK (AP) — Bed Bath & Beyond’s stock plunged to its lowest price in 18 years after the home goods store chain posted weak results in the second quarter and cut its forecasts for the rest of the year.

The company’s profit fell by almost 50 percent compared to a year ago. Its stock sank 21.5 percent to $14.76 in very heavy trading. It’s down about 33 percent in 2018.

Bed Bath & Beyond, which traded above $75 in early 2015, fell to its lowest level since early 2000.

KeyBanc analyst Bradley Thomas said competition for Bed Bath & Beyond from both online and physical retailers is getting worse. He said that competition, along with continued spending on its website and mobile business, will continue to hurt the company’s profits.

AETNA-BUSINESS SALE

Aetna sells Medicare business as it eyes close of CVS deal

UNDATED (AP) — Aetna is selling its Medicare prescription drug business, potentially clearing the way for CVS Health to complete its $69 billion takeover of the insurer.

CVS announced plans to buy Aetna late last year. The deal is expected to give the drugstore chain a bigger role in health care, with the companies combining to manage care through CVS stores, clinics and prescription drugs.

Industry experts say regulators may have been concerned about a Medicare business overlap between the companies. But Leerink analyst David Larsen says he is more confident the deal will be approved due to the sale that Aetna announced Thursday.

Aetna is not disclosing terms of its deal with fellow insurer WellCare.

Aetna Inc. and CVS Health Corp. expect their combination to close before the end of this year.

RITE AID-BOARD SHAKE-UP

A board reshuffle at Rite aid after 2 failed merger attempts

UNDATED (AP) — After two failed buyouts, Rite Aid is shuffling its board of directors and dividing power at the top of the drugstore chain.

Rite Aid said Thursday that three new, independent directors will be nominated to its board and that CEO John Standley will no longer hold the title of chairman. That goes to current board member Bruce Bodaken.

Shareholders will vote next month on whether to approve new board nominees Robert Knowling Jr., Louis Miramontes and Arun Nayar.

Bodaken said in a prepared statement that a push for a board reorganization was accelerated after hearing from shareholders following the collapse last month of an attempted buyout by Albertsons. Rival Walgreens also failed in a separate attempt to acquire Rite Aid Corp., which is based in Camp Hill, Pennsylvania.

HEALTH OVERHAUL

Trump health chief: Premiums to drop for popular ACA plan

WASHINGTON (AP) — U.S. health secretary Alex Azar says premiums for a popular type of health plan under the Affordable Care Act will edge downward next year.

Speaking in Nashville on Thursday, Azar said premiums for a popular type of “silver” plan will drop by 2 percent in the 39 states served by the federal HealthCare.gov website. The number of marketplace insurers will grow for the first time since 2015.

Azar’s comments track with a broader independent analysis earlier this month.

The analysis by the consulting firm Avalere Health and The Associated Press found that average premiums across all plans under the Obama health law will rise 3.3 percent.

The Trump administration is taking credit for market stability, but experts say premiums would be even lower but for administration attempts to undermine “Obamacare.”

SPORTS GAMBLING

Republicans favor new federal regulation on sports gambling

WASHINGTON (AP) — House Republicans say they strongly favor new federal regulations on sports gambling after the Supreme Court allowed states to open sports books.

Thursday’s hearing of a House Judiciary subcommittee was the first Congress has held on the issue since the Supreme Court decision in June to strike down a law that limited sports gambling to four states. Since then, sports books have opened in Delaware, New Jersey, Mississippi and West Virginia, with more states considering legalization.

Republicans expressed concerns about advertisements and online gambling platforms targeting minors, as well as the potential for match-fixing.

GOP Congressman Jim Sensenbrenner of Wisconsin says “for Congress to do nothing is the worst possible alternative” and that with no federal action, “there are going to be people who get hurt and get hurt badly.”

WTO-TRADE FORECAST

WTO cuts trade growth forecast to 3.9 percent for 2018

GENEVA (AP) — The World Trade Organization has lowered its global trade growth forecast for this year by one-half percentage point to a still-robust 3.9 percent, saying increased trade tensions between large economies and heightened uncertainty contributed to the downgrade.

For next year, the Geneva-based trade body predicts a further slowing of growth in volume terms, to 3.7 percent.

WTO Director General Roberto Azevedo said Thursday: “While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners.”

The WTO cited new trade measures targeting exports from “large economies,” a clear allusion to U.S. tensions with some key trading partners.

CHINA-US-INTERFERENCE

China urges US to stop slander after Trump’s meddling claim

BEIJING (AP) — Beijing has urged the United States to stop slandering China after President Donald Trump accused the Asian giant of trying to interfere in the upcoming American congressional elections.

Geng Shuang, a foreign ministry spokesman, said Thursday that the Chinese government does not interfere in other countries’ internal affairs.

Trump said China was interfering in the elections because it opposes his tough trade policies. The White House provided scant evidence of anything akin to the level of Russia’s meddling in the 2016 presidential election.

Geng said Beijing “urges the U.S. to stop making unwarranted accusations and slanders against China and stop the words and deeds that harm bilateral ties and the fundamental interest of the two peoples.”

Trump later said there was “plenty” of evidence but didn’t provide details.

EUROPE-FACEBOOK

Senior EU lawmaker urges cyber, data audit of Facebook

BRUSSELS (AP) — A senior European Union lawmaker says Facebook should be audited by Europe’s cyber security agency and data protection authority.

The chairman of the EU Parliament’s civil liberties and justice committee, Claude Moraes, said Thursday that the audits “need to be done.”

The parliament summoned Facebook CEO Mark Zuckerberg in May to testify about allegations that political consulting firm Cambridge Analytica used the data of millions of Facebook users to target voters during political campaigns.

The audit demands a part of a resolution that Moraes has drafted in response to the scandal. The committee aims to pass the resolution by Oct. 10 and put it to the full assembly in late October.

GREECE-ECONOMY

After 3 years, Greece ends limits on bank cash withdrawals

ATHENS, Greece (AP) — Greek authorities say they will soon lift restrictions on domestic cash withdrawals imposed more than three years ago to prevent a bank run by depositors at the height of the country’s debt crisis.

The finance ministry said Thursday that from Oct. 1 depositors will face no limits on withdrawals from bank accounts in Greece.

Greeks abroad will be able to withdraw up to 5,000 euros ($5,800) a month. Furthermore, the limit on carrying cash abroad will be increased from 3,000 euros to 10,000.

The restrictions were imposed in June 2015, to prevent banks from collapse as depositors tried to empty their accounts after talks between the government and bailout creditors appeared on the verge of collapse.

The moves come a month after the country formally ended its latest bailout program.

CRAB MEAT-FALSE LABELS

Seafood firm owner pleads guilty to falsely labeling crab

NEWPORT NEWS, Va. (AP) — The owner of a Virginia seafood company has pleaded guilty to conspiring to falsely label foreign crabmeat as fresh Chesapeake blue crab.

News outlets report 74-year-old James Casey of Poquoson, who owns Casey’s Seafood in Newport News, entered the plea Wednesday in federal court. He faces up to five years in prison at sentencing Jan. 9.

Prosecutors say the company mixed discount “distressed” crabmeat from Indonesia, Brazil and elsewhere with Chesapeake blue crab, labeling it a “Product of the USA.” Some of the crabmeat sold as Chesapeake blue crab contained only foreign meat.

Court documents state Casey’s Seafood sold about 360,000 pounds of falsely labeled crabmeat from 2012 to 2015, worth $4.3 million at wholesale prices in Virginia, Maryland, Washington, D.C., Delaware, North Carolina, South Carolina, Tennessee and Florida.

THE OKLAHOMAN-SOLD

The Oklahoman has been sold to GateHouse Media

OKLAHOMA CITY (AP) — The Oklahoman is being sold to GateHouse Media.

Publisher Chris Reen announced the sale to staff Thursday. Terms have not been disclosed. The sale is expected to close Monday.

Reen says some layoffs would happen Thursday to help stabilize financial operations for Oklahoma City’s only daily newspaper. Reen says he will be leaving his position as publisher.

The Anschutz Corp., owned by Denver businessman Philip Anschutz, bought The Oklahoman in 2011.

GateHouse CEO Kirk Davis says he is enthusiastic about the purchase and that Gatehouse also owns Oklahoma City business publication The Journal Record.

New York-based GateHouse is one of the largest publishing companies in the U.S. with 145 newspapers, including The Austin American-Statesman and The Florida Times-Union.

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