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Update on the latest business

Posted July 11

FINANCIAL MARKETS

Mixed start for US stocks

Stocks are mostly lower in afternoon trading with losses among banks and other financial companies outweighing gains in the energy sector.

Wells Fargo and Bank of America each lost 1 percent. But energy stocks bucked the downward trend as oil prices rebounded.

The movement in the Dow, S&P 500 and the Nasdaq has been slight overall.

Nadia Lovell at J.P. Morgan Private Bank says traders are in a "wait-and-see" pattern ahead of Federal Reserve chair Janet Yellen's testimony to Congress tomorrow and the start of the second-quarter company earnings season.

JOB OPENINGS

US job openings slipped in May, but hiring increased

U.S. employers posted fewer job openings in May. But hiring picked up and more people are quitting their jobs — both positive signs for the economy.

Job openings fell 5 percent in May to 5.7 million. The setback occurred after advertised job postings nearly reached 6 million in April, a figure that has been revised downward from the initial report. Meanwhile, hiring climbed 8.5 percent to just under 5.5 million.

The data is a sign the economy at 4.4 percent unemployment is nearing "full employment," when nearly all those who want a job have one and the unemployment rate mostly reflects the temporary churn of people who are temporarily out of work. Typically, when unemployment falls that low, companies are forced to offer more pay, but that hasn't yet happened.

GERMANY-US

Merkel reiterates support for US-EU trade deal

German Chancellor Angela Merkel says she's open to restarting talks with the United States on a trade deal with the European Union.

The dpa news agency reported Tuesday that Merkel told a business audience in Bavaria that President Donald Trump's administration had signaled it is ready to negotiate and that "for me a Trans-Atlantic agreement remains on the daily agenda."

On a trip to Berlin last month, U.S. Commerce Secretary Wilbur Ross said the U.S. and EU should have a free trade agreement. Negotiations for the Trans-Atlantic Trade and Investment Partnership deal, known as TTIP, started under the Obama administration but have been stalled since last year.

Merkel says protectionist policies can be self-defeating.

She says "it's been repeatedly shown that open markets have economic advantages for all parties involved."

BRITAIN-ECONOMY

Credit agency warns of 'considerable' risks to UK economy

Credit ratings agency Standard & Poor's has warned that economic growth in Britain will slow sharply over the coming couple of years and that uncertainties related to the country's exit from the European Union raise further "considerable downside risks" to its already gloomy forecast.

In a report issued Tuesday, S&P said growth is set to slow to 1.4 percent this year from 1.8 percent in 2016. The slowdown is expected to continue next year with growth of 0.9 percent predicted.

The agency said growth will be constrained by higher inflation, which keeps a lid on spending, as well as uncertainty over Brexit. Britain has begun the two-year process to leave the EU by March 2019.

As a result, S&P doubts that the Bank of England will raise interest rates soon.

TAKATA-RECALL EXPANSION

Takata adds 2.7M vehicles to air bag inflator recall

Takata is adding 2.7 million vehicles from Ford, Nissan and Mazda to the long list of those recalled to replace potentially dangerous air bag inflators.

The inflators are a new type that previously was thought to be safe. Vehicles affected are from the 2005 through 2012 model years.

Takata inflators can explode with too much force and spew shrapnel into drivers and passengers. At least 17 people have died and more than 180 injured due to the problem.

Takata uses the chemical ammonium nitrate to inflate air bags. But it can deteriorate when exposed to humidity and high temperatures. Previously the company thought inflators with a drying agent were safe. But the government says new tests show that some inflators with the drying agent pose a safety risk.

EARNS-PEPSICO

PepsiCo beats Street 2Q forecasts

Pricier snacks and drinks have boosted PepsiCo's North American sales.

The company says its profit rose 5 percent in the second quarter to $2.11 billion, or $1.46 per share. Earnings excluding non-recurring costs were $1.50 per share. The results surpassed Wall Street expectations.

PepsiCo, like other major packaged food makers, is working on cutting costs and transforming its product lineup to reflect shifting tastes. It's also trying to push up revenue with pricier products since increasing sales volume can be difficult. The push has included the introduction of Lifewtr, a bottled water intended to compete with Coca-Cola's Smartwater.

COOK COUNTY-SODA TAX

Illinois appeals court upholds order blocking state soda tax

An Illinois appeals court has upheld a temporary restraining order that's preventing Cook County's sweetened beverage tax from taking effect.

The 1st District Appellate Court's decision Monday comes ahead of a planned hearing Wednesday on a preliminary injunction in the case.

Cook County is counting on raising $67.5 million with the tax through Nov. 30. Circuit Judge Daniel Kubasiak recently imposed a temporary restraining order that's preventing the penny-per-ounce tax from being levied.

The Illinois Retail Merchants Association and several grocers say the tax is vague and unconstitutional.

Cook County officials have warned that a 10 percent budget cut is possible if the tax isn't allowed to take effect by August. County President Toni Preckwinkle says the county respects the appellate court's decision and is prepared to defend the tax.

CABELA'S SALE

Cabela's shareholders approve sale to Bass Pro

Cabela's shareholders are giving a nod to the sale of the outdoor outfitter to rival Bass Pro Shops for roughly $4 billion.

The Nebraska chain said Tuesday that shareholders approved a deal, announced in October, which will pay them $61.50 per share.

Sporting goods retailers, like the rest of the retail sector, has been under pressure because of changing shopping patterns.

Company officials have said they expect the sale to close later this year, but banking regulators must still approve the sale of Cabela's credit card unit, which is part of the deal.

After the buyout, the company will be based in Bass Pro's hometown of Springfield, Missouri. It's not yet clear how many of the roughly 2,000 workers at Cabela's headquarters of Sidney, Nebraska will be kept on.

SUN-TIMES-TRONC

Bid for Sun-Times by ex-politician, labor unions advances

An investor group headed by a former Chicago city council member that includes labor unions says it has secured enough money to buy and operate the Chicago Sun-Times.

Edwin Eisendrath told the Sun-Times (http://bit.ly/2tI2xn8 ) on Monday that the group met a U.S. Department of Justice deadline to prove it has funds to operate the newspaper. Bob Reiter of the Chicago Federation of Labor said investors raised "in excess of $11.2 million."

Eisendrath pushed the bid after Sun-Times' owner Wrapports LLC announced it was in discussions with Tronc — which owns the rival Chicago Tribune and several other major newspapers — to acquire the newspaper.

The Justice Department's Antitrust Division is involved in the sale because of its opposition to a single entity controlling multiple media operations in the same market.

ELECTRIC CAR FACTORY-NEVADA

Electric car maker scraps plans for $1 billion Nevada plant

An electric car maker has deserted its plan to construct a $1 billion manufacturing plant in southern Nevada in a move experts say could spell trouble for the company and the broader niche electric automobile businesses.

Faraday Future said its Monday decision to scrap the plant was due to a shift in business strategy.

It will now look for an existing facility to use in California or Nevada.

The company halted work on the project outside Las Vegas eight months ago and sunk more than $120 million into it.

Market analysts say the decision comes at a time of uncertainty for companies like Faraday and Tesla that offer uniquely all-electric lineups.

Established car companies are releasing more electric options and it's unclear whether President Donald Trump's administration will continue tax breaks that incentivize the industry and motivate buyers.

7-ELEVEN-FREE SLURPEES

7-Eleven continues free Slurpee tradition on 7/11

7-Eleven stores across the country are giving away free Slurpee drinks to celebrate the convenience store chain's 90th birthday.

This marks the 16th straight year 7-Eleven has given out its iconic frozen drink on July 11th or 7/11. The company expects to hand out 9 million free small Slurpees during the promotion that runs from 11 a.m. to 7 p.m. local time.

7-Eleven was launched in 1927, and the Slurpee was first introduced in 1966. The company says it has sold 7.4 billion Slurpees since its introduction.

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