Update on the latest business



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FINANCIAL MARKETS

US stocks rise as health authorities focus on China virus

NEW YORK (AP) — Stock indexes are up in midday trading as health authorities around the world take steps to monitor and contain a deadly virus that could spread globally.

Technology stocks led the gains early on. Many of the companies in the sector are reliant on China for sales and could suffer if that nation’s economy slumps. IBM was a standout following good fourth-quarter earnings.

Communications companies also made solid gains, while industrial stocks fell. Energy companies also fell as oil prices slipped.

Financial markets slid Tuesday over fears that the outbreak in China would spread. The virus has been confirmed in five countries, including China, the U.S., Thailand, Japan and South Korea.

China and other countries are ramping up screenings for fever on aircraft and at airports. The World Health Organization is expected to meet Wednesday to determine whether the virus is a health emergency. As of Wednesday, more than 500 people were confirmed infected with the coronavirus and 17 had died from the illness, which can cause pneumonia and other severe respiratory symptoms.

HOME SALES

US home sales soared 3.6% in December

WASHINGTON (AP) — U.S. home sales climbed 3.6% in December, but a record-low inventory of houses on the market has caused prices to surge as affordability is worsening.

The National Association of Realtors said Wednesday that sales of existing homes rose last month to a seasonally adjusted annual rate of 5.54 million. For all of 2019, 5.34 million homes were sold — matching the 2018 level. High mortgage rates hurt sales in the first half of the last year, while lower rates boosted purchases in the second half.

But the rebound in sales failed to cause more people to put their homes on the market. Sales listings have tumbled 8.5% from a year ago to 1.4 million properties. There are just 3 months' supply of single-family houses for sale, the lowest level since the Realtors began tracking the number in 1982. Inventories have fallen at all price levels below $1 million for the past year.

The median sales price has jumped 7.8% over the past year to $274,500. Home values have increased at more than double the pace of wage growth, making it harder for would-be buyers to save enough money for a down payment.

DAVOS FORUM-DIGITAL TAX

US, France reach tax deal averting broader trade war

DAVOS, Switzerland (AP) — France will delay its tax on the digital business of big tech firms like Google and Faceook in exchange for the United States's promise to hold off retaliatory sanctions - a deal that could avert a broader trade dispute.

Finance Minister Bruno Le Maire said Wednesday he had agreed on the truce with U.S. Treasury chief Steven Mnuchin, at a meeting on the sidelines of the World Economic Forum in Davos, Switzerland.

Le Maire said France would delay collection of the digital tax until December - through the next U.S. election cycle, potentially easing pressure for President Donald Trump as he seeks reelection. But the French minister said his country would never scrap it entirely until an international accord can be reached.

The U.S., in turn, will hold off imposing retaliatory tariffs that it had threatened to slap tariffs on French wine, cheese and other products.

MICROSOFT-IRS-TAX DISPUTE

Judge orders Microsoft to release tax records in IRS dispute

SEATTLE (AP) — A federal judge says it's likely that Microsoft was trying to avoid or evade paying U.S. taxes and is ordering the company to hand over financial documents from more than a decade ago.

The Internal Revenue Service has been seeking the documents as part of a long-running investigation into how Microsoft structured a Puerto Rico manufacturing facility starting in 2005. The IRS has said Microsoft hired accounting firm KPMG to set up a cost-sharing arrangement with the Puerto Rican affiliate that shifted taxable revenue out of the U.S.

A ruling Friday by U.S. District Judge Ricardo Martinez says the court “finds itself unable to escape the conclusion that a significant purpose, if not the sole purpose, of Microsoft’s transactions was to avoid or evade federal income tax.”

The Seattle judge gave Microsoft about a week to hand over documents that the IRS has been seeking for several years. The Redmond, Washington tech company has objected to disclosing the 174 documents, saying U.S. law protects confidential communications with tax professionals.

In a statement, Microsoft said the judge's ruling was based on “limited information” and that it had “no bearing on the validity of Microsoft's historical tax arrangements.”

GENERAL MOTORS-TAX BREAKS

GM to spend $3.5B in Michigan under revised tax credit deal

LANSING, Mich. (AP) — Michigan on Wednesday agreed to revise decade-long tax breaks for General Motors in exchange for the company's commitment to spend at least $3.5 billion more over 10 years, including to build electric pickup trucks in Detroit.

Under the deal — the seventh amendment to the home state automaker's incentives since 2009 — the value of GM's maximum tax credit will be cut by $325 million, to approximately $2.28 billion through 2029, and will be capped annually. The company will still have to retain at least 34,750 jobs in Michigan — it has about 45,000 now — but will get flexibility to count more jobs at its headquarters in Detroit and its research, development and engineering campus in the suburb of Warren.

To fully qualify for the annual credit, the company will have to retain 34,750 Michigan jobs that pay on average $1,300 a week — up from $650 under the original 2009 agreement.

GM's Detroit-Hamtramck plant now employs about 800 people. Production of the Chevrolet Impala will cease at the end of February, at which point renovations will begin to produce electric vehicles. The plant will have 2,000 employees once it is at full capacity.

TESLA-MICHIGAN LAWSUIT

Michigan lifts barriers to Tesla sales, settling lawsuit

DETROIT (AP) — Michigan has cleared the way for Tesla to sell more electric vehicles in the state and get them serviced under a deal filed Wednesday that settles a lawsuit by the automaker.

It won't be as simple as Tesla opening a dealership on a corner lot. But consumers at least won't have to leave Michigan to buy a car or SUV.

Tesla had sued Michigan in 2016, challenging a 2014 law that ensured automakers could only sell through independent, franchised dealers and not directly to customers. The company claimed it was unconstitutional.

Teslas will have to be titled in another state and then transferred to Michigan. Repair centers will be allowed as long as they're owned by a Tesla subsidiary.

Thousands of Teslas are on the roads now in Michigan, but they must be sold and serviced across the border in Ohio or another state.

MANDATORY SEVERANCE PAY

New Jersey law now requires severance pay for mass layoffs

TRENTON, N.J. (AP) — New Jersey has become the first state to guarantee severance pay for mass layoffs, according to the bill's sponsors and the governor's office.

Gov. Phil Murphy, a Democrat, signed legislation Tuesday that requires companies with 100 or more full-time employees to pay them a week's pay for each year of service during a mass layoff, plant closing or transfer resulting in 50 or more workers losing their jobs. The law also increases the minimum number of days notice from 60 to 90 for such events.

The legislation was motivated by last year's closing of Toys R Us, which cost 2,000 employees their jobs in New Jersey. Two of the private equity firms that owned the retail giant eventually established a severance fund.

The new law has its critics. The New Jersey Business and Industry Association, which lobbies state government on behalf of businesses, said the law will take effect just as other requirements like a higher minimum wage and increased taxes are hitting. The association said in a statement that the legislation makes New Jersey less competitive.

AIR BAG RECALLS

Air bag woes force Honda, Toyota to recall 6M vehicles

DETROIT (AP) — Two different air bag glitches have forced Toyota and Honda to recall over 6 million vehicles worldwide, and both problems present different dangers to motorists.

The Toyota recall affects about 3.4 million vehicles globally and is being done because the air bags may not inflate in a crash. The cars have air bag control computers made by ZF-TRW that are vulnerable to electrical interference and may not signal the bags to inflate.

The problem could affect as many as 12.3 million vehicles in the U.S. made by six companies. It’s possible that as many as eight people were killed when air bags didn’t inflate. U.S. safety regulators are investigating.

Honda’s recall covers about 2.7 million vehicles in the U.S. and Canada with Takata air bag inflators. But they’re a different version than the ones blamed for 25 deaths worldwide. Still, it’s possible the air bags could blow apart a metal canister and hurl shrapnel at drivers and passengers.

Toyota said the computer may not have adequate protection against electrical noise that can happen in crashes, such as when the vehicle runs under a different vehicle. The problem can cause incomplete opening of the air bags, or they may not open at all. Devices that prepare seat belts for a collision also may not work.

ANIMALS ON PLANES

US seeks to tighten rules covering service animals on planes

UNDATED (AP) — Airlines might soon be able to turn away cats, rabbits and all animals other than dogs that passengers try to bring with them in the cabin.

The U.S. Transportation Department on Wednesday announced plans to tighten rules around service animals. The biggest change would be that only dogs that are trained to help passengers with psychiatric needs would qualify.

Airlines say the number of support animals has been growing dramatically in recent years, and they have lobbied to tighten the rules. They also imposed their own restrictions in response to passengers who show up at the airport with pigs, pheasants, turkeys, snakes and other unusual pets.

The U.S. airline industry trade group praised the tighter rules. Industry officials believe many that hundreds of thousands of passengers scam the system each year by claiming they need their pet for emotional support. Those people avoid airline pet fees, which are generally more than $100 each way.

Veterans groups have sided with the airlines, arguing that a boom in untrained dogs and other animals threatens their ability to fly with properly trained service dogs. Last year, more than 80 veterans and disability groups endorsed banning untrained emotional-support animals in airline cabins.

Flight attendants had pushed to rein in support animals, too, and were pleased with Wednesday's proposed changes.

The public will have 60 days to comment on the proposed changes.

EQUIFAX DATA BREACH-CLAIMS DEADLINE

Wednesday is deadline for claims in 2017 Equifax data breach

NEW YORK (AP) — Wednesday is the deadline to seek cash payments and claim free services as part of Equifax's $700 million settlement over a massive data breach.

The breach in 2017, affecting 147 million people, was one of the largest ever to threaten private information. The compromised data included Social Security numbers, birth dates, addresses, driver license numbers, credit card numbers and in some cases, data from passports. Criminals can use those bits of personal information to commit identity theft.

Equifax's settlement with the U.S. government entitles affected consumers to free credit-monitoring and identity-restoration services for the next several years. Consumers may also be eligible for money for their time or reimbursement for certain services.

You can make a claim if you can show you suffered identity theft "fairly traceable" to the breach or if you can document you spent time and money dealing with securing your credit because of the breach, even if you weren't subject to identity theft. That could include signing up for credit-monitoring services.

EXPRESS-STORE CLOSING

Express to close 100 stores

NEW YORK (AP) — Express, a staple in US malls, will close about 100 stores as part of a restructuring plan as the chain grapples with drastic changes in where people spend their shopping dollars.

The retailer that caters to younger shoppers said earlier this month that it was laying of 10% of the staff at its Columbus, Ohio, headquarters and its New York City design studio.

Express Inc. said Wednesday that it can cut its costs by $80 million annually, partially through the store closures, nine of which took place in 2019. It plans to close another 31 stores this year, and 35 more by the end of next year.

It was not immediately clear how that would affect the employees at those stores. Staff in Columbus and New York were provided severance pay and ongoing benefits.

Express operates about 600 stores. Its sales and profit growth have slid over the past three years.

Clothing retailers, particularly those in malls, have been devastated by changing consumer behavior. More than 9,000 stores were shuttered last year.

SPORTS-BETTING-XFL

NJ OKs XFL bets, 6th state to allow wagers on revived league

ATLANTIC CITY, N.J. (AP) — New Jersey gambling regulators have authorized betting on XFL football games, becoming the sixth state to authorize wagers on the revived league.

The state Division of Gaming Enforcement added the XFL to its list of approved events for sports betting on Jan. 15.

The league's games will now be wagered on in the two largest states for sports betting — Nevada and New Jersey. Gamblers in Pennsylvania, Indiana, Rhode Island and Iowa also will be able to bet on the XFL, according to the league. Approvals from additional states could come soon. o get going.”

The XFL's rules differ from the NFL's in several ways, including the option to seek 1, 2 or 3 points from the 2, 5 or 10-yard line after scoring a touchdown. The XFL will also allow a team to throw two forward passes on the same play as long as both happen behind the line of scrimmage.

After a one-and-done season in 2001, the league owned by World Wrestling Entertainment president Vince McMahon will try again starting Feb. 8.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

The Associated Press

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