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FINANCIAL MARKETS

S&P 500 slips for first time this week as momentum stalls

NEW YORK (AP) — Stocks are falling in midday trading on Wall Street amid concern that the best week for the S&P 500 in eight months may have been overdone.

Stocks have rallied sharply since Monday and had erased all their earlier losses from worries about economic fallout from a new virus from China that’s rapidly spreading. Stronger-than-expected reports on corporate profits and the U.S. economy have helped assuage the fears, as has increasing hope that central banks and governments around the world can support markets with rate cuts and stimulus.

The recent gains were so strong, however, that some market watchers caution that stocks may have gotten ahead of themselves. In the parlance of markets, some analysts said stocks had become “overbought.” That’s because health experts are still unsure about how far the virus will spread, how deadly it may be and how much damage it will ultimately cause the global economy.

That uncertainty overshadowed the latest encouraging data point on the U.S. economy. A government report on Friday morning showed that many more jobs were created in January than economists expected. Employers added 225,000 last month, comfortably above forecasts for 161,500 and December’s pace of 147,000.

ECONOMY-JOBS REPORT

Hiring surges in January as Americans flood into job market

WASHINGTON (AP) — Hiring jumped last month as U.S. employers added a robust 225,000 jobs, bolstering an economy that faces threats from China’s viral outbreak, an ongoing trade war and struggles at Boeing.

The Labor Department also said Friday that a half-million people streamed into the job market in January, though not all of them found jobs. That influx meant that more people were counted as unemployed, and it boosted the jobless rate to 3.6% from a half-century low of 3.5% in December.

The government’s monthly jobs report signaled that businesses remain confident enough to keep hiring, with the pace of job growth accelerating from a year ago. Solid consumer spending is offsetting drags from the trade war and declining business investment.

Wages for workers paint a more mixed picture. Average hourly earnings were 3.1% higher in January than a year earlier. That’s a touch above December’s 3% rise, but the figure has been on a general trend downward since peaking at 3.5% last summer.

Economists cautioned that a large chunk of January’s job growth reflected temporary increases from unseasonably warm weather. Construction firms, hotels, and restaurants, which benefit from better outdoor conditions, accounted for about one-third of last month’s gains.

FEDERAL RESERVE-MONETARY REPORT

Fed signals steady interest rates as economic risks lessen

WASHINGTON (AP) — The Federal Reserve believes that downside risks to the U.S. economy have lessened with the easing of trade tensions and better prospects for global growth but officials note a concern that possible spillovers from a deadly virus in China represent a new threat.

In its semi-annual monetary policy report released Friday, the Fed did not signal any imminent changes in its benchmark interest rate, which it cut three times last year to the current historically low range of 1.5% to 1.75%.

The Fed said after quarter-point rate cuts at the July, September and October meetings it has viewed the present level of interest rates to be “appropriate to support sustained expansion of economic activity” and a strong labor market and inflation rising to the Fed’s 2% target.

Federal Reserve Chairman Jerome Powell will testify before congressional committees on the new report on Tuesday and Wednesday, and his testimony is expected to amplify the Fed’s view that no further changes in interest rates are needed.

Many economists believe the Fed will keep rates unchanged for the entire year although some analysts think there is still the chance of one more rate cut if risks such as the coronavirus outbreak in China threaten to slow U.S. growth.

TRUMP

Trump to promote opportunity zones on North Carolina visit

WASHINGTON (AP) — President Donald Trump is visiting North Carolina to promote economic revitalization in low-income areas, his first trip outside Washington since he was acquitted in the Senate impeachment trial.

Before leaving for North Carolina, Trump continued to air grievances about his impeachment ordeal, saying of Democrats: “I think there's a lot of evil on that side.”

He also told reporters on the South Lawn before his departure that reports that acting White House chief of staff Mick Mulvaney is on his way out are “false.”

Trump was scheduled to deliver closing remarks at the North Carolina Opportunity Now Summit at Piedmont Community College in Charlotte. It's the first in a series of trips the president will be taking to promote opportunity zones.

Trump will spotlight help for thousands of neighborhoods around the country that were designated as opportunity zones under a tax-cut package he signed into law in 2017. Tax breaks are provided for certain investments in these lower income areas.

BOEING-CREW CAPSULE

Defective software could have doomed Boeing's crew capsule

CAPE CANAVERAL, Fla. (AP) — Defective software could have doomed Boeing's crew capsule during its first test flight that ended up being cut short late last year, NASA said Friday.

The Starliner capsule launched without astronauts in December, but its automatic timer was off by 11 hours, preventing the capsule from flying to the International Space Station as planned.

In addition, a software problem with the Starliner's service module was not detected until the flight was underway, according to NASA. That would have interfered with the separation of the service module before touchdown.

If ground controllers had not intervened to fix the problems, NASA said the Starliner could have been destroyed.

These latest findings stem from a joint investigation team formed by NASA and Boeing in the wake of the aborted test flight. The capsule ended up in the wrong orbit and returned to Earth two days later, parachuting down to a landing in New Mexico.

NASA has yet to decide whether Boeing must conduct another test flight without a crew, before putting astronauts on board. Just in case, Boeing reported last week that it took a $410 million charge in its fourth-quarter earnings, to cover a possible mission repeat.

FORD-MANAGEMENT SHAKEUP

Ford top automotive executive retires in management shake-up

DETROIT (AP) — Ford is shaking up its management after a poor fourth-quarter financial performance and the botched launch of the Explorer SUV.

The Dearborn, Michigan, company says that automotive President Joe Hinrichs will retire effective March 1. Jim Farley, president of new business and strategy, will become chief operating officer in charge of global markets and automotive operations.

In addition, product development chief Hau Thai-Tang will take on an expanded role for products, services and customer experiences.

Ford's full-year profit plunged by more than $3.6 billion last year, and it lost $1.7 billion in the fourth quarter.

When earnings were announced on Tuesday, CEO Jim Hackett said the company fell short of expectations for the year, and he blamed the performance largely on the flubbed launch of the new Ford Explorer SUV at its factory in Chicago. New Explorers came off the assembly line with multiple problems and had to be shipped to a Detroit-area factory for repairs, delaying deliveries to customers and costing the company sales.

Hackett also referred to higher warranty costs during the year, especially

UAW CORRUPTION

Official who was close to UAW president pleads guilty

DETROIT (AP) — A former senior official at the United Auto Workers pleaded guilty Friday to a broad corruption scheme, admitting that he conspired with others to conceal the use of union cash for vacation villas, golf, cigars and booze.

Vance Pearson was based in the St. Louis area as director of UAW's Region 5, which covered more than a dozen states. His conviction is significant because he worked closely with Gary Jones, who had Pearson's job before becoming national president in 2018.

Jones hasn't been charged in a corruption probe that has netted nine guilty pleas from union officials and a spouse, and three more from Fiat Chrysler employees. But agents searched his Detroit-area home in August under the eye of local TV news cameras.

Jones and Pearson resigned their union posts in November. Pearson is cooperating with federal agents, according to his plea agreement.

Pearson pleaded guilty to a single charge of conspiring to embezzle union money and use a tool of interstate commerce to aid racketeering. The plea deal states that his involvement in the embezzlement was limited to an amount between $250,000 and $500,000.

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

The Associated Press

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