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FINANCIAL MARKETS
Wall Street stumbles after rise in layoffs, tech weakness
NEW YORK (AP) — Stocks are stumbling on Wall Street, undercut in part by a discouraging report showing that layoffs are picking up across the country with coronavirus counts.
The S&P 500 was 0.5% lower in early afternoon trading, threatening to halt a rally that had sent it higher for four straight days. The other major U.S. indexes were also down.
Technology stocks have had the sharpest losses after a better-than-expected profit report from Microsoft wasn’t enough to satisfy investors expecting even more. It’s a relatively rare stumble for the tech giant, which has cruised higher through much of the pandemic on expectations that it can continue to grow whether the economy is locked down or not.
The yield on the 10-year Treasury dipped, gold rose and benchmark U.S. crude fell.
VIRUS OUTBREAK-UNEMPLOYMENT BENEFITS
Virus sends jobless claims up for first time since March
WASHINGTON (AP) — The number of laid-off Americans seeking unemployment benefits rose last week for the first time since the pandemic struck in March, evidence of the deepening economic pain the outbreak is causing to the economy. The rise in weekly jobless claims to 1.4 million underscores the outsize role the unemployment insurance system is playing among the nation’s safety net programs — just when a $600 weekly federal aid payment for the jobless is set to expire at the end of this week. All told, the Labor Department said Thursday that roughly 32 million people are receiving unemployment benefits.
MORTGAGE RATES
US long-term mortgage rates rise; 30-year at 3.01%
WASHINGTON (AP) — Average rates on long-term mortgages rose this week for the first time since June 25, after weeks of marking new record lows. Mortgage buyer Freddie Mac says the average rate on the key 30-year home loan increased to 3.01% from 2.98% last week, which was the first time in 50 years that it slipped below 3%. The rate averaged 3.75% a year ago. The average rate on the 15-year fixed-rate mortgage rose to 2.54% from to 2.48% last week.
VIRUS OUTBREAK-CONGRESS
White House drops payroll tax cut after GOP allies object
WASHINGTON (AP) — The White House has dropped a bid to cut Social Security payroll taxes as Republicans prepare to unveil a $1 trillion COVID-19 rescue package. The tax cut had been opposed by top Senate GOP allies. The legislation comes amid alarming developments on the virus crisis. Senate Majority Leader Mitch McConnell’s package is an opening GOP bid in talks with top Capitol Hill Democrats in a negotiation that could be rockier than talks in March that produced a $2 trillion rescue bill. GOP senators and President Donald Trump are at odds over priorities, and Democrats say the Republicans’ proposals are not enough to stem the health crisis, reopen schools and extend aid to jobless Americans.
VIRUS OUTBREAK-PEPCID STUDY
Trump admin $21M gambit for Pepcid as a COVID remedy fizzles
UNDATED (AP) — The Trump Administration pushed through a $21 million contract to study whether the active ingredient in Pepcid is an effective treatment for Covid-19. The Food and Drug Administration gave the clinical trial speedy approval even as a top agency official worried that daily injections of high doses of famotidine for already sick patients pushed the levels of what was considered safe “to the limits,” internal government emails show. That contract is now under scrutiny after a government whistleblower accused a senior administration official of rushing the deal through without the scientific oversight necessary for such a large federal award.
AIRLINES-FACE MASKS
Southwest tightens face-mask rule, Delta steps up testing
DALLAS (AP) — Southwest Airlines says it won’t allow health waivers to its face-mask rule. Only children under 2 will be exempt from the requirement to cover their mouth and nose during flights. Meanwhile, Delta Air Lines said Thursday that it will expand its coronavirus testing of employees to include at-home tests. Air travel has collapsed because of the virus pandemic, and airlines are trying to convince passengers and their own employees about safety. All airlines require passengers to wear masks during flights, and most extend the rule to airports too. But some people have complained about violators refusing to keep their mask on.
AIRLINES-EARNINGS
American, Southwest add to US airline industry’s 2Q losses
DALLAS (AP) — Two major airlines reported huge second-quarter losses Thursday and warned that the recovery in air travel seen in April has stalled as coronavirus cases surge in the U.S. American posted a loss of more than $2 billion, and Southwest lost $915 million. That pushed the combined loss of the nation’s four biggest airlines to more than $10 billion in just three months.
Between them, American and Southwest carried 15.4 million passengers from April through June. A year earlier, more than 98 million people jammed on to their planes.
With all those lost ticket sales, airlines have turned to cutting costs and hoarding cash in a desperate bid to hang on until the shadow of COVID-19 passes.
TWITTER-EARNINGS
A world in isolation, a surge of new users for Twitter
LONDON (AP) — The global pandemic and U.S. protests are forcing a pullback by advertisers on Twitter, but it’s also led to an unprecedented surge of users. The company says average daily user growth spiked 34% in the second quarter, the largest jump in users ever recorded by the company.
But the company took a huge tax hit to earnings, posting a net loss of $1.2 billion, or $1.56 per share, in the April-June period, compared with profit of $1.1 billion, or $1.43 per share, a year earlier. Revenue fell by about a fifth to $683 million, far short of the $702 million Wall Street had expected, according to a survey of analysts by FactSet.
In an earnings call, CEO Jack Dorsey addressed an embarrassing hacking incident last week that compromised the accounts of high-profile users, saying he felt “terrible” about it.
ASCENA-BANKRUPTCY
Ann Taylor owner files for Chapter 11 bankruptcy
NEW YORK (AP) — The operator of Ann Taylor and Lane Bryant filed for Chapter 11 bankruptcy protection on Thursday, the latest retailer to do so during the pandemic.
Mahwah, New Jersey-based Ascena Retail Group Inc., which operates nearly 3,000 stores mostly at malls, had been dragged down by debt and weak sales for years. As part of its bankruptcy plan, the company said that it would close all of its Catherines stores, a “significant number” of Justice stores and a select number of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores.
The company said it has reached an agreement with its creditors to reduce its debt by $1 billion. It received $150 million in new financing to continue operating during its reorganization.
Ascena joins a growing list of mostly clothing retailers that have filed for Chapter 11 in recent weeks, including Brooks Brothers, Neiman Marcus, J.C. Penney, J.Crew and Stage Stores.
AT&T-EARNINGS
Coronavirus impact saps AT&T revenue; 3M sign-ups at HBO Max
UNDATED (AP) — AT&T says the coronavirus sapped $2.8 billion from its revenue due to the lack of live sports and movie delays. Its satellite TV business, DirecTV, continued to bleed customers, while the wireless division, AT&T’s biggest, was relatively steady. The new streaming service HBO Max added 3 million new customers and got 4 million HBO customers to activate the new app. Overall during the April-June quarter, revenue fell 9%, while net income dropped 65% in the first quarter. AT&T’s CEO says economic challenges related to the pandemic will continue.
COAL COMPANY-BANKRUPTCY
Kentucky coal operator files for bankruptcy protection
LEXINGTON, Ky. (AP) — A coal operator headquartered in Kentucky has filed for bankruptcy protection. Rhino Resource Partners announced Wednesday that they plan to sell all their assets and the assets of their subsidiaries to a bidder. WJHL-TV reports coal mining operations at the company have declined since March due to the coronavirus pandemic. Rhino’s CEO said in court documents obtained by the news outlet that this has led to a decline in revenue. According to court documents, the company has nearly 550 employees in different states, including Virginia and West Virginia. The news outlet reports they purchased assets in Virginia from Blackjewel LLC last year amid that company’s controversial bankruptcy filing.
UTILITY EXECUTIVE CHARGED
Ex-utility exec pleads guilty to $1B fraud in South Carolina
COLUMBIA, S.C. (AP) — An executive in charge of building two nuclear reactors in South Carolina that never generated a watt of power has pleaded guilty to fraud. Federal prosecutors said Thursday that former SCANA Corp. Executive Vice President Stephen Byrne took $1 billion out of the pockets of ratepayers and investors. Authorities say Byrne lied that the reactors at V.C. Summer Plant near Columbia would be finished by the end of 2020 to get $1.4 billion in tax credits when he knew that was impossible because of construction delays. Prosecutors will ask for a reduction from the maximum five years in prison when he is sentenced later.
FACIAL RECOGNITION-SCHOOLS
NY lawmakers vote to pause facial recognition in schools
ALBANY, N.Y. (AP) — The New York Legislature has passed a two-year moratorium on the use of facial recognition in schools. The ban approved Wednesday follows an upstate district’s adoption of the technology as part of its security plans, and a lawsuit by civil rights advocates challenging the decision. If signed by Gov. Andrew Cuomo, the legislation would prohibit the use of biometric identifying technology in schools until at least July 1, 2022. It also would direct the state’s education commissioner to issue a report examining its potential impact on student and staff privacy and recommending guidelines. The Lockport Central School District activated its system in January.
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