Update on the latest business

FINANCIAL MARKETS

Stocks rise as investors focus on solid corporate earnings

NEW YORK (AP) — Stocks are broadly higher in midday trading on Wall Street as investors focus on solid earnings from several big companies. The gains were temporarily curtailed earlier by a report that Americans pulled back on signing contracts to buy homes last month.

Apple gained ground after reporting solid profit gains, and industrial stocks also rose. Railroads climbed following a good report from Norfolk Southern. General Electric surged after a strong showing from its aviation business pushed profits above expectations. Victoria's Secret parent company L Brands soared following a report that its long-serving CEO might leave.

Homebuilders slumped following the weak housing report.

Bond prices rose. The yield on the 10-year Treasury fell to 1.62%.

TRUMP-TRADE

Trump: New trade deal with Canada, Mexico to boost US growth

WASHINGTON (AP) — President Donald Trump on Wednesday signed into law a major rewrite of the rules of trade with Canada and Mexico that he said replaces the “nightmare" of a Clinton-era agreement and will keep jobs, wealth and growth in America.

Trump made renegotiating the North American Free Trade Agreement a priority during his 2016 campaign, although trade experts say the impact of the new U.S.-Mexico-Canada Agreement will be modest.

Canada and Mexico already represent the top two export markets for U.S. goods. But the new pact, along with the signing of a “phase one” agreement with China, dials down trade tensions that contributed to slowing economic growth globally.

The leaders of the U.S., Canada and Mexico signed the deal in late 2018. Legislation implementing it received overwhelming, bipartisan support in Congress after several months of behind-the-scenes negotiations between Democratic lawmakers and the Trump administration.

NAFTA, which took effect in 1994 under President Bill Clinton, tore down trade barriers between the three North American countries and commerce between them surged. But Trump and other critics said NAFTA encouraged factories to leave the United States and relocate south of the border to take advantage of low-wage Mexican labor.

PENDING HOME SALES

US pending home sales tumbled 4.9% in December

WASHINGTON (AP) — Americans pulled back substantially on signing contracts to buy homes in December, a possible sign of mounting affordability challenges as prices are rising faster than incomes.

The National Association of Realtors said Wednesday that its pending home sales index, which measures the numbers of purchase contracts signed, plunged 4.9% last month to 103.2. Still, lower mortgage rates mean that contract signings were up 4.6% from December 2018.

The average rate on a 30-year mortgage was 3.65% last week, down from 4.45% a year ago, according to mortgage buyer Freddie Mac. Cheaper borrowing costs helped boost demand for housing last year, but it also led to higher prices by the end of 2019 that could weigh on affordability going forward.

Contract signings fell last month in the Northeast, Midwest, South and West.

CHINA-OUTBREAK-AIRLINES

More airlines drop flights to China as deadly virus spreads

BANGKOK (AP) — British Airways halted all flights to China and American Airlines suspended Los Angeles flights to and from Shanghai and Beijing as efforts to contain a new and deadly virus intensifies.

The coronavirus has now infected more people in China than were sickened in the country by the SARS outbreak in 2002-2003. The number of confirmed cases jumped to 5,974, surpassing the 5,327 in mainland China from SARS. The virus has killed more than 130 people.

The British and U.S. carriers on Wednesday joined several Asian carriers that are either suspending or significantly cutting back service there as fears spread about the coronavirus.

Air India and South Korean budget carrier Seoul Air are also halting all flights to the country, and Indonesia’s Lion Air plans to do the same. Other carriers including Finnair, Hong Kong-based Cathay Pacific, and Singapore-based Jetstar Asia are slashing service.

American Airlines said Wednesday it will suspend flights between Los Angeles and both Shanghai and Beijing from Feb. 9 through Mar. 27. The airline cited “the significant decline in demand for travel to and from China.”

EARNS-BOEING

737 Max costs double, Boeing posts first loss in 2 decades

UNDATED (AP) — Boeing, an icon in American manufacturing, suffered its first annual financial loss in more than two decades as the costs related to its marquee aircraft doubled to more than $18 billion after a pair of deadly crashes.

New CEO David Calhoun on Wednesday stood by his estimate that regulators will certify changes Boeing is making to the 737 Max by mid-year. And he criticized the company's prior leadership for not immediately disclosing a trove of damning internal communications.

Boeing reported a loss of $1 billion in the fourth quarter as revenue plunged 37% due to the grounding of the Max. The company suspended deliveries of the plane last spring and never expected the stoppage to last this long.

The company lost $636 million for all 2019.

Boeing added another $9.2 billion to charges for concessions to airlines that have canceled thousands of Max flights and higher costs related to compensation, doubling its estimate of the total financial hit from the crisis to $18.6 billion.

Revenue tumbled to $17.91 billion, far below Wall Street’s forecast of $21.70 billion, according to a FactSet survey of analysts. For all the troubling news from the company, Wall Street was happy that it wasn't worse. Shares rose.

NORFOLK SOUTHERN RESULTS

Norfolk Southern's 4Q profit slips 5% as railroad hauls less

OMAHA, Neb. (AP) — Norfolk Southern Corp.'s fourth-quarter profit declined 5% as the railroad hauled 9% less freight.

The Norfolk, Virginia-based company said Wednesday it made $666 million, or $2.55 per share, in the quarter. That's down from $702 million net income, or $2.57 per share, a year earlier. The results topped Wall Street expectations.

The railroad's revenue fell 7% to $2.69 billion in the period, which met Street forecasts.

Norfolk Southern cut its expenses 5% to $1.73 billion in the quarter. The railroad is in the midst of reforming its operations to operate on a tighter schedule and move more freight with fewer people.

The railroad said it expects revenue to be flat in 2020 because coal demand will remain weak while other shipping categories improve somewhat.

Norfolk Southern operates about 19,500 miles of track in 22 states and the District of Columbia

MCDONALD'S RESULTS

McDonald's wraps up tumultuous year on a strong note

UNDATED (AP) — McDonald's wrapped up a tumultuous year on a high note after the company's CEO was ousted in November.

The burger giant said Wednesday it surpassed $100 billion in annual sales for the first time, and notched its highest same-store sales in more than a decade, with growth in all of its global regions.

Even as the Chicago company puts a rocky year behind it, potential hurdles have already emerged in 2020.

McDonald’s new President and CEO Chris Kempczinski said McDonald's has closed several hundred restaurants in China because of the new coronavirus. He said 3,000 restaurants remain open in China, including some that are feeding health care workers.

Kempczinski said his top priority is improving U.S. customer traffic, which has been falling for more than a year. U.S. same-store sales — or sales at restaurants open at least 13 months — rose 5% in the fourth quarter, but that was driven by higher prices and delivery.

BREXIT

Brexit deal cleared by EU Parliament; UK set to leave Friday

BRUSSELS (AP) — Britain's departure from the European Union was backed by European lawmakers Wednesday, after a debate that mixed warm words of love with hard-headed warnings to the country not to seek too many concessions during upcoming trade talks on a future relationship.

The European Parliament overwhelmingly approved Britain's departure terms from the EU — the final major decision in the four-year Brexit saga. The vote was 621 to 49 in favor of the Brexit deal that British Prime Minister Boris Johnson negotiated with the other 27 EU leaders in the fall of last year.

While backing Britain's departure in the wake of the country's vote to leave in a referendum in June 2016, EU countries are already preparing for the possibility that talks on a new trade deal with Britain could collapse by the end of the year, and no-deal contingency planning for a chaotic end to the transition period is necessary.

After Britain's departure on Friday, the U.K. will remain within the EU's economic arrangements until the end of the year though it won't have a say in policy as it will not be a member of the EU anymore.

Britain is the first country to leave the EU. Its departure will reduce the number in the bloc to 27.

EUROPE-HUAWEI

EU stops short of recommending ban on China's Huawei

LONDON (AP) — The European Union unveiled security guidelines for next generation high-speed wireless networks that stop short of calling for a ban on Huawei (WAH'-way), in the latest setback for the U.S. campaign against the Chinese tech company.

The EU's executive Commission on Wednesday outlined a set of strategic and technical measures aimed at reducing cybersecurity risks from fifth-generation, or 5G, mobile networks. The recommendations include blocking high-risk equipment suppliers from "critical and sensitive" parts of the network, including the core, which keeps track of data and authenticates smartphones connecting to cell towers.

No companies were mentioned by name but the term “high risk" supplier was an obvious reference to Huawei , the world's top maker of telecom infrastructure equipment such as routers, switches and antennas — the hidden plumbing through which wireless companies' internet data traffic flows.

The U.S. has been lobbying European allies to ban Huawei, over concerns it could be compelled to help with electronic eavesdropping after Beijing enacted a 2017 national intelligence law. U.S. officials also worry that 5G networks would rely heavily on software, leaving them open to vulnerabilities, and have repeatedly warned they would have to reconsider intelligence sharing with allies that use Huawei.

UN-HACK

Leaked report shows United Nations suffered hack

GENEVA (AP) — Sophisticated hackers infiltrated U.N. offices in Geneva and Vienna last year in an apparent espionage operation, and their identity and the extent of the data they obtained is not clear.

An internal confidential document from the United Nations, leaked to The New Humanitarian and seen by The Associated Press, says dozens of servers were compromised including at the U.N. human rights office, which collects sensitive data and has often been a lightning rod of criticism from autocratic governments for exposing rights abuses.

Asked about the report, one U.N. official told the AP that the hack appeared “sophisticated” and that the extent of the damage remained unclear, especially in terms of personal, secret or compromising information that may have been stolen. The official, who spoke only on condition of anonymity to speak freely about the episode, said systems have since been reinforced.

The official said the skill level was so high it was possible a state-backed actor might have been behind it.

BERKSHIRE-LEE NEWSPAPER DEAL

Warren Buffett gets out of the newspaper business

OMAHA, Neb. (AP) — Billionaire Warren Buffett is giving up on the newspaper business.

He's selling all of Berkshire Hathaway's publications to Lee Enterprises for $140 million, including the Omaha World-Herald in Nebraska and The Buffalo News in New York

Buffett is a lifelong fan of newspapers but he has said for several years that he expects most of them to continue on their declining trajectory, save for a handful of national papers such as The New York Times and The Wall Street Journal.

The deal covers 31 daily newspapers in 10 states as well as 49 paid weekly publications with digital sites and 32 other print products. Other newspapers include the Tulsa World in Oklahoma and the Winston-Salem Journal in North Carolina. As part of the agreement, Lee will enter into a 10-year lease for BH Media's real estate.

Lee has been managing the BH Media publications since July 2018. Analyst Ken Doctor, who writes the Newsonomics blog, said this sale is a logical step for Berkshire after hiring Lee to manage most of its papers.

The deal will increase Lee's size significantly. The company said its portfolio will grow to 81 daily papers and nearly double its audience size. The deal is expected to close in mid-March.

BRITAIN-BBC CUTS

BBC to cut an estimated 450 jobs in modernization plan

LONDON (AP) — The BBC said Wednesday that plans to “modernize” the British broadcaster's newsroom will lead to the loss of an estimated 450 jobs.

The cuts represent a substantial blow to the national public service broadcaster, which enjoys a worldwide reputation for the high quality of its news and entertainment programs.

Fran Unsworth, director of news and current affairs, said the streamlining will be carried out with an eye on digital journalism.

The broadcaster said it wants to "reduce duplication" while saving 80 million pounds ($105 million) in costs.

Like traditional news outlets throughout the world, the publicly funded BBC faces financial and political pressure in a fast-changing media landscape.

The broadcaster currently is funded largely through a 154 pound ($200) annual fee paid by every household with a television. It is not state-controlled, although the government sets the terms of the broadcaster's charter, which is renewed once a decade.

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

Related topics