Trade jitters knock stocks lower
NEW YORK — Stocks closed broadly lower Thursday after investors got spooked by a published report that cast doubt on the prospects of a long-term U.S-China trade deal.
Bond prices surged, sending yields sharply lower, as traders turned cautious. The sell-off was a marked shift from a day earlier, when the S&P 500 notched its second all-time high this week.
Despite the sell-off, the benchmark index closed out October with its second straight monthly gain as an easing of trade tensions and surprisingly good corporate earnings gave investors more confidence.
Industrial stocks led the selling Thursday after a published report raised concerns about the prospects of a comprehensive trade deal between Washington and Beijing. That overshadowed remarks by President Donald Trump, who touted Thursday that both sides are working on finding a location to sign "phase one" of the trade deal.
"It's mainly the concerns about whether there will be some kind of trade deal with China, both the first round and the bigger agreement that, obviously, appears further away," said Kate Warne, chief investment strategist at Edward Jones. "When there's good news on trade negotiations, stocks tend to move up, and when there's bad news or concerns, stocks tend to sell off."
Altria slashes value of Juul stake
RICHMOND, Va. — Altria Group swung to a loss in the third quarter as it wrote down the value of its investment in e-cigarette maker Juul.
Altria bought roughly a third of Juul for $13 billion in December. Since then, an outbreak of vaping illnesses — some deadly — has led to multiple investigations, with Juul no longer advertising its products in the U.S.
Altria said Thursday it posted a quarterly loss of $2.6 billion, or $1.39 per share, including the $4.5 billion pretax write-down. Adjusted earnings of $1.08 per share missed the average Street estimate of $1.14 per share.
Altria, the owner of Philip Morris USA, the nation's largest cigarette maker, posted revenue of $6.86 billion. Its adjusted revenue, which excludes excise taxes, beat estimates.
Consumer spending rises 0.2% in Sept.
WASHINGTON — American consumers modestly stepped up their spending in September, but their incomes grew fast enough to let them save more, too.
The Commerce Department said Thursday that consumer spending rose 0.2 percent last month, matching August's increase but coming in slightly below economists' expectations. Incomes grew 0.3 percent lifting the U.S. savings rate to 8.3 percent in September, highest since March.
A measure of inflation closely watched by the Federal Reserve was flat in September, even excluding volatile food and energy prices. Over the past year, it is up 1.3 percent, and 1.7 percent without food and energy.
Consumer spending accounts for about 70% of U.S. economic activity.
GM recalls 600K trucks and SUVs
DETROIT — General Motors is recalling more than 600,000 four-wheel drive trucks and SUVs because a software error could activate the braking system, increasing the risk of a crash.
The recall covers the 2014-2018 Chevrolet Silverado 1500, 2015-2020 Chevrolet Suburban, 2015-2020 Chevrolet Tahoe, 2014-2018 GMC Sierra 1500 and 2015-2020 GMC Yukon models.
GM said 653,370 vehicles worldwide were potentially affected, but no accidents have been reported.
Activation of the braking software is triggered by the failure of a wheel-speed sensor, leading to unintended braking on the opposite wheel. That would cause the vehicle to pull to one side, increasing the risk of a crash. That risk can be eliminated by driving in two-wheel drive mode until the recall repair is made, GM said.
GM will reprogram the software free of charge.
Kraft Heinz results mixed amid changes
NEW YORK — It's no picnic at Kraft Heinz Co.
Four years after a merger that promised growth and innovation, the maker of iconic brands like Oscar Meyer, Kool-Aid and Jell-O is struggling to find its place in a rapidly changing market.
Sales are faltering as consumers increasingly seeking fresh, minimally processed foods. In a recent Nielsen survey, 41% of consumers globally said they would pay more for foods with natural or organic ingredients. That's not good news for a product like Kraft Heinz's Velveeta cheese, which contains 20 ingredients and has no organic option.
Kraft Heinz CEO Miguel Patricio, who came to the company in July, says he's been taking stock of the company's strengths and weaknesses and will present a detailed plan for the future early next year. Patricio said Kraft Heinz needs to get better at predicting trends.
On Thursday, Kraft Heinz beat Wall Street's profit forecasts thanks to the sale of its Canadian natural cheese business for $1.2 billion. The company's net income jumped 45 percent to $899 million. Third quarter revenue fell 5 perccent to $6.08 billion — missing forecasts — as price increases in the U.S. and Europe failed to make up for lower sales.
Samsung says 3Q profit fell 56%
SEOUL, South Korea — Samsung Electronics said Thursday its operating profit for the last quarter fell by nearly 56 percent, with its robust sales of smartphones, displays and TVs offset by a continuously weak market for computer chips.
The South Korean technology giant reported an operating profit of $6.7 billion for the July-September quarter. Revenue fell 5.3 percent to the U.S. equivalent of $53.4 billion.
Samsung is the world's biggest maker of semiconductors and smartphones, but it has struggled with falling prices for DRAM and NAND memory chips since late last year.
Qantas won't ground Boeing 737s
SYDNEY — Australian airline Qantas on Thursday rejected calls to ground its Boeing 737s after claims that a second aircraft in its fleet was found with a crack in its wing structure.
The airline has been inspecting its aircraft following calls this month from the U.S. Federal Aviation Administration for all airlines to check Boeing 737 NG planes that had completed more than 30,000 takeoff and landing cycles for cracking in a part that helps keep wings attached to the fuselage.
Qantas on Wednesday said it had found cracking in one 737 that had completed just less than 27,000 cycles, and that the plane had been removed from service and sent for repairs.
On Thursday, the Australian Licensed Aircraft Engineers Association, the body representing the workers who carry out the checks, said another Qantas 737 had been found with "a cracked primary wing structure," and urged the airline to ground its fleet until they are all checked.
Qantas engineering chief Chris Snook said the call to ground the fleet was "completely irresponsible," saying the airline would never operate a plane unless it was "completely safe to do so."
Bankruptcy judge OKs Barneys sale
NEW YORK — Barneys New York, the iconic luxury chain, says a bankruptcy judge has approved the sale of its assets to fashion licensing company Authentic Brands Group.
The New York-based retailer said Thursday there's still a chance that rival bidders could come forward before the sale closes on Friday.
Under the deal with Authentic Brands, Barneys New York would likely close most of its stores. Authentic Brands has an agreement to license the Barneys name to Saks Fifth Avenue.
Barneys New York filed for bankruptcy protection in August, the latest retailer to buckle as shoppers move online.
Authentic Brands couldn't be immediately reached for comment.
Long-term home loan rates rise
WASHINGTON — U.S. long-term mortgage rates rose this week for the third straight week, while remaining historically low and far below their levels of a year ago.
Mortgage giant Freddie Mac said Thursday the average rate for a 30-year fixed-rate mortgage increased to 3.78 percent from 3.75 percent last week. By contrast, the key average rate stood at 4.83 percent a year ago.
The average rate on a 15-year mortgage ticked up to 3.19 percent from 3.18 percent last week.