Trade optimism boosts stocks again
NEW YORK — Stocks finished broadly higher Wednesday as investors remained optimistic that the U.S. and China will make more progress in resolving their costly trade dispute.
Energy companies, retailers and industrial stocks accounted for much of the broad gains as the market extended its winning streak to a fourth day.
Key officials from the world's two largest economies will meet Thursday and Friday to try and stave off an escalation of a trade conflict that has hurt companies and consumers by raising prices on a number of products. President Donald Trump has said he might let a March 2 deadline slide if the U.S. and China get close to a deal.
After March 2, additional tariffs are scheduled to kick in, making the situation worse. Economists and analysts are optimistic that both sides will eventually hammer out an agreement that satisfies U.S. complaints that China steals or pressures U.S. companies to hand over technology.
"The president's seemingly positive tone regarding trade has helped underpin the market, particularly the industrial names," said Quincy Krosby, chief market strategist at Prudential Financial. "That's a positive catalyst for the market."
Major indexes in Europe also finished broadly higher, despite a report of slumping industrial output across the 19 countries that use the euro.
US consumer prices flat in Jan.
WASHINGTON — Consumer prices were unchanged in January, as lower gasoline prices offset the rising costs of housing, clothing and medical care.
The Labor Department said the consumer price index rose only 1.6 percent last month from a year earlier. That matched the slowest pace of annual inflation since June 2017.
Inflation has been tempered by a 10.1 percent plunge over the past 12 months in prices at the gas pump. But housing expenses — the dominant part of the index — have risen 3.2 percent.
The relatively modest level of inflation suggests that recent wage gains have not spurred higher inflation. Average hourly earnings have improved 1.7 percent over the past 12 months, a solid gain from an increase of just 0.7 percent a year ago.
The Federal Reserve has been cautious on plans to increase interest rates, after four hikes to a key short-term rate in 2018 after deficit-financed tax cuts caused economic growth to accelerate. But amid signs of slowing growth despite robust hiring and a 4 percent unemployment rate, the relatively low level of inflation close to the Fed's 2 percent target has reduced pressure to continue increasing rates.
"Inflation seems to be having a goldilocks moment — essentially right on the Fed's target, with little indication it will shift in either direction soon," said Leslie Preston, a senior economist at TD Bank.
Excluding the volatile energy and food categories, core prices increased 0.2 percent for the fifth month in a row. For the third straight month, core prices were up 2.2 percent from a year ago. On a monthly basis, clothing costs jumped 1.1 percent, the largest gain in 11 months. Medical care services rose 0.3 percent on a monthly basis, as did housing costs.
Car reliability up, but glitches persist
DETROIT — Automobiles are getting more reliable, but J.D. Power's annual survey finds problems with battery failures, transmission shifting and voice recognition systems.
The survey found that Lexus was the most dependable brand for the eighth-straight year, but some mass-market brands cracked the top five. Porsche and Toyota tied for second, followed by Chevrolet and Buick. The worst performers were Fiat, Land Rover, Volvo, Dodge and a tie between Ram and Acura, the survey said.
J.D. Power measures problems per 100 vehicles after three years of ownership. The company collected 32,952 responses from original owners of 2016 model-year vehicles.
Owners of all brands reported an average of 136 problems per 100 vehicles this year, six problems fewer than in the 2018 survey.
Jailed ex-Renault boss out millions in pay
PARIS — French car maker Renault won't pay former chairman Carlos Ghosn millions of euros in compensation following his resignation.
Renault said Wednesday its board unanimously decided to waive Ghosn's "non-compete commitment and, consequently, not to pay the corresponding compensation equal to two years fixed and variable compensation."
Ghosn has been jailed in Tokyo since November. He has been charged with falsifying financial reports in under-reporting compensation and breach of trust in having Nissan Motor Co. shoulder investment losses and paying a Saudi businessman.
Renault also canceled shares granted to Ghosn from 2015 to 2018, which were subject to his continued presence at Renault. The board noted "that such condition is not met, thereby triggering the loss of Mr. Ghosn's rights to the definitive acquisition of such shares."
A spokeswoman from Renault said some 450,000 shares will be canceled. At the current share price of around 57 euros, that is worth almost 26 million euros. The actual value of the compensation scheme would reflect the share price's variation over several years.
Renault said its board will decide next month on Ghosn's remuneration for the 2018 financial year. Ghosn is a former South Carolina-based tire industry executive who once ran Greenville's Michelin North America.
Levi Strauss plans $100M stock offering
SAN FRANCISCO — Well-known jeans company Levi Strauss & Co. says it plans to raise about $100 million through an initial public offering.
The number of shares to be offered and the price range has yet to be determined. The total amount raised may change based on investor demand and other factors.
The company said Wednesday that it plans to use the proceeds from the IPO for general corporate purposes, including working capital, operating expenses and capital expenditures. It may also use proceeds for acquisitions or other strategic investments.
Levi Strauss made its first pair of jeans in 1873. It was a public company from 1971 until 1985 when it was taken private in a leveraged buyout.
In its fiscal year ended last November, revenue rose nearly 14 percent to $5.58 billion. The company earned $283.1 million, or 73 cents per share.
The shares will be listed on the New York Stock Exchange under the "LEVI" ticker symbol.
Video game maker to lay off 800 workers
SANTA MONICA, Calif. — Video game maker Activision Blizzard is laying off nearly 800 workers as the company braces for a steep downturn in revenue following the best year in its history.
The cutbacks announced Tuesday illustrate the boom-and-bust cycles in an industry whose fortunes are tied to video games that can have a relatively short lives before players move on to the next craze.
Right now, Epic Games' "Fortnite" is a hot fad that has been siphoning attention — and potential sales — from the titles made by other companies.
Although Activision also still owns popular games such as "Call of Duty" and "Candy Crush," it expects its revenue this year to fall by about 20 percent to $6.03 billion.
Activision will cope trimming 8 percent from its workforce of nearly 10,000 people and assigning more of its remaining employees to work on "Call of Duty," ''Candy Crush," and several other of its most popular titles.
The company had already reshuffled its leadership, even though it profits rose last year by more than five-fold to $1.8 billion. Revenue climbed 7 percent to $7.5 billion, the highest since Activision's inception 40 years ago.
But CEO Bobby Kotick said the performance fell shy of the company's expectations, prompting a re-evaluation of its priorities and a pruning of its workforce.
This year "will require significant change to enable us to achieve our long-term goals and objectives," Kotick told analysts during a Tuesday conference call. "We're making changes to enable our development teams to create better content for our biggest franchises more quickly."
Southern Air buys a Hawaii carrier
HONOLULU — Southern Airways has acquired Mokulele Airlines, adding flights in Hawaii and California to the commuter airline's portfolio.
The airline announced Tuesday that it bought Hawaii's second-largest carrier in a deal that closed last week, the Honolulu Star-Advertiser reported . Southern Airways did not disclose the terms of the deal.
The Big Island-based airline serves 11 cities with 787 weekly departures on 15 aircraft. With the acquisition, Southern Airways will serve 30 cities across five U.S. time zones.
"This acquisition will give the newly-combined company stability in an otherwise volatile marketplace, while making Southern Airways a nationally-recognized brand," said Stan Little, the airline's chairman and CEO.
Southern Airways plans to keep running Mokulele under its same name.
"All employees will be absorbed. Everything will be exactly the same as it was last week," said Keith Sisson, chief marketing officer for Southern Airways. "We'll keep the name and honor the loyalty program. This is just for the purpose of having a larger company that looks more attractive to major airlines for interline agreements and code share partnerships."
This deal is the carrier's third in four years. Its plans for continued growth include obtaining more interline baggage agreements with major carriers. It has agreements with American Airlines and Condor Airlines while Mokulele has agreements with Alaska Airlines and New Zealand.
Delta, EasyJet in talks for Alitalia stake
MILAN — Italy's state railway has confirmed it is in talks with Delta Air Lines and EasyJet as possible industrial partners in relaunching the troubled Alitalia airline.
The state railway was given a lead role in taking over Alitalia, which struggled amid competition from low-cost carriers and has failed to come up with a sustainable plan to establish Italy's flagship airline as a long-haul player.
Italian Premier Giuseppe Conte's office said in a separate statement Wednesday that it is ready to participate in establishing a new company to run Alitalia as long as the new business plan is sustainable and follows European guidelines. Italy's government has been shopping around Alitalia's assets since the airline declared its latest bankruptcy two years ago.