Stocks wobble but end the week up
NEW YORK — Stocks wrapped up another solid week Friday as industrial and energy companies ticked higher, but corporate earnings got off to a sluggish start as reports from several major U.S. banks failed to excite investors.
Indexes wobbled in morning trading, but rising oil prices helped energy companies, and defense contractors and machinery makers also rose. Consumer-focused companies like Amazon set record highs.
Wells Fargo skidded after reporting a drop in earnings as fallout continued from its phony accounts scandal. Citigroup also fell after its revenue growth was weak. AT&T skidded after the Justice Department asked a court to overturn the company's purchase of Time Warner.
Investors expect another round of great profit growth this quarter, but they're not sure about what will come next: the U.S. and China are in a trade war without any signs of resolution, midterm Congressional elections are getting closer, and interest rates keep rising. Paul Christopher, head of global market strategy for the Wells Fargo Investment Institute, said investors will focus on corporate forecasts covering the rest of the year.
Major indexes rose for the second consecutive week following modest losses over the previous two weeks.
Papa John's pulling founder's image
NEW YORK — Papa John's, which has featured founder John Schnatter as the face of the company in logos and TV ads, is pulling his image from its marketing after reports he used a racial slur.
His face was off at least some materials by late morning Friday, though the company said the details and exact timing for everything were still being worked out. The pizza chain said there are no plans to change its name.
Schnatter is still on the board and is the company's largest shareholder — meaning he remains a key presence. In addition to appearing in TV ads, Schnatter's image has been on packaging and at the center of a logo that usually was all over the website of the company.
The fallout from his comments continued Friday. The University of Louisville said it will remove the Papa John's name from its football stadium, and that it will rename the John H. Schnatter Center for Free Enterprise at its business college. Major League Baseball had also said it was indefinitely suspending a promotion with Papa John's.
Wells Fargo's net falls as scandals linger
NEW YORK — Wells Fargo & Co., which has been mired in investigations related to its business practices, said Friday that its second-quarter earnings fell to $5.19 billion from $5.86 billion a year ago. The bank also revised its first-quarter earnings downward after agreeing in April to pay $1 billion in fines to federal regulators.
The bank has faced multiple investigations in recent years over practices including the opening of accounts without customers' consent, charging clients for unnecessary insurance policies, and imposing unfair fees tied to mortgage rates.
Although Wells reported a 1 percent increase in net interest income in the second quarter, thanks to higher interest rates, the company saw declines in customer deposits and loans, a sign of the lingering impact of the various scandals.
"The broad-based weakness of Wells Fargo's results is troubling, with many indicators such as deposits, commercial and consumer lending trending down," said Octavio Marenzi, of the analytical firm Opimas. "It appears that the slew of scandals that Wells Fargo has been involved in are taking their toll."
Wells Fargo is the largest bank operating in South Carolina based on deposits.
'Do not eat': Cereal linked to salmonella
ATLANTA — The Centers for Disease Control and Prevention says a popular Kellogg's cereal has been linked to a salmonella outbreak that has infected 100 people in 33 states.
The CDC announced Thursday that customers should avoid Honey Smacks, tweeting, "Do not eat this cereal." The agency says it found salmonella in samples of Honey Smacks, which has been subject to a voluntary recall by Kellogg since mid-June.
It says that regardless of expiration date, the cereal should be thrown away or returned to a retailer for a refund.
The CDC says at least 30 of the people infected in the outbreak have been hospitalized. It says most people infected with salmonella develop a fever, cramps or diarrhea within 12 to 72 hours of being exposed to the bacteria.
Commerce's Ross to sell assets, admits errors
WASHINGTON — Commerce Secretary Wilbur Ross says he will sell all his equity holdings after a government ethics office noted inaccuracies and omissions in his financial disclosure reports.
Ross says in a statement issued Thursday night that he "made inadvertent errors in completing the divestitures required by my ethics agreement."
He says he "worked diligently with my department's ethics officials to make sure I avoided any conflicts of interest."
However, the Office of Government Ethics sent Ross a letter Thursday noting that he continued to own assets which could lead to such conflicts.
Ross' statement in response says, "To maintain the public trust, I have directed that all of my equity holdings be sold and the proceeds placed in U.S. Treasury securities."
Fed projects further hikes in key rate
WASHINGTON — The Federal Reserve says it expects low unemployment and rising inflation will keep it on track to raise interest rates at a gradual pace over the next two years. By late 2019, the Fed says its key policy rate should be at a level that will be slightly restrictive for growth.
The Fed's projection on rate hikes came with release of the central bank's semi-annual monetary report to Congress. Fed Chairman Jerome Powell is scheduled to testify on the report for two days next week.
The Fed last month raised its policy rate for a second time this year and projected two more hikes in 2018. The monetary report says the expectation is that further hikes will leave the rate slightly above its neutral level by late next year.