Business Highlights
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Bad timing: New virus poses threat to fragile world economy
China's new virus is striking at a bad time for the world economy. The Chinese economy, No. 2 in the world, was already decelerating before the virus hit and global economic growth projections are down. The coronavirus is drawing comparisons to the SARS outbreak, which paralyzed the economies of China and Hong Kong for weeks in 2003. The economic damage from SARS was short-lived. But what happens in China carries a lot more weight these days: In 2003, China accounted for 4% of global output. Now its share is 16%.
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In snub to US, Britain will allow Huawei in 5G networks
LONDON (AP) — Britain has decided to let Huawei have a limited role in supplying new high-speed mobile gear to wireless carriers. The Chinese tech company will also be banned from the network's sensitive “core." By giving Huawei limited access to new 5G networks, the U.K. is ignoring U.S. government warnings that it would cut off intelligence sharing over security concerns. Britain's decision is the first by a major U.S. ally in Europe, and follows intense lobbying from the Trump administration as the U.S. vies with China for technological dominance. Huawei said it was reassured by the decision, which it portrayed as a victory.
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Stocks indexes gain on Wall Street a day after a big drop
NEW YORK (AP) — Stocks are closing broadly higher on Wall Street, reversing most of their losses from a sell-off the day before. The gains on Tuesday snapped a two-day skid driven by fears that the spread of a new virus in China could hamper global ecomomic growth. Technology stocks rose the most. Banks and other financial companies also climbed, along with communications stocks.
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Apple holiday season tops projections as iPhone bounces back
SAN FRANCISCO (AP) — Apple is still reaping huge profits from the iPhone while mining more moneymaking opportunities from the growing popularity of its smartwatch, digital services and wireless earbuds. That combination produced a banner season for a company whose fortunes appeared to be sliding just a year ago amid declining sales for the iPhone, its marquee product for the past decade. Apple’s fiscal first-quarter results released Tuesday provided the latest proof that the fears hanging over the consumer electronics icon might have been unfounded. The company's profits and revenue topped analyst projections. That lifted its stock price into record territory.
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Budget deficit to break $1 trillion despite strong economy
WASHINGTON (AP) — An annual congressional report says that the U.S. budget deficit is likely to burst through the symbolic $1 trillion barrier this year despite a healthy economy. The Congressional Budget Office report follows a burst of new spending last year and the repeal in December of several taxes used to help finance the Affordable Care Act. Those have combined to deepen the government's deficit spiral well on into the future, with trillion-dollar deficits likely for as far as the eye can see. The annual CBO update government's economic and fiscal health estimates a $1 trillion deficit for the ongoing fiscal year.
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What to know for year two of the Trump tax plan
The IRS has begun accepting and processing tax returns for individuals. Last year’s filing season was an adjustment for taxpayers and industry professionals alike as it was the first under a massive overhaul of federal tax law. While this year’s season is expected to be more sedate, there are a few tweaks to be aware of. For one, there is no longer a penalty on federal taxes for not having health insurance. And anyone who got divorced after 2018 and pays alimony can no longer deduct alimony payments. Also, a few tax provisions that had expired or were going to expire soon have been extended.
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Starbucks' results top estimates but coronavirus slows sales
It was a happy holiday at Starbucks, but the coronavirus outbreak in China could slow the company's sales momentum. New drinks like the Pumpkin Cream Cold Brew were a hit with customers in the October-December period, helping the Seattle-based coffee giant beat Wall Street's earnings forecast. Starbucks' earnings rose 16% to $886 million in its fiscal first quarter. Adjusted earnings of 79 cents per share beat Wall Street's forecast of 76 cents. But the company said it has already closed more than half its stores in China and doesn't yet know how the coronavirus will impact its sales.
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US consumer confidence shows solid gain in January
WASHINGTON (AP) — U.S. consumer confidence showed a strong gain in January, bolstered by continued strength in the job market. The Conference Board said Tuesday that its consumer confidence index rose to a reading of 131.6 this month, up from 128.2 in December. Lynn Franco, senior director of economic indicators at the Conference Board, says the increase reflects more positive assessment of the current job market. The Conference Board’s present situation index and its expectation index both showed gains in January. Consumer confidence surveys are closely followed for clues about whether households are in a buying mood. Consumer spending accounts for 70% of economic activity.
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The S&P 500 index rose 32.61 points, or 1%, to 3,276.24. The Dow gained 187.05 points, or 0.7%, to 28,722.85. The Nasdaq climbed 130.37 points, or 1.4%, to 9,269.68. The Russell 2000 index of smaller company stocks picked up 14.18 points, or 0.9%, to 1,658.31.