News Archive

Ford to repair U.S. police vehicles after carbon monoxide concerns

WASHINGTON (Reuters) – Ford Motor Co said Friday it will pay to repair police versions of its Ford Explorer SUVs to correct possible carbon monoxide leaks that may be linked to crashes and injuries after U.S. regulators escalated an investigation into 1.33 million vehicles.

Ford said it will cover the costs of specific repairs in every Police Interceptor Explorer SUVs that may be tied to after-market installation of police equipment. The company said the modifications may have left holes in the underbody of the vehicles.

“If the holes are not properly sealed, it creates an opening where exhaust could enter the cabin,” Ford said in a statement.

Ford acted amid concerns by some police departments about the safety of officers. The city of Austin, Texas said Friday it was removing all 400 of the city’s Ford Explorer SUVs from use.

Several Texas media outlets cited a city memo that said 20 police officers have been found with elevated levels of carbon monoxide and three have not returned to work.

Ford said it has not found any elevated levels of carbon monoxide in regular Ford Explorers, but NHTSA is investigating reports of exhaust odors in those vehicles. Ford did not say how much it expected to pay to repair police vehicles and said its investigation is ongoing.

On Thursday, the U.S. National Highway Traffic Safety Administration said it was upgrading and expanding a probe into 1.33 million Ford Explorer SUVs over reports of exhaust odors in vehicle compartments.

Police have reported two crashes that may be linked to carbon monoxide exposure and a third incident involving injuries related to carbon monoxide exposure.

The auto safety agency said it was also aware of more than 2,700 complaints that may be linked to exhaust orders and possible exposure to carbon monoxide and 41 injuries among police and civilian vehicles in the probe covering 2011-2017 model year Ford Explorer sport utility vehicles.

Ford has issued four technical service bulletins related to the exhaust odor issue to address complaints from police fleets and other owners, NHTSA and Ford said.

NHTSA said it is evaluating preliminary testing that suggests carbon monoxide levels may be elevated in certain driving scenarios.

NHTSA said it recently learned that the police version of the Ford Explorer was experiencing exhaust manifold cracks.

The agency said the reported injuries include “loss of consciousness, with the majority indicating nausea, headaches, or light-headedness.”

Reporting by David Shepardson in Washington; Editing by Lisa Shumaker

Article source:

Chip stocks show signs of slowing with more earnings on tap

NEW YORK (Reuters) – High-flying semiconductor stocks may be poised for more losses in the coming weeks as a large swath of chip names reports quarterly results in a sector that may have run up too far for some investors.

Investors will parse earnings from 40 percent of the components in the PHLX semiconductor index .SOX over the next month, including Applied Materials (AMAT.O), Nvidia (NVDA.O) and Marvell Technology (MRVL.O).

The index is up more than 20 percent on the year, powered by gains of nearly 60 percent in names such as Nvidia and Lam Research (LRCX.O), which has helped propel the SP technology sector .SPLRCT higher as the best performing of the 11 major SP sectors. Only five of the 30 names in the semiconductor index are in negative territory for the year.

Those gains were fueled by expectations of strong earnings and revenue for the quarter. Semiconductor and semiconductor equipment stocks are expected to see the highest growth within the tech sector, with year-over-year earnings growth of more than 40 percent, according to Thomson Reuters data.

“The semis are the heart and soul of the technology sector, particularly the large-cap technology sector, and they are really driving the theme that we saw really take shape in the second quarter,” said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York.

“The question is are they going to be able to continue to do it and even if they are, which the street is expecting, there is a case to be made for stretched valuations triggering a little bit of rotation out of the space.”

Initial stock movements in the wake of those that have already reported suggest some investors are ready to lighten up. The average 1-day stock performance has been a decline of 1.2 percent for semiconductor companies that reported earnings through Wednesday.

The semiconductor index was poised for its first weekly drop in four and was on track for its fifth drop in six sessions, with declines on Friday coming on the heels of results from Cypress Semiconductor (CY.O), InterDigital (IDCC.O), MicroSemi Corp (MSCC.O) and Intel (INTC.O).

“A year ago I would say you have to be careful but now I’d say you have to be extremely careful,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

“The ones that have these exotic stories and high growth are probably frothy.”

The forward price-to-earnings (P/E) ratio of the SP 500 semiconductor and semiconductor equipment index .SPLRCSE stands at 15.2, above its five-year average of 14.4 but below the forward P/E of the broader SP 500 .SPX of nearly 18.

(For a graphic on ‘Price and Forward P/E of Semiconductor and Semiconductor Equipment Index’ click

In addition, the 14-day relative strength index reading for the PHLX Semiconductor index stands at 51.6, below the 70 level that indicate an overbought condition, which suggests the sector may still have room to run higher.

“The expectations are high in terms of growth rates: you keep raising the bar, raising the bar; even if you hit the number or get a penny over, it’s not good enough anymore,” said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta, Georgia.

“You are getting some mismatched trading related to earnings reports coming out; it creates some opportunities to be in some great names where the fundamental themes are still in place.”

Reporting by Chuck Mikolajczak; Editing by James Dalgleish

Article source:

Wells Fargo faces angry questions after new sales abuses uncovered

NEW YORK (Reuters) – New revelations that Wells Fargo Co (WFC.N) spent years enrolling unknowing borrowers in costly auto insurance has put the bank under new pressure to answer for a months-long scandal over sales practices that have harmed millions of Americans.

The latest news that 800,000 Wells Fargo auto borrowers were improperly charged for insurance rattled investors yet again, and sent its stock down 2.6 percent on Friday.

Shareholders, analysts, lawmakers and consumer advocates demanded answers about how the situation manifested, and why Wells Fargo did not disclose the problems sooner, given existing turmoil over phony deposit and credit card accounts opened in customers’ names without their permission.

“This is a full-blown scandal — again,” said New York City Comptroller Scott Stringer, who oversees public pension funds that hold roughly 11.6 million Wells Fargo shares. “It’s unbelievable, outrageous, sad, and yet quintessential Wells Fargo. This isn’t just a corporate debacle. It’s caused real human harm.”

Stringer called on the bank to install a new independent chair and “immediately” disclose more information.

Wells Fargo first became aware of potential problems a year ago, when the auto lending business began receiving an unusually high number of complaints, Franklin Codel, head of consumer lending, said in an interview.

The auto insurance program was quickly suspended, and the problem escalated to senior management, the board and regulators, he said. Wells Fargo planned to delay public disclosure until it could notify affected customers and reimburse them.

“The problem with disclosing to the marketplace today or several months ago is customers start calling and asking when they’re going to get their money,” he said. “It’s not a great customer experience to say, ‘Yeah, we’ll get back to you.'”

  • Wells scandals show rolling back financial reforms dangerous: Democratic senator

The bank was prompted to issue a press release on Thursday evening after the New York Times reported that 800,000 of its auto borrowers were charged for insurance they did not need from January 2012 to July 2016.

Wells plans to return $80 million to 570,000 customers who qualify for a refund.

The latest revelations echo what happened at Wells Fargo branches across the United States for years. Under pressure to hit aggressive sales targets, thousands of employees signed up customers for deposit and credit-card accounts without their permission over a period of several years.

As part of a $190 million regulatory settlement in September, Wells said as many as 2.1 million phony accounts were opened. A class-action lawsuit against Wells Fargo puts the figure at 3.5 million.

Matthew Preusch, an attorney with Keller Rohrback, which filed that lawsuit, said his firm is looking into whether auto borrowers have claims against the bank.

“It’s likely to result in consumer litigation,” Preusch said.

Wells Fargo has previously said that it found no evidence of improper sales practices outside its retail banking operation.

An April report by the board of directors following an internal investigation did not mention auto insurance problems, nor did executives discuss them during a day-long investor event in May, nor while presenting at conferences and hosting calls to discuss quarterly results.

Behind the scenes, Wells Fargo’s auto lending business has been going through an overhaul to improve risk management and install fresh leadership. Dawn Martin Harp, who headed the unit during the sales abuses, retired in April. Her deputy, Bill Katafias, also departed this year.

“Both of those executives, in my view, were held accountable for their actions,” Codel told Reuters, including “from a compensation perspective.”

Katafias did not return a call to his office at auto lender CRB Auto, where he is now CEO, and Martin Harp could not be reached.

Wall Street analysts expect the financial damage to go beyond the $80 million in reimbursements.

In a note on Friday, Piper Jaffray’s Kevin Barker predicted the true cost would be “multiples” of that figure, with lawsuits and further customer remediation. The added cost of insurance pushed 274,000 customers into delinquency, and led to at least 20,000 wrongful repossessions, according to the Times.

Since 2012, the U.S. Consumer Financial Protection Bureau (CFPB) has received 1,826 complaints about Wells Fargo vehicle loans or leases.

Many customer narratives in the regulator’s public database detail being charged for insurance when the car was already insured elsewhere, not being able to have erroneous insurance charges removed, and problems with making payments.

One customer from 2014 called Wells immediately after realizing unneeded insurance had been added to a financing package, but still was charged over several months for the guaranty. When the customer asked for it to be removed, Wells only promised to investigate.

“I feel I am being and have been scammed,” the car buyer wrote to the CFPB.

Reporting by Dan Freed in New York; Additional reporting by Ross Kerber in Boston, Karen Freifeld in New York, and Lisa Lambert, Pete Schroeder, Sarah N. Lynch and Patrick Rucker in Washington; Writing by Lauren Tara LaCapra; Editing by Bernard Orr

Article source:

Toshiba to give Western Digital notice on closing memory sale

(Reuters) – Toshiba Corp (6502.T) has agreed to give Western Digital Corp (WDC.O) two weeks’ notice before closing any sale of a memory chip unit that would involve transferring joint venture shares that Western Digital claims give it a say in the $18 billion sale of the unit.

San Francisco Superior Court Judge Harold Kahn on Friday approved an agreement between the two.

Notice from Toshiba to Western Digital will give Western Digital the opportunity to come back to the court or an arbitration panel to argue for a chance to stop the deal. The agreement also puts off a final decision on the question of whether the California court has jurisdiction over Toshiba, one of Japan’s largest companies.

Toshiba is scrambling to sell its flash memory unit to cover losses from its nuclear reactor business. The company is inching toward deals to cap its liabilities from the nuclear unit.

In late June, Toshiba announced its preferred bidder was a group made up of Bain Capital, South Korean chip maker SK Hynix (000660.KS) and Japanese-government backed banks that offered $18 billion.But that deal has not come together, so Toshiba’s board met last week to consider other bidders.

Western Digital, which is among those being considered, sued Toshiba in San Francisco County Superior Court in mid-June, saying it believed a joint venture with Toshiba means Toshiba needs its consent to sell the flash business.

Western Digital’s joint venture with Toshiba helps finance equipment at Toshiba’s plants in exchange for some of their output.

Western Digital filed its lawsuit in San Francisco to prevent Toshiba from closing the sale of its memory unit before an arbitration panel has a chance to play out.

The deal reached on Friday requires Toshiba to announce within a day the signing of any agreement that would result in the sale of the joint venture and give notice before the close. It stays in effect until 60 days after arbitration has begun.

“As a practical matter, we don’t expect to close a deal during the period addressed in the order,” Yasuo Naruke, senior executive vice president of Toshiba, said in a statement. “We look forward to successfully presenting Toshiba’s position to the (arbitration) tribunal, which we believe will be formed within the next month or so.”

“Our ongoing discussions with Toshiba and its stakeholders have been constructive, and we will continue to work to seek a solution that is in the best interests of all parties,” Western Digital said in a statement.

Reporting by Stephen Nellis; Editing by Jonathan Oatis and Cynthia Osterman

Article source:

AT&T executives to run combined company after Time Warner deal

NEW YORK (Reuters) – ATT Inc (T.N) said on Friday that its executives will head its media and wireless businesses following the close of its $85.4 billion acquisition of Time Warner Inc (TWX.N).

As of Aug. 1, John Stankey, who currently leads DirecTV and other entertainment businesses for the No. 2 U.S. wireless carrier, will lead the team charged with Time Warner’s integration before transitioning to chief executive of the media business once the merger is complete. John Donovan, currently chief strategy officer, has been named chief executive of ATT Communications, which will include ATT’s wireless and DirecTV businesses.

The deal, expected to close by the end of the year, would give ATT control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted media assets. It still needs approval from the U.S. Justice Department.

ATT also said that Lori Lee will lead ATT’s international business in addition to her responsibilities as global marketing officer.

The three executives will continue to report to ATT Chief Executive Randall Stephenson, ATT said.

A source told Reuters earlier this month that ATT would run its wireless and DirecTV satellite television businesses separately from Time Warner Inc’s media assets following its acquisition of the entertainment group.

ATT shares were up 8 cents at $39.08 in after-hours trading.

Reporting by Anjali Athavaley; Editing by Lisa Shumaker

Article source:

Amazon everywhere: E-commerce titan is topic companies can’t avoid

NEW YORK (Reuters) – What looms over businesses as far flung as car repair, lab equipment and swimming pool gear? In a word, Amazon.

Almost 700 U.S. companies have reported quarterly results so far this earnings season, and the e-commerce titan’s name has popped up on roughly one of every 10 earnings conference calls so far. And the retailers whose lunch has long been eaten by Inc haven’t even reported yet.

In all, Amazon has been raised either in passing or with some urgency on 75 calls hosted by corporate chieftains in the past several weeks, according to a Reuters analysis of call transcripts from components of the SP 1500. That’s well more than twice as many mentions as Google or its parent Alphabet Inc and over three times as many as Apple Inc.

The preponderance of Amazon mentions by executives and Wall Street analysts is the latest indication of its rapidly expanding reach. Its move last month to buy upscale grocer Whole Foods Market Inc for nearly $14 billion has added fresh fuel to the concerns.

Once primarily a scourge of traditional brick-and-mortar retailers, Amazon’s cloud over U.S. business has spread to more corners of the economy and raised worries about where it could strike next. Even executives for whom Amazon was not previously a top concern have found themselves responding to questions about how it may burst into their industries.

On the call for 3M Co, which makes everything from scouring pads to stainless steel dental crowns, Amazon was raised by several analysts. Executives at diversified healthcare company Johnson Johnson were asked how Amazon might pose a risk to its consumer brands.

McDonald’s Corp CEO Stephen Easterbrook declined to respond directly to a question about implications of the Amazon-Whole Foods deal. But he did say: “It just demonstrates how disruptive the business world is and how quickly it moves.”

It was the first time a McDonald’s, 3M or JJ executive had faced an Amazon-related question in an earnings call, according to data from Thomson Reuters dating back to 2000.

“Just that name puts fear even if it’s just a rumor that they might be going into your space,” said Alan Lancz, president of Toledo, Ohio-based investment advisory firm Alan B. Lancz Associates Inc., who has been an investor for more than 30 years. “To be over all these different sectors and all these different spaces, I can’t recall anything like that.”

Eyes on Amazon

Not all of the Amazon references reflect worry. In many instances, companies talked up existing and potential partnerships with Amazon, bounties from the recent Amazon Prime Day sale, or opportunities that might stem from a Whole Foods purchase.

But Amazon emerged as a source of analyst concern on conference calls for tire servicer Monro Muffler Brake Inc, swimming pool equipment distributor Pool Corp and water heater maker A.O. Smith.

“I can tell you that we do think that they’re a force,” Albert Nahmad, chief executive of Watsco Inc, a heating, ventilation and air conditioning system distributor, said in response to a question. “The economy’s never seen anything like it.”

“We keep our eyes on Amazon,” he added.

At issue is the competitive threat from Amazon’s massive size, willingness to sell at low prices and desire to push into a vast array of products or business lines.

In its own quarterly report late on Thursday, Amazon reported a jump in retail sales along with a profit slump, as its rapid, costly expansion into new shopping categories and countries showed no sign of slowing.

Whole Foods on Their Minds

The Whole Foods deal roiled retailers, supermarkets and companies in the food-supply chain. But analysts are also asking real estate investment trusts and banks about their exposure to grocers, while Dover Corp, which manufacturers refrigeration equipment, and Silgan Holdings, which supplies packaging for consumer goods products, also were queried about the deal.

“It seems like everyone’s asking that question at this stage,” Silgan CEO Anthony Allott said when asked about the penetration of e-commerce in groceries in the wake of the deal, adding that he viewed it as an opportunity.

Amazon is generating an outsized amount of chatter on Wall Street as well.

Bank research notes and sales and trading commentary this month have contained nearly twice the number of Amazon mentions as for Microsoft and Apple, with Amazon tripling the number of Alphabet references, according to data from Street Contxt, an institutional content and data-insights platform for brokers and investors.

Amazon has been mentioned nearly 17 times as much as the average company, according to Street Contxt.

Jeff Hammond, an equity research analyst at KeyBanc Capital Markets, said investors are concerned that distributors of a variety of industrial wares are vulnerable to Amazon.

“For commodity products with low differentiation, where price is higher on the list and it’s a smaller item that’s easy to deliver, that’s probably something that Amazon can be competitive at,” Hammond said.

For some executives, the Amazon question has been a periodic feature, even in arenas well beyond its traditional boundaries.

Executives at Thermo Fisher Scientific, whose business includes supplying equipment to research laboratories, have fielded questions about an Amazon impact as far back as five years. This month its CEO said it was investing in its e-commerce capabilities and its supply chain.

“We take Amazon very seriously,” Thermo Fisher Chief Executive Marc Casper said on the call, “and we always have.”

Additional reporting by Rodrigo Campos; Editing by Dan Burns and Nick Zieminski

Article source:

Exclusive: Congress asks U.S. agencies for Kaspersky Lab cyber documents

LAS VEGAS (Reuters) – A U.S. congressional panel this week asked 22 government agencies to share documents on Moscow-based cyber firm Kaspersky Lab, saying its products could be used to carry out “nefarious activities against the United States,” according to letters seen by Reuters.

The requests made on Thursday by the U.S. House of Representatives Committee on Science, Space and Technology are the latest blow to the antivirus company, which has been countering accusations by U.S. officials that it may be vulnerable to Russian government influence.

The committee asked the agencies for all documents and communications about Kaspersky Lab products dating back to Jan. 1, 2013, including any internal risk assessments. It also requested lists of any systems that use Kaspersky products and the names of any U.S. government contractors or subcontractors that do so.

Kaspersky has repeatedly denied that it has ties to any government and said it would not help any government with cyber espionage. It said there is no evidence for the accusations made by U.S. officials.

The committee “is concerned that Kaspersky Lab is susceptible to manipulation by the Russian government, and that its products could be used as a tool for espionage, sabotage, or other nefarious activities against the United States,” wrote the panel’s Republican chairman, Lamar Smith, in the letters.

They were sent to all Cabinet-level agencies, including the Department of Commerce and Department of Homeland Security, as well as the Environmental Protection Agency and the National Aeronautics and Space Administration, among others.

A committee aide told Reuters the survey was a “first step” designed to canvas the U.S. government and that more action may follow depending on the results. The committee asked for responses by Aug. 11.

Kaspersky Lab, founded in 1997 and now counts over 400 million global customers, has tried largely in vain to become a vendor to the U.S. government, one of the world’s biggest buyers of cyber tools.

Longstanding suspicions about the company grew in the United States when U.S.-Russia relations deteriorated following Russia’s 2014 annexation of Crimea and later when U.S. intelligence agencies determined that Russia interfered in the 2016 U.S. presidential election using cyber means.

Congress this week slapped new sanctions on Russia, in part in response to the allegations, which Moscow flatly denies. Moscow retaliated by ordering out some U.S. diplomats.

U.S. intelligence chiefs in May publicly expressed doubt about the safety of Kaspersky products for the first time, although they offered no specific evidence of any wrongdoing. The government is reviewing how many agencies use software from Kaspersky Lab.

In June, FBI agents visited the homes of Kaspersky employees as part of a counterintelligence probe, two sources familiar with the matter said. The Trump administration also took steps to remove Kaspersky from a list of approved government vendors.

A defense spending policy bill advancing in the U.S. Senate would prohibit the Department of Defense from using Kaspersky products.

Kaspersky employees attending the annual Black Hat conference in Las Vegas this week appeared to be largely taking the setbacks in stride. The company cheekily hosted a party at the “Red Square” restaurant and bar, where it invited attendees to don fur coats before entering a vodka freezer to enjoy high-end imported bottles of alcohol.

On Tuesday, the company launched a free, global version of its antivirus software, saying in a blog post that it would help “secure the whole world.”

Reporting by Dustin Volz; Editing by Jonathan Weber and Grant McCool

Article source:

U.S. economy speeds up in second-quarter, wages continue to lag

WASHINGTON (Reuters) – The U.S. economy accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment, but persistent sluggish wage gains cast a dark shadow over the growth outlook.

Gross domestic product increased at a 2.6 percent annual rate in the April-June period, which included a boost from trade, the Commerce Department said in its advance estimate on Friday. That was more than double the first quarter’s downwardly revised 1.2 percent growth pace.

Wage growth, however, decelerated despite an unemployment rate that averaged 4.4 percent in the second quarter. Inflation also retreated, appearing to weaken the case for the Federal Reserve to raise interest rates again this year.

“Although growth is solid, the lack of wage pressure buys the Fed plenty of time, and works with a very ‘gradual’ tightening cycle,” said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank in New York. “There is more here for the Fed doves than the hawks.”

Prices of U.S. Treasuries rose after the data but pared gains as oil prices hit two-month highs. The dollar fell against a basket of currencies and stocks on Wall Street were trading lower following recent hefty gains.

Economists expect the Fed to announce a plan to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September.

The U.S. central bank left rates unchanged on Wednesday and said it expected to start winding down its portfolio “relatively soon.” The Fed has raised rates twice this year.

The rise in second-quarter GDP was in line with economists’ expectations. Output was previously reported to have increased at a 1.4 percent pace in the first quarter.

  • 2015 economic growth strongest since 2005
  • U.S. labor cost growth slows in second quarter

The economy grew 1.9 percent in the first half of 2017, making it unlikely that GDP would top 2.5 percent for the full year. President Donald Trump has set an ambitious 3.0 percent growth target for 2017.

While the Trump administration has vowed to cut corporate and individual taxes as part of its business-friendly agenda, Republicans’ struggles in Congress to pass a healthcare restructuring have left analysts skeptical on the prospects of fiscal stimulus. So far, the impasse in Washington has not hurt either business and consumer confidence.

Consumers Boost Growth

A resurgence in consumer spending accounted for the bulk of the pickup in economic growth in the second quarter. Consumer spending, which makes up more than two-thirds of the U.S. economy, grew at a 2.8 percent rate. That was an acceleration from the 1.9 percent pace logged in the first quarter.

But with wage growth remaining sluggish despite the labor market being near full employment, there are concerns that consumer spending could slow in the third quarter.

In a separate report on Friday, the Labor Department said wages and salaries increased 0.5. percent in the April-June period after accelerating 0.8 percent in the first quarter.

They rose 2.3 percent on a year-on-year basis. There were, however, strong wage gains in the information, finance and natural resources sectors.

“A tightening labor market ought to put upward pressure on wage rates, but employers are likely to resist increases as long as they can, given the state of productivity,” said John Ryding, chief economist at RDQ Economics in New York.

Inflation was subdued in the second quarter. The Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index excluding food and energy, increased at a 0.9 percent rate.

That was the slowest rise in more than two years and followed a 1.8 percent rate of increase in the first quarter.

The gross domestic purchases price index, another measure of inflation pressures in the economy, increased at a 0.8 percent rate after advancing 2.6 percent in the prior quarter.

Businesses helped to carry the economy in the second quarter, with spending on equipment jumping at a rate of 8.2 percent, the fastest in nearly two years. It was the third straight quarterly increase.

Spending on mining exploration, wells and shafts grew at a 116.7 percent rate, slowing from the first-quarter’s robust 272.1 percent pace. As a result, investment on nonresidential structures increased at a 4.9 percent pace, moderating from the January-March period’s brisk 14.8 percent rate.

Though businesses continued to carefully manage their inventories in the second quarter, they spent more in some places. Inventory investment was neutral to GDP growth after slicing 1.46 percentage points in the first quarter.

Trade added 0.18 percentage point to growth, contributing to output for a second straight quarter.

Housing was a drag on growth in the last quarter, with investment on homebuilding contracting at a 6.8 percent rate, the worst performance in nearly seven years. Auto production slumped for a third straight quarter, while government spending rebounded after declining in the prior period.

Alongside the second-quarter GDP report, the government published revisions to data going back to 2014, which showed little change in the growth picture.

Graphic: U.S. GDP interactive –

Reporting by Lucia Mutikani; Editing by Paul Simao

Article source:

Wall Street dragged lower by Amazon, tobacco stocks

(Reuters) – Wall Street slipped on Friday as losses in Amazon and tobacco shares weighed on major indexes.

Amazon’s (AMZN.O) shares were down 3.39 percent after it reported a 77 percent drop in profit as its rapid and costly expansion into new shopping categories and countries showed no sign of slowing.

The stock was the biggest drag on the SP 500 and the Nasdaq.

However, the tech index .SPLRCT pared some early losses to trade down 0.22 percent. The sector has been the best performer this year, driving the SP 500’s 10.6 percent run in 2017.

“Investors are still feeling some weakness in the tech sector and that’s weighing on the broader market,” said Robert Pavlik, chief market strategist at Boston Private Wealth.

“I’m a bit concerned about some of the valuations, but I expect to see these stocks eventually climb higher as people look for growth. There are bound to be some bumps along the way.”

The consumer staples sector’s .SPLRCS 1.86 percent fall led a broad decline as an FDA announcement seeking to cut nicotine in cigarettes to non-addictive levels dragged down tobacco stocks.

Altria (MO.N) slumped 13.2 percent and Philip Morris (PM.N) 3.5 percent. The stocks were among the top drags on the SP.

The consumer discretionary .SPLRCD sector, of which Amazon is a component, was down 0.97 percent also due to losses in Starbucks and Mattel.

Starbucks (SBUX.O) fell 7.50 percent and Mattel (MAT.O) 8.78 percent after their disappointing quarterly reports.

At 10:59 a.m. ET (1659 GMT), the Dow Jones Industrial Average .DJI was down 9.97 points, or 0.05 percent, at 21,786.58 and the SP 500 .SPX was down 8.79 points, or 0.35 percent, at 2,466.63. The Nasdaq Composite .IXIC was down 27.60 points, or 0.43 percent, at 6,354.59.

Risk sentiment also took a hit following the failure of Republicans to repeal Obamacare in a tight Senate vote overnight.

Investors are worried about the ability of President Donald Trump to legislate his pro-growth agenda of tax reform and higher spending on infrastructure.

“When a lot of people think about the White House, they just think of a lot of chaos going on, and if they can’t get stuff together in their own house, how are they going to get it together for the country. What kind of outlook does that have for things like tax reform?,” Pavlik said.

Data showed that the U.S. economy accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment.

Gross domestic product increased at a 2.6 percent annual rate in the April-June period, up from 1.2 percent in the first quarter, the Commerce Department said in its advance estimate.

Declining issues outnumbered advancers on the NYSE by 1,363 to 1,330. On the Nasdaq, 1,479 issues fell and 1,156 advanced.

Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D’Silva

Article source: