Stocks drop as investors seek safety in government bonds
Stocks fell and bond prices rose sharply on Wall Street on Friday amid signs that economic fallout from the viral outbreak that originated in China is hurting U.S. companies.
The yield on the 30-year Treasury reached a record low as investors sought the safety of U.S. government bonds. The price of gold climbed 1.7%.
Technology stocks led the selling. Retailers, travel-related companies, banks and communication services stocks also took heavy losses. The selloff capped a volatile, holiday-shortened week that left the benchmark S&P 500 index with its first weekly loss after two weeks of gains.
The S&P 500 index fell 35.48 points, or 1.1%, to 3,337.75. The Dow Jones Industrial Average slid 227.57 points, or 0.8%, to 28,992.41. The Nasdaq lost 174.37 points, or 1.8%, to 9,576.59. The Russell 2000 index of smaller company stocks gave up 17.46 points, or 1%, to 1,678.61.
Wells Fargo to pay $3B to resolve probes into fake accounts
Wells Fargo agreed Friday to pay $3 billion to settle criminal and civil investigations into a long-running practice whereby company employees opened millions of unauthorized bank accounts in order to meet unrealistic sales goals.
Since the fake-accounts scandal came to light in 2016, Wells has paid out billions in fines to state and federal regulators, reshuffled its board of directors and seen two CEOS and other top executives leave the company.
The $3 billion payment includes a $500 million civil payment to the Securities and Exchange Commission, which will distribute those funds to investors who were impacted by Wells’ behavior.
The settlement with the Department of Justice covers Wells Fargo as a company, and the DOJ could still go after individuals for violating bank laws. The Office of the Comptroller of the Currency, one of the nation’s bank regulators, fined several of Wells’ former top executives earlier this year for their role in the scandal.
US home sales slipped 1.3% in January
U.S. home sales retreated 1.3% in January from the prior month, but low mortgage rates helped enable an increase in purchases from a year ago.
The National Association of Realtors said Friday that sales of existing homes slipped last month to a seasonally adjusted annual rate of 5.46 million. Sales have climbed 9.6% over the past 12 months as borrowing costs have fallen. But sales could be squeezed in the coming months because of a shortage of homes listed for sale.
Just 1.42 million homes were on the market at the end of January, a 10.7% decline from a year ago. With fewer homes for sale, would-be buyers have fewer options, and prices are rising faster than wage growth.
The median sales price in January was $266,300, up 6.8% from a year ago.
German court says Tesla can fell trees at site of new plant
A German court has ruled that the clearing of trees from the site of Tesla Inc.’s first electric car factory in Europe can go ahead, days after it issued an injunction temporarily halting the preparatory work.
The top administrative court in the Berlin-brandenburg region ruled late Thursday that authorities had been within their rights to clear the way for work to start.
The court had issued an injunction last weekend to give it time to consider the case after an environmental group challenged a lower court’s ruling that Tesla could go ahead with felling the trees. Final planning approval for the factory has yet to be granted.
The company wants to start manufacturing 150,000 electric cars a year from mid-2021.
Palo Alto, California-based Tesla announced in November that it had decided to build its first European factory in the Berlin area. The planned site is at Gruenheide, just east of the capital in Brandenburg state.
Presidents of Russia, Belarus discuss oil price dispute
The presidents of Russia and Belarus on Friday discussed their continuing oil price dispute that disrupted steady supplies of oil from Russia to its neighboring ex-soviet state.
Russia halted oil supplies to Belarus earlier this year amid disagreement over the price Belarus would pay in 2020 and tension over closer economic ties Russian President Vladimir Putin is seeking.
Belarusian President Alexander Lukashenko said Putin offered during a phone call Friday to pay Belarus compensation for energy-related losses that could amount to $300 million this year and suggested maintaining “last year’s financial conditions on oil” supplies.
Lukashenko called the offer “some progress” and tasked his government with making the necessary calculations to reach an agreement with Moscow. The Kremlin neither confirmed nor denied Lukashenko’s account. Kremlin spokesman Dmitry Peskov said the presidents discussed “different questions pertaining to the supply of Russian oil and its cost” and “the work will continue.”
Eurozone economy picks up as services grow
Business in the 19-country eurozone has picked up in February from a deep slump, particularly in Germany’s big industrial sector, despite disruption from the new coronavirus, a report showed Friday.
A survey of business managers by financial firm IHS Markit showed that the economy expanded in February at its fastest rate in six months as services grew and trouble in manufacturing eased.
The group’s PMI index, a gauge of business activity, rose to 51.6 points from 51.3 in January.
The index is on a 100-point scale, with the 50-mark separating growth from contraction.
Chris Williamson, chief business economist at IHS Markit, said the expansion “is being led by welcome resilience in the service sector but manufacturing is also showing encouraging signs of pulling out of the downturn that has plagued producers for over a year.” New business orders remained constrained, however.
— Wire reports