DAILY MARKET REPORTS
- U.S. stocks rose broadly on Wednesday after a fresh set of economic data strengthened the Federal Reserve’s patient stance on future rate hikes and as Boeing rose for the first time since Sunday’s deadly crash of a 737 MAX 8 jet in Ethiopia.
- Data Wednesday showed demand for long-lasting goods produced by U.S. factories rose in January for the third consecutive month, a sign of momentum for manufacturers.
- And producer prices edged higher last month, the latest sign that underlying inflation pressures remain tepid and a positive development for investors hoping contained inflation will prevent the Fed from raising rates this year.
- Boeing shares also rebounded Wednesday, supporting the Dow industrials after the largest component in the price-weighted index tumbled to start the week.
- Several countries have suspended flights of the Boeing 737 MAX after the model was involved in a second deadly crash in less than five months on Sunday.
- Investors were also optimistic that British lawmakers were set to rule out a no-deal Brexit.
- The parliament is due to vote later in the day on whether the country should leave the European Union on March 29 without a deal, a scenario that business leaders warn would bring chaos to markets globally.
US FINANCIAL MARKET
Boeing to Make Key Change in 737 MAX Cockpit Software
- Boeing is making an extensive change to the flight-control system in the 737 MAX aircraft involved in October’s Lion Air crash in Indonesia, going beyond what many industry officials familiar with the discussions had anticipated.
- The change was prompted by the Indonesian crash investigation indicating that erroneous data from a single sensor, which measures the angle of the plane’s nose, caused the stall-prevention system to misfire. Then, a series of events put the aircraft into a dangerous dive.
- A company spokesman confirmed the update would use feeds from multiple sensors in the MAX’s stall-prevention system—instead of the current reliance on a single sensor.
Pilot of Crashed Ethiopian Airlines Jet Reported Flight-Control Problems
- The pilot of the Ethiopian Airlines jet reported that he was having flight-control problems and wanted to return to the airport, but didn’t indicate any other technical faults or other difficulties during the jet’s short ascent, according to the carrier’s chief.
- Chief Executive Tewolde Gebremariam declined to discuss the flight or investigation further, but said the conversation between the pilot and ground control didn’t point to any external issues that might help investigators narrow the possible causes.
- The pilot “reported back to air-traffic controllers that he was having flight-control problems” and wanted to return to Addis Ababa, Mr. Gebremariam said.
Elon Musk Set to Unveil a New Tesla for the Masses—the Model Y SUV
- Days after cutting the price of Tesla’s Model 3 sedan to reach mainstream buyers, the billionaire entrepreneur is expected Thursday night to unveil the Model Y compact sport-utility vehicle in front of fans and customers near Los Angeles.
- While the Model 3 has tested Tesla’s mettle to build an affordable electric car, it is targeting a broader spectrum of buyers with an SUV, the fastest-growing vehicle segment in the U.S. and China.
- It is critical to Mr. Musk’s bid to move beyond a luxury brand and pump out a long-promised 1 million cars a year, quadrupling what it did in 2018.
Spotify Accuses Apple of Stifling Competition in EU Complaint
- Music-streaming service Spotify has filed an antitrust complaint in Europe against Apple, a new salvo in the broader battle over how and whether to rein in alleged wrongdoing by tech giants.
- Spotify’s complaint, filed late Monday to the antitrust arm of the European Union, alleges that Apple in recent years has abused its control over which apps appear in its App Store.
- The restrictions, Spotify claims, are designed to restrict music-streaming services that compete with Apple’s own Apple Music.
- Spotify claims that Apple made it difficult for rival subscription services to market themselves to users without using Apple’s payment system, which generally takes a 30% cut of transactions.
- Spotify’s app doesn’t face the same restrictions on in the Play store run by Google, Spotify said.
How Much Does 5G Cost? Verizon Says $10 Extra Per Month
- Verizon will charge an additional $10 a month per smartphone for subscribers who want to add 5G speeds to their devices, the first major U.S. carrier to disclose pricing for the faster cellular service.
- The largest U.S. wireless carrier by subscribers will begin offering 5G phone service in some parts of Chicago and Minneapolis on April 11, a Verizon spokesman said.
- Verizon will initially sell one device that works with the faster service, the Motorola Moto Z3 with a clip-on modem that makes it compatible. Samsung has announced plans for a 5G-compatible device later this year.
FDA Sets Limits on Retail Sales of Flavored E-Cigarettes
- Convenience stores and gas stations will effectively be banned from selling most flavored e-cigarettes under restrictions issued Wednesday by the Food and Drug Administration.
- The new directives for retailers and manufacturers, first proposed by the FDA in November, are aimed at limiting access to the e-cigarette flavors most popular among children and teens, whose use of the devices surged last year.
- Under the proposed restrictions, expected to be finalized and implemented within the next few months, brick-and-mortar stores will be barred from selling e-cigarettes in flavors other than tobacco, mint and menthol unless they prevent minors from entering the store altogether or create a separate section of the store that minors can’t enter.
- The FDA will require all e-cigarette makers, including Juul, to submit products currently on the market to the agency for review by August 2021, a year earlier than its previous deadline.
US ECONOMY & POLITICS
U.S. Durable Goods Orders Rose in January
- Demand for long-lasting goods produced by U.S. factories rose in January for the third consecutive month, a sign of momentum in the manufacturing sector.
- Overall orders for durable goods, manufactured products intended to last at least three years, increased a seasonally adjusted 0.4% in January from the prior month, the Commerce Department said Wednesday.
- Economists expected a 0.6% decline for the month.
- An underlying measure of business investment, new orders for nondefense capital goods excluding aircraft, climbed 0.8% from December, the strongest pace since last summer.
U.S. Producer Prices Remained Tame in February
- The producer-price index, a measure of the prices businesses receive for their goods and services, rose a seasonally adjusted 0.1% in February from a month earlier, the Labor Department said Wednesday.
- When excluding the often-volatile food and energy categories, prices were up 0.1% in February from the prior month. Prices excluding food, energy and a volatile gauge of margins called trade services also rose 0.1% last month.
- Economists had expected a 0.2% one-month increase for each measure.
- From a year earlier, overall prices were up 1.9% in February, while prices excluding food and energy rose 2.5% and prices excluding food, energy and trade services climbed 2.3%.
US construction spending posts biggest increase in 9 months
- U.S. construction spending surged in January, with investment in public projects rising to a more than eight-year high, which could boost economic growth estimates for the first quarter.
- The Commerce Department said that construction spending jumped 1.3%, the largest increase since last April, after a revised 0.8% drop in December.
- Economists had forecast construction spending rising 0.4% in January after a previously reported 0.6% drop in December.
- Construction spending increased 0.3% on a year-on-year basis in January.
White House Might Put Colleges on the Hook for Student Loans
- The White House is weighing a measure that would require colleges and universities to take a financial stake in their students’ ability to repay government loans, an effort that could squeeze loan availability to students and reduce defaults.
- For several months, Trump administration officials have been discussing enacting such a mechanism or making a push for one in Congress as part of a broader effort to combat rising college costs.
- The order the White House is preparing, expected in coming weeks and led by Ivanka Trump, will likely touch on several hot-button issues in higher education, including a possible provision tying federal dollars to rules about free speech on campuses.
Navy, Industry Partners Are ‘Under Cyber Siege’ by Chinese Hackers, Review Asserts
- The Navy and its industry partners are “under cyber siege” by Chinese hackers and others who have stolen national security secrets, exploiting critical weaknesses that threaten the U.S. as the top military power, an internal Navy review has concluded.
- The assessment, reviewed by The Wall Street Journal, depicts a branch of the armed forces under relentless cyberattack by foreign adversaries and struggling in its response to the scale and sophistication of the problem.
- The document is scathing of how the Navy has addressed cybersecurity challenges facing its contractors and subcontractors, faulting officials for not anticipating that adversaries would attack and for not adequately informing those partners of the threat.
- It also acknowledges a lack of full understanding about the extent of the damage.
Federal Prosecutors Charge Dozens in College Admissions Cheating Scheme
- Federal prosecutors charged dozens of wealthy parents—including prominent law and business figures and two actresses—with using bribes, bogus entrance-exam scores and faked athletic achievements to get their children admitted to elite colleges.
- The agent in charge of the FBI Boston office, described a “culture of corruption and greed that created an uneven playing field for students trying to get into these schools the right way, through hard work, good grades and community service.”
- The sprawling case, the result of a 10-month multiagency federal investigation dubbed Operation Varsity Blues that led to charges against actresses Felicity Huffman and Lori Loughlin, lays bare a privileged world of high anxiety and high net worth.
Paul Manafort’s Second Sentencing Will Come Amid Flurry of Mueller Activity
- Paul Manafort, former campaign chairman to President Trump, is set to face his second court sentencing in a week amid multiple developments that could provide a clearer picture about the nearing conclusion of Robert Mueller’s investigation.
- Mr. Manafort, who was sentenced last week to 47 months in prison for his conviction on tax- and bank-fraud charges, now faces U.S. District Judge Amy Berman Jackson in Washington, D.C.
- Judge Jackson could hand Mr. Manafort up to 10 years in prison for two additional crimes Mr. Manafort pleaded guilty to in connection with violating a foreign lobbying law and witness tampering.
- Judge Jackson will be closely watched for whether she orders the sentences to be served concurrently or one after the other. The latter could keep Mr. Manafort, a 69-year-old who has been detained since last June, behind bars for a far longer stretch of time.
EUROPE & WORLD
Adidas shares fall as supply chain problems slow growth
- Adidas expects supply chain issues to curb sales growth in the first half of the year, particularly in North America, but said it hopes to see off a challenge from Nike in Europe and return to growth in the region.
- Fourth-quarter sales rose by a currency-adjusted 5% to 5.234 billion euros ($5.91 billion), ahead of average analyst forecasts for 5.2 billion, while attributable net profit came in at 108 million, versus consensus for 88 million.
- Sales rose 13% in greater China and 9% in North America, but fell 6% in Europe.
- Adidas said currency-neutral sales growth would slow to between 5 and 8% in 2019, from 8% in 2018, with supply issues accounting for a 1-2% fall as it struggles to meet strong demand for mid-priced apparel.
U.K. Parliament Votes Down May’s Brexit Deal
- British lawmakers rejected Prime Minister Theresa May’s Brexit divorce deal for a second time, making a delay in the U.K.’s scheduled March 29 departure from the EU all but inevitable and intensifying political turmoil and business uncertainty.
- The heavy defeat on Tuesday—by 391 votes against to 242 in favor—opens a new chapter in Britain’s chaotic exit from the EU, a process that has already cost banks and companies billions, riven British society and splintered its political landscape.
- In the end 75 of her party members voted against her, along with all the members of Northern Ireland’s small Democratic Unionist Party, which secures her government’s tenuous majority in the House of Commons.
British Lawmakers Set to Vote on No-Deal Brexit
- British lawmakers are expected to vote Wednesday against leaving the European Union without agreeing terms for Britain’s withdrawal, a decision likely to delay the country’s planned departure later this month.
- The U.K. Parliament is due to vote later Wednesday on a government motion opposing a so-called “no-deal” exit on March 29, the date that Britain is due to separate from the EU.
- Following Tuesday’s resounding loss, Mrs. May promised to allow lawmakers to vote on a motion that would take a no-deal separation off the table.
- Lawmakers are also expected to consider an amendment that would rule out a no-deal exit at any time.
EU, in Major Shift, Moves to Confront China’s Growing Assertiveness
- The European Union moved Tuesday to recalibrate ties with China, promising to address growing threats to trade, economic growth and security posed by Beijing’s global assertiveness.
- In a sharp shift from just two years ago, the EU’s executive arm labeled Beijing an “economic competitor” in critical fields such as the development of 5G networks and a “systemic rival” politically.
- The assertions, made in a European Commission strategy paper that could stir unease among China’s allies in the bloc, put Brussels’ approach toward Beijing closer to the U.S. assessment of China as a major strategic rival.
- EU officials said attitudes toward China had changed because of its failure to open its markets, its use of subsidies to create corporate champions, its actions in the South China Sea and its push for dominance in technology and telecom sectors.
ZTE’s State Owner to Cut Its Stake
- The state-backed owner of China’s ZTE is cutting its stake in the telecoms giant, which is recovering from a bruising run-in with U.S. authorities last year.
- On Tuesday, ZTE’s controlling shareholder, Zhongxingxin, said it would sell up to 3% of ZTE’s shares outstanding, according to a regulatory filing.
- The Chinese government owns nearly half of closely held Zhongxingxin—which in turn has a 30% stake in ZTE—via a complex ownership structure that places its stake in two state-owned technology companies.
- Zhongxingxin, which is also a supplier to ZTE, will use the proceeds to buy shares of a China-focused exchange-traded fund and to meet operational needs, the filing said.
Fiat Chrysler to recall 862,520 U.S. vehicles that do not meet emissions standards
- Fiat Chrysler Automobiles will recall 862,520 gasoline-powered vehicles that do not meet U.S. emissions standards.
- The recall was prompted by in-use emissions investigations conducted by the U.S. Environmental Protection Agency and testing conducted by Fiat Chrysler as required by EPA regulations, the agency said.
- The recall includes 2011-2016 Dodge Journey, 2011-2014 Chrysler 200 and Dodge Avenger and 2011-2012 Dodge Caliber.
Desperate Looters Ravage Power-Starved Western Venezuela
- Looters ransacked businesses in western Venezuela as people across the country struggled to fill gas tanks and obtain food and water, which can’t be adequately pumped to customers because of an epic blackout that began on Thursday.
- On Tuesday, the sixth day of a blackout still affecting much of western Venezuela, people looted food shops, leaving the city of Maracaibo reeling.
- The regime responded to the deepening crisis by ordering the arrest of a prominent Venezuelan journalist, while calling on its violent allies, the paramilitary colectivos, to be on guard against saboteurs they say are responsible for the country’s agony.
- On Tuesday, Venezuelan Attorney General, said Juan Guaidó, the head of the National Assembly who more than 50 countries regard as the legitimate president, is under investigation for the alleged sabotage of the country’s power grid.
TODAY in HISTORY
- Tennessee passed a bill prohibiting the teaching of evolution in public schools. (1925)
- Britain and China resumed full diplomatic relations after 22 years; Britain withdrew its consulate from Taiwan. (1972)
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