Consumer Reports says Tesla misunderstands ‘positive’ Model 3 rating

FILE PHOTO: Tesla Model 3 cars are seen as Tesla holds an event at the factory handing over its first 30 Model 3 vehicles to employee buyers at the company’s Fremont facility in California, U.S. on July 28, 2017. Courtesy Tesla/Handout via REUTERS

By Nick Carey

DETROIT (Reuters) – Consumer Reports said on Friday that Tesla Inc <TSLA.O> had apparently misunderstood the “average” reliability rating the magazine assigned to the electric carmaker’s Model 3 sedan this week, calling it generally “positive” for an all-new vehicle.

Tesla criticized the rating on Thursday, saying “it’s important to note that Consumer Reports has not yet driven a Model 3, let alone do they know anything substantial about how the Model 3 was designed and engineered.”

The rating for the Model 3, which is lower priced than earlier Tesla models and aimed at giving the Silicon Valley automaker mass market appeal, was part of magazine’s annual survey of new vehicle reliability.

The survey predicts which cars will give owners fewer or more problems than their competitors, based on data collected. Its scorecard is influential among consumers and industry executives.

“Tesla seems to misunderstand or is conflating some of what we fundamentally do,” the magazine, sometimes called the buyer’s bible for car shoppers, said in a statement.

“Tesla appears unhappy that CR expects the new-to-market Tesla Model 3 to be of average reliability, which is generally a positive projection for any first model year of a car,” the magazine said.

Tesla launched production of the Model 3, its newest car, over the summer.

Consumer Reports said its rating was based on 2,000 consumer survey response about Tesla models. It also noted that its survey listed Tesla’s Model S sedan as the magazine’s top rated car with “above average reliability for the first time ever.”

Palo Alto, California-based Tesla said earlier this month that “production bottlenecks” had left it running behind in ramp-up plans for the Model 3, which is still short in supply with long waiting lists for deliveries.

“As with all the cars we review … we will thoroughly test and evaluate the Model 3 with the same care and scrutiny we apply to all the cars we test just as soon as we can get one – we’re waiting patiently along with other consumers,” Consumer Reports said.

(Reporting by Nick Carey; editing by Tom Brown)

U.S. existing home sales unexpectedly rebound in September

FILE PHOTO: An existing single family home which is up for sale is pictured in Burbank, California December 15, 2011. REUTERS/Fred Prouser/files

WASHINGTON (Reuters) – U.S. home resales unexpectedly increased in September as the effects of Hurricanes Harvey and Irma began to dissipate, but a persistent dearth of properties for sale continued to weigh on overall activity.

The National Association of Realtors said on Friday existing home sales rose 0.7 percent to a seasonally adjusted annual rate of 5.39 million units last month. August’s sales pace was unrevised.

Economists polled by Reuters had forecast sales falling 1.0 percent to a rate of 5.30 million units last month. Sales were down 1.5 percent from September 2016, the first year-over-year decline since July 2016.

Harvey, which hit Texas in the last week of August, and Irma, which battered Florida in early September, had already affected sales for August. Texas and Florida make up more than 18 percent of the nation’s existing home sales.

The NAR said that Houston’s market had recovered quickly, with a 4 percent gain in September compared to a year ago. Florida’s sales were still down 22 percent compared to this time last year.

Analysts expect that sales in the hurricane-affected areas will rebound further once delays in sales fade. However, the overall housing sector has been slowing as the number of properties available has not kept up with demand.

Supply was down 6.4 percent from a year ago. Housing inventory has declined on a year-on-year basis for more than two years.

The median house price was $245,100 in September, a 4.2 percent rise from a year ago, reflecting the shortage of homes on the market.

“As long as we have a housing shortage, this will lead to affordability issues,” NAR chief economist Lawrence Yun said.

At the current sales rate, it would take 4.2 months to clear inventory, down from 4.5 months a year ago. Economists view a six-month supply as a healthy balance between supply and demand.

The median number of days that homes were on the market in September was 34, compared to 39 days a year ago.

Across the regions, sales increased in the West by 3.3 percent and in the Midwest by 1.6 percent. They fell 0.9 percent in the South and were unchanged in the Northeast.

The Commerce Department reported earlier this week that new U.S. single-family home sales fell to a one-year low in September, as Harvey and Irma disrupted the construction of single-family homes in the South.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)

Low pay, no bonus: U.S. retailers struggle with hiring

Pedestrians pass a sign advertising a sale and a job opening at a shop on Newbury Street in Boston, Massachusetts, U.S., October 11, 2017. REUTERS/Brian Snyder

By Sruthi Ramakrishnan and Vibhuti Sharma

(Reuters) – U.S. retailers are finding it increasingly difficult to hire employees for stores and for middle and higher management as low pay and a feeling of uncertainty clouds the industry following a spate of bankruptcies and store closures.

Retailers including Macy’s Inc and J.C. Penney have said they will hire the same or fewer seasonal workers for the holidays this year than last, while some, like Wal-Mart Stores Inc, have chosen not to hire temporary workers at all.

Sector observers have attributed this to brick-and-mortar retailers’ retreat under pressure from online players including Amazon, and firms themselves say they have simply taken a staggered approach to hiring this year that fills gaps slowly. Macy’s said holiday hiring was “off to a great start”.

But staffing companies that hire employees for the industry say the problem is deeper and is putting pressure both on the quality of staff retailers can hire and, sooner or later, wages that potential candidates will demand.

The staffing firms say it may also create a squeeze on retailers as they seek to hire heavily for Halloween, Thanksgiving and Christmas — the biggest drivers of retailers’ annual profits.

“Where we have a problem hiring is the lower level, the seasonal or entry-level employees,” said Melissa Hassett, vice president of client delivery for ManpowerGroup Solutions.

Her clients include Lowe’s Cos Inc, Staples and auto parts firm Pep Boys and she says employees are seeking more flexibility with their schedules, training and pay, which is competitive with other entry-level jobs.

U.S. unemployment levels have hit their lowest in more than 16 years and recruiters say the rise of the “gig economy” and new occupations, such as driving for Uber [UBER.UL] or Deliveroo, is shrinking the youth talent pool.

The hourly mean wage for entry level sales personnel at retailers, including at clothing, sports goods and department stores, was $11.96 as of May 2016, according to the latest data from the Bureau of Labor Statistics.

In comparison, an Uber driver earns $14.76 per hour, according to data Glassdoor posted on its site earlier this month.

The job search and review site listed 829,500 retail job openings as of mid-October, compared with 875,000 at the same time a year ago.

“There just aren’t enough people who are looking for work … to be put in those positions,” the site’s chief economist, Andrew Chamberlain, said.

NO BONUS

The Bureau of Labor Statistics’ JOLTS survey on job openings also shows that more people have quit retail by August this year than in the past decade, with 3.74 million giving up their jobs.

Recruiters say that reflects the growing stresses of working for companies who have cut costs, closed stores and asked staff to adapt and do more.

“The jobs have become bigger,” Manpower Group’s Hassett said. “A manager will do more at the stores, they’ll even pick up and join a register, help stocking if they need to.”

Wal-Mart said that it has not hired for the holiday-season in part because they are paying existing employees more.

“We think it just makes sense to partner with the associates who know the business, are trained in serving customers and the operations of the stores, and who know the customer better than anyone,” said Erica Jones, Wal-Mart’s senior manager of corporate communications.

J.C. Penney said it was introducing paid time off for part-time hourly associates, starting from early 2018, to entice seasonal hires to stay beyond the holiday season.

Higher up the food chain, recruiters also point to bonuses that have lagged other industries as harming efforts to draw in and keep talented regional managers or heads of business lines.

“They (retailers) are paying lower bonuses and some companies have paid lower bonuses for a couple of years,” talent acquisition firm Korn Ferry’s retail expert Craig Rowley said.

An analysis by Korn Ferry of 40 big North American retailers showed that 73 percent paid little to no bonuses to senior executives for their performance in 2016. Thirty five percent paid no bonus, up from 25 percent last year.

“It’s the perception of where retail as an industry is going,” Manpower’s Hassett said. “So when the brick-and-mortar retail is really struggling, at that executive level, people are concerned about staying in retail.”

(Additional reporting by Siddharth Cavale in Bengaluru; editing by Patrick Graham and Savio D’Souza)

PayPal quarterly profit beats on higher mobile transaction volume

The PayPal app logo seen on a mobile phone in this illustration photo October 16, 2017. REUTERS/Thomas White/Illustration

(Reuters) – Payment processor PayPal Holdings Inc <PYPL.O> reported a better-than-expected quarterly profit on Thursday, helped by mobile payments volume that more than doubled.

The company’s shares rose 4.3 percent to $70.18 in extended trading after closing barely changed at $67.25.

San Jose, California-based PayPal has been expanding its services to gain advantage over rivals in the digital payments market, particularly in person-to-person payments, where competition has intensified.

PayPal’s mobile payments volume jumped 54 percent to about $40 billion, while total payments volume rose 30.5 percent to $114.05 billion, in the third quarter.

The company forecast fourth-quarter adjusted earnings in the range of 50 cents to 52 cents per share. Analysts had expected earnings of 51 cents, according to Thomson Reuters I/B/E/S.

Net income rose to $380 million, or 31 cents per share, in the quarter ended Sept. 30, from $323 million, or 27 cents per share, a year earlier.

Excluding items, the company earned 46 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.

PayPal, whose product portfolio includes Braintree, Venmo, One Touch and Xoom, added 218 million active customer accounts in the reported quarter, up 13.5 percent from a year earlier.

Revenue rose 21.4 percent to $3.24 billion.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Shounak Dasgupta)

Verizon quarterly revenue tops estimates as subscribers rise

FILE PHOTO: The Verizon logo is seen on the side of a truck in New York City, U.S., October 13, 2016. REUTERS/Brendan McDermid/File Photo

By Anjali Athavaley

NEW YORK (Reuters) – Verizon Communications Inc’s <VZ.N> quarterly revenue topped Wall Street analyst estimates on Thursday and the company added more phone subscribers than expected, sending shares of the No. 1 U.S. wireless carrier up in mid-morning trading.

Verizon has struggled to fend off smaller rivals T-Mobile US Inc <TMUS.O> and Sprint Corp <S.N> in a mature market for wireless service.

AT&T Inc <T.N>, its No. 2 competitor, plans to diversify its revenues with an $85.4-billion acquisition of Time Warner Inc <TWX.N>, a deal that, if approved by regulators, would give it ownership of premium content like HBO.

Verizon maintains it does not need to do a large content acquisition. “Just through licensing content, we can have access to content that we want to distribute to our customers,” Chief Financial Officer Matthew Ellis said in an interview.

He said Verizon was continuing to work on a deal for content rights referenced by Chief Executive Officer Lowell McAdam at an investor conference in September but declined to comment on the type of content or partner.

Verizon said that it added 274,000 phone subscribers who pay a monthly bill on a net basis. Churn, or rate of defections for all customers paying a monthly bill, including tablet subscribers, was 0.97 percent.

Wells Fargo analysts had expected subscriber additions of 185,000 and churn of 1.05 percent. They said in an earlier note that the quarter was relatively less competitive, with consumers pushing out decisions to switch carriers until the fourth quarter when Apple Inc’s <AAPL.O> iPhone X is expected to debut. New phone launches typically give customers incentive to upgrade plans and change service providers.

Verizon shares, part of the Dow Jones Industrial Average <.DJI>, rose 2.4 percent to $49.82.

Verizon also said it lost 18,000 video subscribers in the third quarter, citing a shift from traditional pay-TV packages to cheaper streaming services. Other companies have pointed to the trend, saying it contributed to a more competitive environment during the period.

Revenues in its Oath media business, which includes AOL and Yahoo, were $2 billion in the first full quarter to include both internet businesses.

Net income attributable to Verizon was $3.62 billion, or 89 cents per share, in the third quarter ended Sept. 30, flat from the year earlier period.

Excluding items, earnings per share was 98 cents.

Total revenue rose to $31.72 billion from $30.94 billion a year earlier.

According to Thomson Reuters I/B/E/S, analysts had expected adjusted earnings per share of 98 cents and revenue of $31.45 billion.

(Additional reporting by Arjun Panchadar in Bengalaru; Editing by Nick Zieminski)

Apple drags down Wall Street from record highs

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 13, 2017. REUTERS/Brendan McDermid

By Sruthi Shankar

(Reuters) – Losses in Apple stalled Wall Street’s record run on Thursday as worries over slack demand for iPhone 8 sent its shares down 2.5 percent.

Shares of the world’s biggest company by market capitalization <AAPL.O> were headed for their worst day in more than two months as doubts about its double 2017 iPhone release strategy weighed on investor minds.

A bunch of weak corporate earnings also added to the weak sentiment.

“Apple has its impact across the board,” said Phil Blancato, head of Ladenburg Thalmann Asset Management in New York.

“The marketing plan here was not a lot to be desired, considering you have two phones and the next one is just two weeks away from release. If it’s going to be a significant upgrade, it did not make any sense to me.”

There is also profit-taking in the tech sector, Blancato said. Technology sector has had a strong run so far, gaining more than 30 percent and helping the three major indexes scale record highs.

The other high-flying FAANG stocks – Amazon <AMZN.O>, Facebook <FB.O>, Alphabet <GOOGL.O> and Netflix <NFLX.O> – were down about 1 percent.

At 12:42 p.m. ET, the Dow Jones Industrial Average <.DJI> was down 42.26 points, or 0.18 percent, at 23,115.34, the S&P 500 <.SPX> was down 5.89 points, or 0.23 percent, at 2,555.37 and the Nasdaq Composite <.IXIC> was down 46.19 points, or 0.7 percent, at 6,578.04.

The retreat from record levels comes on a day that marks the 30th anniversary of the 1987 Black Monday stock market crash.

Six of the 11 major S&P indexes were lower, led by technology and financials index <.SPSY>.

The financial index <.SPSY> dropped 0.46 percent, led by losses in Bank of New York Mellon <BK.N> and KeyCorp <KEY.N>.

United Airlines <UAL.N> tumbled 11.4 percent, weighing on other airlines stocks and the Dow Jones Transport index <.DJT>, after the third largest U.S. carrier’s profit fell due to flight cancellations during the hurricane season.

Healthcare stocks <.SPXHC> gained, boosted by a 5.4 percent rise in the shares of medical equipment maker Danaher <DHR.N>.

Verizon <VZ.N> jumped 2 percent on strong quarterly earnings, lifting telecom stocks.

Among the few gainers in the tech sector was Adobe <ADBE.O>, which jumped more than 11 percent after the Photoshop maker gave a strong 2018 profit forecast.

Declining issues outnumbered advancers on the NYSE by 1,793 to 1,027. On the Nasdaq, 1,971 issues fell and 856 advanced.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D’Souza and Arun Koyyur)

Ford to recall about 1.3 million trucks in North America for door latch fix

FILE PHOTO: An airplane flies above a Ford logo in Colma, California, U.S., October 3, 2017. REUTERS/Stephen Lam

WASHINGTON (Reuters) – Ford Motor Co said on Wednesday it would recall about 1.3 million 2015-17 Ford F-150 and 2017 Ford Super Duty trucks in North America to add water shields to side door latches at a cost of $267 million.

The No.2 U.S. automaker said the safety recall is due to a frozen door latch or a bent or kinked actuation cable in the affected vehicles, that may result in a door not opening or closing.

A Ford spokeswoman said customers would be notified next month but did not have a timetable for when parts will be available. Dealers will install water shields over the door latches and inspect and repair door latch cables if needed.

Ford has now recalled more than 5 million vehicles for varying door latch-related issues since 2016, but the company said the issue in the new recall is different from prior ones.

Ford said the cost of the new recall would be reflected in its fourth-quarter results. Ford said it continues to expect full-year adjusted earnings in the range of $1.65 to $1.85‍​ per share.

The company said it was not aware of any accidents or injuries associated with the issue but said because of the fault, the door may appear closed, increasing the risk of the door opening while driving.

Ford has previously disclosed plans to spend $935 million on other recalls announced since August 2016.

In March, Ford said it would spend $295 million to recall 211,000 vehicles in North America to replace potentially faulty side door latches and 230,000 vehicles for under-hood fire risks.

Ford previously recalled nearly 4 million vehicles for door latch issues in six separate recalls since 2014, including 2.4 million vehicles recalled in August 2016.

In September 2016, Ford said it was taking a $640 million charge for its expanded side-door latch recalls.

Ford shares fell 0.7 percent to $12.19 in morning trading Wednesday.

(Reporting by David Shepardson in Washington and Ankit Ajmera in Bengaluru; Editing by Arun Koyyur and James Dalgleish)

Native American tribe holding patents sues Amazon and Microsoft

Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo

(Reuters) – A Native American tribe sued Amazon.com Inc and Microsoft Corp in federal court in Virginia on Wednesday for infringing supercomputer patents it is holding for a technology firm.

The Saint Regis Mohawk Tribe was assigned the patents by SRC Labs LLC in a deal intended to use the tribe’s sovereign status to shield them from administrative review. SRC is also a plaintiff in the case.

The tribe has a similar deal to hold patents for Allergan.

(Reporting by Jan Wolfe)

IBM beats revenue estimates; hints at sales growth

FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company IBM (IBM) is seen on a computer screen in Los Angeles, California, United States, April 22, 2016. REUTERS/Lucy Nicholson/File Photo

By Pushkala A and Laharee Chatterjee

(Reuters) – International Business Machines Corp’s <IBM.N> shift to newer businesses such as cloud and security services helped it beat analysts’ quarterly revenue estimates, and the technology major hinted at sales growth after nearly six years of declines.

Shares of the Dow component rose nearly 5.1 percent to $153.93 in extended trading on Tuesday.

IBM has been focusing on cloud, cybersecurity and data analytics, or what the company calls its “strategic imperatives”, to counter a slowdown in its legacy hardware and software businesses.

Revenue from these businesses climbed 11 percent to $8.8 billion in the third quarter ended Sept. 30, accounting for about 46 percent of the company’s total revenue.

“Management is focused in the right areas, but still have some work and must demonstrate this growth is sustainable,” said Josh Olson, an analyst at Edward Jones.

Revenue from the cognitive solutions business, which includes the AI-powered supercomputer Watson, rose nearly 4 percent to $4.40 billion, after falling 2.5 percent in the previous quarter.

Analysts on average expected revenue of $4.17 billion, according to financial data and analytics firm FactSet.

IBM said it expected revenue to grow $2.8 billion to $2.9 billion in fourth quarter from the third quarter.

This implies fourth-quarter revenue in the range of $22 billion to $22.1 billion, a year-on-year growth of about 1.4 percent at the high end.

A part of the rise in revenue is expected to come from the mainframe business, which got a boost from the launch of Z14.

Revenue in mainframe business jumped 60 percent in the third quarter, Chief Financial Officer Martin Schroeter told Reuters, adding that the business gained from Z14, which began shipping in mid-September.

“The progress around the mainframe contribution, signings growth/visibility in consulting and positive trends in cloud likely sets up for further momentum in Q4,” said David Holt, an analyst with CFRA.

IBM backed its forecast for 2017 adjusted earnings of at least $13.80 per share. Analysts on average are expecting earnings of $13.75 per share, according to Thomson Reuters I/B/E/S.

Total revenue fell 0.4 percent to $19.15 billion, but handily beat analysts’ estimates of $18.60 billion.

The company’s net income fell to $2.73 billion, or $2.92 per share, in the third quarter, from $2.85 billion, or $2.98 per share, a year earlier.

Excluding one-time items, IBM earned $3.30 per share, beating analysts’ estimates of $3.28.

(Reporting by Pushkala A and Laharee Chatterjee in Bengaluru; Editing by Sriraj Kalluvila)

Dow pierces 23,000 but finishes below milestone

A screen shows the Dow Jones Industrial Average as it briefly traded at 23,000 on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 17, 2017. REUTERS/Brendan McDermid

By Caroline Valetkevitch

NEW YORK (Reuters) – The Dow Jones Industrial Average briefly broke above the 23,000-point mark for the first time on Tuesday, driven by strong earnings from UnitedHealth and Johnson & Johnson, but finished the session just below that milestone.

The blue-chip index, which surpassed similar 1,000-point marks three times previously this year, has been steadily inching higher and is up 2.6 percent so far this month, putting it on track for a seventh straight monthly advance.

Still, the Dow may in the near term have a difficult time sustaining a move above 23,000, said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

“My view is it may pull back before staying above” that level. “It may take several days or a couple of weeks,” he said.

“Right now, you’re contending with earnings season and the fact that the market has run up leading up into the earnings season,” Pavlik said.

Shares of the largest U.S. health insurer UnitedHealth <UNH.N> touched a life intraday high and closed up 5.5 percent after the company reported a stronger-than-expected profit and raised its full-year earnings forecast.

Johnson & Johnson <JNJ.N>, up 3.4 percent, also posted better-than-expected results and raised its forecast, leading a 1.3 percent gain in the S&P healthcare sector <.SPXHC>.

The Dow Jones Industrial Average <.DJI> rose 40.48 points, or 0.18 percent, to end at 22,997.44 after rising as high as 23,002.20.

The S&P 500 <.SPX> gained 1.72 points, or 0.07 percent, to 2,559.36. and the Nasdaq Composite <.IXIC> dropped 0.35 point, or 0.01 percent, to 6,623.66.

Also boosting some health insurers and U.S. hospital operators was news of a bipartisan deal in the U.S. Senate to stabilize Obamacare. Shares of Anthem <ANTM.N> were up 1.9 percent, while shares of Tenet Healthcare <THC.N> were up 5.3 percent.

Financials were the biggest drag on the S&P 500, with shares of Goldman Sachs <GS.N> down 2.6 percent despite reporting a profit beat and smaller-than-expected trading revenue fall.

Netflix <NFLX.O> slipped 1.6 percent after touching a record high as more subscribers signed up for its original content in the latest quarter.

After the bell, shares of International Business Machines <IBM.N> were up 4.9 percent after the company reported revenue that beat analysts’ expectations. The stock ended the regular session down 0.2 percent at $146.54.

During the session, declining issues outnumbered advancing ones on the NYSE by a 1.37-to-1 ratio; on Nasdaq, a 1.72-to-1 ratio favored decliners.

About 5.5 billion shares changed hands on U.S. exchanges. That compares with the 5.9 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Editing by Nick Zieminski and James Dalgleish)

Powell likely next Fed chief, though Yellen best suited: economists

FILE PHOTO: Federal Reserve Board Governor Jerome Powell discusses financial regulation in Washington, U.S., October 3, 2017. REUTERS/Joshua Roberts

By Jonathan Cable

LONDON (Reuters) – Jerome Powell likely will be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll – but most of them said current Fed Chair Janet Yellen would be the best option.

Just over half the 40 economists who participated in the survey, taken in the past few days, tipped Fed Governor Powell to be appointed chair by U.S. President Donald Trump when Yellen’s current four-year term ends on Feb 1, 2018.

Powell, a lawyer and former investment banker, has served as a member of the Fed’s Board of Governors since May 2012.

“The most continuity between Fed chairs would be Yellen to Powell. Given where we are in the tightening cycle some consistency would be welcomed by financial markets,” said Ryan Sweet at Moody’s Analytics.

“A regime change can be a little more rattling and unnerving for markets.”

The next most likely choice was Kevin Warsh, who served as a Fed governor during the financial crisis, with 13 forecasts. Yellen received only four.

Also on the list of options, alongside being able to suggest someone else, was Trump’s top economic adviser Gary Cohn, the former chief executive of U.S. Bancorp Richard Davis, Columbia Business School’s Glenn Hubbard, former head of BB&T John Allison and Stanford University professor John Taylor.

They were all chosen by either one or no economist at all.

When asked who would be the best choice, around two-thirds said Trump should allow Yellen to remain in place. Powell was in second place with seven of 37 votes.

There is little daylight between his and Yellen’s thinking and none of the economists polled said Powell would implement the most radical change in policy.

Instead they said Taylor would make the biggest change. Taylor is the author of an interest-rate forecasting model named after him in which rates are tied to inflation and growth. In line with this rule, he has long argued the Fed has kept rates too low for too long because of the risk of unwanted inflationary pressures.

Expectations interest rates would go higher and at a faster clip under his leadership got Warsh the second most votes.

“Warsh and Taylor might be hiking a bit more aggressively in the current environment,” said James Knightley at ING.

The Fed has slowly increased borrowing costs and is expected to raise rates again in December and follow that up with more hikes next year. [ECILT/US]

However, minutes from September’s Federal Open Market Committee meeting revealed policymakers remained divided over the slow pickup in inflation, raising doubts over the future path of interest rate hikes.

An inflation index closely watched by the Fed – the core PCE price index – has been below the central bank’s medium-term target of 2 percent for more than five years.

Trump said late last month he would make a choice “over the next two or three weeks” on who will lead U.S. monetary policy. He has met with four candidates, but his chief of staff said last week he was still some time away from making a decision.

In July, Trump said he might decide to renominate Yellen for a new four-year term, or turn to Cohn. He met with Taylor on Wednesday to discuss the job.

“Probably depends on what Trump has for breakfast that day,” said Scott Brown at Raymond James, when asked who the next chair would be.

(Additional reporting and polling by Indradip Ghosh in BENGALURU; Editing by Ross Finley and Chizu Nomiyama)

Nordstrom family suspends attempt to take retailer private

FILE PHOTO: The Nordstrom store is pictured in Broomfield, Colorado, February 23, 2017. REUTERS/Rick Wilking/File Photo

(Reuters) – Nordstrom Inc said on Monday its founding family had suspended attempts to take the upscale retailer private for the rest of the year due to difficulties in arranging funds for the deal ahead of the holiday season.

The company’s shares were down 5 percent in early trading, valuing it at about $6.7 billion.

Nordstrom said in June that the family group, which owns 31.2 percent of the storied retailer, was looking to take the company private as it struggled to compete amid an industry-wide slowdown.

A rapid rise in online shopping and slowing customer traffic at malls have hurt mall-based retailers, including Nordstrom.

The family had hired private equity firm Leonard Green & Partners to help take the retailer private, a source told Reuters last month and were seeking to raise $1 billion to $2 billion in equity.

Media reports earlier this month suggested the family was finding it difficult to shore up financing, especially after the surprise bankruptcy filing of retailer Toys ‘R’ Us that stoked fears of dwindling mall traffic among lenders. (http://nyp.st/2xJTFBL)

(Reporting by Siddharth Cavale in Bengaluru; Editing by Savio D’Souza and Arun Koyyur)

General Motors reaches tentative deal with striking Canada workers

A striking member of the auto workers union Unifor walks to a picket line past a trailer covered by with a Canadian flag reading “Canadian Made Matters!”, outside the General Motors Company (GM) CAMI assembly plant in Ingersoll, Ontario, Canada October 13, 2017. REUTERS/Chris Helgren

By Susan Taylor and Denny Thomas

TORONTO (Reuters) – General Motors Co <GM.N> said on Friday it reached a tentative labor agreement with striking workers at its CAMI plant in Canada, ending an almost month-old dispute.

Some 2,500 workers at the CAMI plant in Ingersoll, in southern Ontario, walked off the job on Sept. 18 after the U.S. automaker rejected a union call to designate the factory as lead production site for the Chevrolet Equinox model in North America.

“These members have shown incredible courage and strength by standing up for good jobs and a secure future for their families and their community,” Jerry Dias, president of Unifor National, the main union leading the contract talks, said in a statement.

“This strike has shown all of Canada why a renewed North American Free Trade Agreement must address the needs of working people first,” he said.

The agreement is subject to member ratification, and Unifor said details of the deal will not be released until after the vote is held. The ratification vote has not yet been scheduled.

This week, the dispute ratcheted up when GM warned the union that it would start winding down production at the CAMI plant and ramp up output of the popular Equinox SUV at two plants in Mexico unless workers called off their strike.

The union had blamed NAFTA and Mexico’s cheaper labor costs for job losses.

GM moved production of the Terrain SUV to Mexico this year, resulting in about 400 layoffs at CAMI.

Dias said on Thursday that GM had “declared war on Canada,” and called the labor dispute “the poster child of what’s wrong with NAFTA.

The assembly plant strike is Canada’s first since 1996.

(Reporting by Susan Taylor and Denny Thomas; Editing by Lisa Shumaker and Leslie Adler)

Tesla fired hundreds of employees in past week

A Tesla charging station is seen in Salt Lake City, Utah, U.S. September 28, 2017. REUTERS/Lucy Nicholson

(Reuters) – Luxury electric vehicle maker Tesla Inc <TSLA.O> fired about 400 employees this week, including associates, team leaders and supervisors, a former employee told Reuters on Friday.

The dismissals were a result of a company-wide annual review, Tesla said in an emailed statement, without confirming the number of employees leaving the company.

“It’s about 400 people ranging from associates to team leaders to supervisors. We don’t know how high up it went,” said the former employee, who worked on the assembly line and did not want to be identified.

Though Tesla cited performance as the reason for the firings, the source told Reuters he was fired in spite of never having been given a bad review.

The Palo Alto, California-based company said earlier in the month that “production bottlenecks” had left Tesla behind its planned ramp-up for the new Model 3 mass-market sedan.

The company delivered 220 Model 3 sedans and produced 260 during the third quarter. In July, it began production of the Model 3, which starts at $35,000 – half the starting price of the Model S.

Mercury News had earlier reported about the firing of hundreds of employees by Tesla in the past week.

(Reporting by Kanishka Singh in Bengaluru and Alexandria Sage in San Francisco; Editing by Andrew Hay)

Wall St. ends up after economic data; S&P up for a fifth week

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 3, 2017. REUTERS/Brendan McDermid

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks rose on Friday following upbeat economic data and gains in technology shares, pushing the Dow and the S&P 500 to a fifth straight week of gains.

Data showed U.S. retail sales jumped in September, and the University of Michigan’s consumer sentiment index hit its highest since January 2004.

Another report showed consumer prices recorded their biggest increase in eight months as hurricanes Harvey and Irma boosted demand but underlying inflation remained muted.

Netflix <NFLX.O> shares closed 1.9 percent higher after hitting an intraday record high at $200.82 on a slew of price target increases ahead of its earnings report on Monday.

Apple <AAPL.O>, up 0.6 percent, gave the S&P 500 its biggest boost, while the S&P technology index <.SPLRCT> was up 0.5 percent. Shares of big banks were mixed following reports from Bank of America and Wells Fargo.

“We’re seeing a continuation of the strength in the market combined with low volatility. There seems to be money searching for stocks and looking for investments, simply because the momentum is still positive,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

“Also we’re entering a seasonal period where it’s difficult to fight the tape. So I imagine there’s cash coming in off the sidelines.”

The CBOE volatility index <.VIX> remains at historically depressed levels, closing at 9.61 on Friday.

The Dow Jones Industrial Average <.DJI> rose 30.71 points, or 0.13 percent, to end at 22,871.72, and the S&P 500 <.SPX> gained 2.24 points, or 0.09 percent, to 2,553.17.

The Nasdaq Composite <.IXIC> added 14.29 points, or 0.22 percent, to 6,605.80, a record closing high.

For the week, the Dow was up 0.4 percent and the S&P 500 was up 0.2 percent. The Nasdaq rose 0.2 percent for the week, registering a third week of gains.

Bank of America <BAC.N>, the second-biggest U.S. bank by assets, rose 1.5 percent after the lender’s profit topped estimates due to higher interest rates and a drop in costs.

But Wells Fargo <WFC.N> tumbled 2.8 percent after it reported lower-than-expected revenue for the fourth straight quarter due to a decline in mortgage banking revenue.

The reports from the Wall Street banks kicked off the third-quarter earnings season, with investors hoping profit growth will help justify valuations after a rally that has sent the S&P 500 up about 14 percent so far this year.

Also limiting the day’s gains, the healthcare sector <.SPXHC> was down 0.3 percent as health insurers and hospital operators tumbled on news that President Donald Trump scrapped billions of dollars in Obamacare subsidies to private insurers for low-income Americans.

Centene <CNC.N> sank 3.3 percent, Molina Healthcare <MOH.N> dropped 3.4 percent and Anthem <ANTM.N> fell 3.1 percent.

Tenet Healthcare <THC.N> dropped 5.1 percent and Community Health System <CYH.N> declined 4 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.08-to-1 ratio favored decliners.

About 5.8 billion shares changed hands on U.S. exchanges. That compares with the 6.1 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Reporting by Caroline Valetkevitch in New York; Editing by James Dalgleish)

Fiat Chrysler recalls 470,000 vehicles for restraint defect

A specialist trader works at the post where Fiat Chrysler Automobiles is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 8, 2017. REUTERS/Brendan McDermid

WASHINGTON (Reuters) – Fiat Chrysler Automobiles NV <FCHA.MI> said on Friday it is recalling 470,000 vehicles worldwide to replace a component that may inhibit deployment of the vehicles’ active head restraints in the event of a crash.

The Italian-American automaker said it is unaware of any injuries or accidents related to the recall. The U.S. National Highway Traffic Safety Administration opened an investigation into the issue in June. The recall covers 2012 Jeep Liberty sport utility vehicles and 2012-13 Chrysler 200 and Dodge Avenger mid-size cars.

(Reporting by David Shepardson; Editing by Steve Orlofsky)

Gasoline buoys U.S. consumer prices, underlying inflation tame

FILE PHOTO: Customers shop at a Whole Foods store in New York City, U.S., August 28, 2017. REUTERS/Brendan McDermid/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices recorded their biggest increase in eight months in September as gasoline prices soared in the wake of hurricane-related production disruptions at oil refineries in the Gulf Coast area, but underlying inflation remained muted.

The mixed report from the Labor Department on Friday comes as Federal Reserve officials have been engaged in a vigorous debate on the inflation path and suggests a December interest rate increase is not a done deal.

As a result, the dollar fell against a basket of currencies, while prices for U.S Treasuries rose. Stocks on Wall Street rose to record highs. Policymakers could, however, find solace from another report indicating that the economy was swiftly recovering from the damage inflicted by Hurricanes Harvey and Irma, with a strong rebound in retail sales last month.

“The firmness in retail sales should override the enduring mystery of low inflation to spur a December Fed rate hike,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

The Labor Department said its Consumer Price Index increased 0.5 percent last month after advancing 0.4 percent in August. September’s rise was the biggest since January and pushed up the year-on-year gain in the CPI to 2.2 percent from 1.9 percent in August. The increase in the CPI was broadly in line with economists’ expectations.

Gasoline prices surged 13.1 percent last month, accounting for 75 percent of the rise in the CPI. The increase in gasoline prices was the largest since June 2009 and followed a 6.3 percent advance in August.

The Labor Department said Harvey was reported to have impacted refinery capacity in the Gulf Coast and was likely a factor in last month’s increase in gasoline prices.

Outside gasoline, price pressures were benign. Excluding the volatile food and energy components, consumer prices gained 0.1 percent in September as the increase in rental accommodation slowed and the cost of new motor vehicles and medical care declined.

The so-called core CPI rose 0.2 percent in August. In the 12 months through September, the core CPI increased 1.7 percent. The year-on-year core CPI has now increased by the same margin for five consecutive months.

INTENSE INFLATION DEBATE

The Fed tracks the personal consumption expenditures (PCE) price index excluding food and energy. The core PCE has consistently undershot the U.S. central bank’s 2 percent target for more than five years. Fed Chair Janet Yellen has said that temporary factors such as one-off price cuts by wireless telephone companies are holding back inflation.

Minutes of the Fed’s Sept. 19-20 meeting published on Wednesday showed “many participants expressed concern that

the low inflation readings this year might reflect not only

transitory factors, but also the influence of developments

that could prove more persistent.”

Last month, food prices rose 0.1 percent after a similar gain in August. Owners’ equivalent rent of primary residence rose 0.2 percent after advancing 0.3 percent in August. Prices for new motor vehicles fell 0.4 percent as manufacturers resort to deep discounting to eliminate an inventory overhang.

There were also decreases in the cost of medical care, apparel, and household furnishings. But the cost of mobile phone services rose 0.4 percent after 14 straight months of declines.

In a separate report on Friday, the Commerce Department said retail sales jumped 1.6 percent in September likely as reconstruction and clean-up efforts in areas devastated by Harvey and Irma boosted demand for building materials and motor vehicles.

Retail sales were also buoyed by a surge in receipts at service stations, which reflected higher gasoline prices. Last month’s increase in retail sales was the largest since March 2015. Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.4 percent last month after being unchanged in August. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

The rebound in core retail sales suggests the drag on the economy from the hurricanes will probably be modest. Economists estimate the storms could subtract at least six-tenths of a percentage point from third-quarter GDP growth.

The economy grew at a 3.1 percent annualized rate in the April-June period.

“The sudden increase in retail demand is likely to cause third-quarter growth to come in somewhat better than expected before the hurricanes hit,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

“But what Mother Nature may have given in the third quarter, she will likely take away in the fourth.”

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Disney to cut about 200 jobs at its TV networks: source

The main gate of entertainment giant Walt Disney Co. is pictured in Burbank, California May 5, 2009. REUTERS/Fred Prouser

By Lisa Richwine

(Reuters) – Walt Disney Co <DIS.N> plans to cut about 200 jobs at unit ABC and other cable networks, according to a source familiar with the matter.

The largest number of layoffs will be in operational areas, but there would be no job cuts at ESPN, the source told Reuters.

The New York Times had reported in September that Disney had cut 250 jobs at its animation unit. (http://nyti.ms/2cv9Zti)

Disney had around 195,000 employees, according to its latest annual filing.

(Additional reporting by Laharee Chatterjee in Bengaluru; Editing by Shounak Dasgupta)

AT&T subscriber losses highlight cord-cutting threat: analysts

FILE PHOTO: An AT&T logo is seen at a AT&T building in New York City, October 23, 2016. REUTERS/Stephanie Keith/File Photo

By Anjali Athavaley

NEW YORK (Reuters) – AT&T Inc’s <T.N> third-quarter video losses sent pay-TV industry shares down on Thursday after Wall Street analysts raised concerns about the continued threat of consumers cancelling their cable and satellite television subscriptions.

The No. 2 U.S. wireless carrier, which owns satellite television service DirecTV, said in a filing on Wednesday that it lost 90,000 U.S. video subscribers in the quarter due to intense competition in traditional pay TV markets and the impact of the recent hurricanes. Shares were down 3.8 percent to $36.74 midday on Thursday.

“It should be clear that DirecTV, like all of its cable peers, is suffering from the ravages of cord-cutting,” said Craig Moffett, analyst at MoffettNathanson, in an email. “It is reasonable to expect a weak quarter for the whole pay-TV industry.”

The announcement weighed on other stocks in the sector, with shares of Dish Network Corp <DISH.O>, Charter Communications Inc <CHTR.O>, Comcast Corp <CMCSA.O> and Altice USA Inc <ATUS.N> trading lower.

AT&T said it added roughly 300,000 subscribers to DirecTV Now, its cheaper option for customers who want to stream television over the internet. That means the company lost 390,000 subscribers to its satellite and U-verse services, who are considered to be higher-value customers.

“Linear video erosion is worsening, with better (streaming) growth the silver lining,” wrote Deutsche Bank analyst Matthew Niknam in a research note, adding that the loss was wider than his estimate of 266,000 and far more than last year’s subscriber loss of 3,000.

AT&T said in its filing that the decline of traditional video subscribers will negatively impact its entertainment group revenue and margins.

The company is expected to report earnings on Oct. 24.

AT&T is not the only pay-TV provider to point to a more competitive environment. Cable company Comcast Corp <CMCSA.O> said in September it expected to lose up to 150,000 video subscribers in the third quarter, citing the same reasons.

The losses come after more options have entered the market that allow consumers to stream television over the internet at a cheaper price than paying for cable. Deutsche Bank’s Niknam noted accelerating competition from Dish’s Sling service, Sony Corp’s <6758.T> PlayStation Vue and others.

(Reporting by Anjali Athavaley; Editing by Frances Kerry and Meredith Mazzilli)

Facebook will help investigators release Russia ads, Sandberg tells Axios

Sheryl Sandberg, Chief Operating Officer of Facebook, delivers a speech during a visit in Paris, France, January 17, 2017, at a start-up companies gathering at Paris’ Station F site as the company tries to head off tougher regulation by Germany. REUTERS/Philippe Wojazer

By Dustin Volz

WASHINGTON (Reuters) – Facebook Inc <FB.O> Chief Operating Officer Sheryl Sandberg said on Thursday the company was fully committed to helping U.S. congressional investigators publicly release Russia-backed political ads that ran during the 2016 U.S. election.

“Things happened on our platform in this election that shouldn’t have happened,” Sandberg said during an interview in Washington with the Axios news website. “We told Congress and the intelligence committees that when they are ready to release the ads, we are ready to help them.”

The live interview was the first by a senior Facebook executive since the social media giant last month told congressional panels investigating allegations of Russian meddling during the election that it had found 3,000 politically divisive ads believed to have been bought by Russia.

Facebook found the ads on its network and said they had appeared in the months preceding and following the election on Nov. 8.

Sandberg said the company began hearing rumors of Russian attempts to use the platform to spread propaganda around election day, but did not give a precise timeline about when the company began its review.

Sandberg said she supported the public release of those ads, in addition to the pages they were connected to.

Information about how the ads were targeted toward specific kinds of users would also be released, she said.

Asked if Facebook contributed to Democratic candidate Hillary Clinton’s defeat last year, Sandberg, an open Clinton supporter during the campaign, did not answer directly, but said it was important the website was “free from abuse” during any election in any country.

But Sandberg acknowledged the company had erred in how it handled the issue of foreign interference last year.

“It’s not just that we apologize. We’re angry, we’re upset. But what we really owe the American people is determination” to do a better job of preventing foreign meddling,” she said.

“We don’t want this kind of foreign interference” on Facebook, Sandberg added. “Any time there is abuse on our platform, it troubles us. It troubles us deeply.”

She said the company had been too permissive at times in terms of how advertisers are allowed to target users, and that Facebook did not want to allow ads that may be “discriminatory.”

Still, Sandberg said it was important to protect “free expression” on the world’s largest social network. If the Russian ads had been bought by legitimate accounts instead of fraudulent ones, many of them would have been allowed to run on the site, she said.

Sandberg said the company wanted other internet firms to work to make ad purchases more transparent, but said the company was still talking about the issue with lawmakers who want to introduce legislation on the topic.

(Additional reporting by Makini Brice; Editing by Bernadette Baum)

Delta refuses to pay tariffs on Bombardier CSeries jets

FILE PHOTO: A Delta Airlines jet takes off from Washington National Airport in Washington, U.S., August 9, 2017. REUTERS/Joshua Roberts/File Photo

By Alana Wise

NEW YORK (Reuters) – Delta Air Lines Inc on Wednesday said it would refuse to pay a 300 percent U.S. tariff on Canadian-built Bombardier CSeries jets, raising doubts about its purchase of 75 of the new aircraft at a list price of more than $5 billion.

“We’re not going to be forced to pay tariffs or anything of the ilk,” Delta Chief Executive Ed Bastian said on the company’s third-quarter earnings call.

Delta is the only major U.S. carrier to buy the CSeries so far, and Bastian called the U.S. Commerce Department’s decision to impose anti-dumping duties on the jets “nonsensical.”

He said Delta still expects to take delivery of the CSeries order, however.

The U.S. tariff decision, sparked by rival planemaker Boeing Co, stems from a claim that Bombardier used Canadian government subsidies to bankroll the CSeries sale to Delta and dump the planes at “absurdly low” prices.

The proposed duties would not take effect unless affirmed by the U.S. International Trade Commission (ITC) early next year.

Shares of Bombardier, which is based in Canada, were up 3.78 percent at $2.34 in afternoon trading.

Delta shares were up slightly, 0.85 percent at $53.15, on the airline’s stronger-than-expected third-quarter results.

Responding to Bastian’s remarks, Bombardier said it was “confident the ITC will reach the right conclusion given that Boeing did not compete for the Delta order.”

“Delta has been supporting Bombardier throughout the process and its CEO, Ed Bastian, reaffirmed the airline’s intention to take possession of its CSeries aircraft. This is the message that we should get out of this,” spokesman Simon Letendre said.

How the extra costs of the planes would be covered remained unclear. Bombardier has also said it would not pick up the tab for the trade duties. [nL8N1M75O0]

The CSeries dispute has spiraled into a broader discussion of trade agreements between the United States and Canada, as U.S. President Donald Trump has warned he would terminate the tri-national North American Free Trade Agreement unless changes were made to address deficits within the trade pact.

(Reporting by Alana Wise; editing by David Gregorio and Tom Brown)

Loyalists unhappy as Coach becomes Tapestry Inc

FILE PHOTO – A view of a Coach store in Pasadena, California, January 26, 2015. REUTERS/Mario Anzuoni

By Siddharth Cavale

(Reuters) – Iconic luxury handbag maker Coach Inc risked Wall Street and social media ire on Wednesday by announcing a change of its corporate name to Tapestry Inc, as it evolves into a multi-brand upscale retailer.

The company’s shares fell as much as 3 percent in early trading, which analysts attributed to strong results from rival LVMH on Tuesday, and to a broader selloff in the consumer discretionary space on Wednesday.

Still, social media reacted harshly to the 76-year old company changing its well-known corporate identity with many Twitter users criticizing the decision that calls for Tapestry being the holding entity that houses the Coach, Kate Spade and Stuart Weitzman brands.

“This is bizarre & a strategy departure. Dying to know the logic,” Andrea Wasserman, a former Nordstrom and Hudson’s Bay executive, wrote on Twitter following the news.

The derision kept coming as people questioned and even mocked the move.

“$COH changing its name to “Tapestry” is a horrible branding idea. Fire the executive who proposed the change,” J Christian Bernabe, a nonprofit digital content director, tweeted.

Chief Executive Victor Luis, however, downplayed the social media backlash.

“At the end of the day some of the social media reaction is misplaced because people think we are changing the name of the Coach brand, which we are not doing,” Luis told Reuters. “It’s really about creating a new corporate identity for Coach as a house of brands.”

Luis added that the management had been thinking about changing the company’s corporate name for a while, but made the decision to change it after the acquisition of Kate Spade.

Founded in a loft in Manhattan in 1941, Coach has grown into a multi-billion dollar company, building its business on the success of its Coach handbags that for many years were widely coveted by wealthy women shoppers around the world.

Coach, however, lost some shine in recent years in part due to the financial recession and increased online shopping. The company is trying to regain its former glory buy buying new brands, keeping a tight lid on discounting and pulling back from department stores.

Coach bought smaller rival Kate Spade for $2.4 billion earlier this year and shoemaker Stuart Weitzman in 2015, broadening its portfolio and transforming into an upscale fashion house rather than just a pricey handbag retailer.

The company said on Wednesday the name change goes into effect on Oct. 31 and will start trading under the ticker symbol “TPR” on the New York Stock Exchange.

Coach’s shares were down 2.8 percent at $38.87 in afternoon trading.

(Reporting by Siddharth Cavale, Uday Sampath Kumar and Sruthi Ramakrishnan in Bengaluru; Editing by Saumyadeb Chakrabarty, Bernard Orr)

Wall Street ends at record highs; eyes on Fed, earnings

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 27, 2017. REUTERS/Brendan McDermid

NEW YORK (Reuters) – Major U.S. stock indexes edged up to record closing highs on Wednesday with sector moves in the S&P 500 showing preference toward so-called defensive stocks, while Wall Street reacted mutedly to the minutes of the most recent Federal Reserve policy meeting.

The Dow Jones Industrial Average <.DJI> rose 42.21 points, or 0.18 percent, to 22,872.89, the S&P 500 <.SPX> gained 4.6 points, or 0.18 percent, to 2,555.24 and the Nasdaq Composite <.IXIC> added 16.30 points, or 0.25 percent, to 6,603.55.

Stocks ended near session highs after Politico reported that Treasury Secretary Steven Mnuchin was pushing president Donald Trump to name Jerome Powell, seen as a safe pick for financial markets, as the next Federal Reserve chairman.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

Wal-Mart rally pushes Dow to all-time high

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 4, 2017. REUTERS/Brendan McDermid

By Noel Randewich

(Reuters) – The Dow Jones Industrial Average hit a record high on Tuesday, helped by a surge in Wal-Mart Stores, while Amazon and Facebook lost ground and investors focused on upcoming quarterly reports.

Wal-Mart <WMT.N> jumped 4.47 percent to a two-year high after forecasting U.S. online sales would rise by about 40 percent in the next fiscal year and unveiling a $20-billion share buyback.

That helped the S&P 500 consumer staples index <.SPLRCS> jump 0.99 percent, although gains in that sector were limited by P&G <PG.N>, which dropped 0.54 percent after activist investor Nelson Peltz unexpectedly failed in his bid to win a board seat.

Third-quarter corporate reporting season kicks into high gear on Thursday with results from JPMorgan Chase <JPM.N> and Citigroup <C.N>. With the S&P 500 up 14 percent in 2017, investors are betting on strong earnings growth across the S&P 500.

Wall Street has mostly shrugged off recent saber-rattling between the United States and North Korea, as well as a lack of progress by President Donald Trump in delivering promised corporate tax cuts.

“The only fear in this market is the fear of missing out,” said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas. “But things can change quickly. There’s stuff out there, like North Korea. You still have to be cautious.”

The Dow Jones Industrial Average <.DJI> rose 0.31 percent to 22,830.68 points, a record-high close. It is up 15.5 percent in 2017.

The S&P 500 <.SPX> gained 0.23 percent to 2,550.64 and the Nasdaq Composite <.IXIC> added 0.11 percent to 6,587.25.

The tech index <.SPLRCT>, the best performing among the 11 major S&P sectors this year, was mostly unchanged, with Facebook falling 0.53 percent and Nvidia <NVDA.O> adding 1.91 percent after unveiling chips for autonomous vehicles, bringing its gain over the past year to 182 percent.

American Airlines <AAL.O> jumped 4.80 percent and United Continental <UAL.N> soared 4.67 percent after the two airlines gave encouraging third-quarter forecasts. Delta <DAL.N>, which reports on Wednesday, rose 1.85 percent.

Energy stocks <.SPNY> got a boost from a near 2-percent rise in oil prices supported by Saudi Arabian export cuts in November and comments from OPEC and trading companies that the market is rebalancing after years of oversupply.

Advancing issues outnumbered declining ones on the NYSE by a 1.90-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favored advancers.

About 5.6 billion shares changed hands on U.S. exchanges, well below the 6.1 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Savio D’Souza and Nick Zieminski)

Exclusive: Symantec CEO says source code reviews pose unacceptable risk

FILE PHOTO – Greg Clark, Chief Executive Officer of Symantec, takes part in the Yahoo Finance All Markets Summit in New York, U.S., February 8, 2017. REUTERS/Lucas Jackson

By Dustin Volz and Joel Schectman

WASHINGTON (Reuters) – U.S.-based cyber firm Symantec <SYMC.O> is no longer allowing governments to review the source code of its software because of fears the agreements would compromise the security of its products, Symantec Chief Executive Greg Clark said in an interview with Reuters.

Tech companies have been under increasing pressure to allow the Russian government to examine source code, the closely guarded inner workings of software, in exchange for approvals to sell products in Russia.

Symantec’s decision highlights a growing tension for U.S. technology companies that must weigh their role as protectors of U.S. cybersecurity as they pursue business with some of Washington’s adversaries, including Russia and China, according to security experts.

While Symantec once allowed the reviews, Clark said that he now sees the security threats as too great. At a time of increased nation-state hacking, Symantec concluded the risk of losing customer confidence by allowing reviews was not worth the business the company could win, he said.

The company’s about-face, which came in the beginning of 2016, was reported by Reuters in June. Clark’s interview is the first detailed explanation a Symantec executive has given about the policy change.

In an hour-long interview, Clark said the firm was still willing to sell its products in any country. But, he added, “that is a different thing than saying, ‘Okay, we’re going to let people crack it open and grind all the way through it and see how it all works’.”

While Symantec had seen no “smoking gun” that foreign source code reviews had led to a cyberattack, Clark said he believed the process posed an unacceptable risk to Symantec customers.

“These are secrets, or things necessary to defend (software),” Clark said of source code. “It’s best kept that way.”

Because Symantec’s market share was still relatively small in Russia, the decision was easier than for competitors heavily invested in the country, Clark said.

“We’re in a great place that says, ‘You know what, we don’t see a lot of product over there’,” Clark said. “We don’t have to say yes.”

Symantec’s decision has been praised by some western cyber security experts, who said the company bucked a growing trend in recent years that has seen other companies accede to demands to share source code.

“They took a stand and they put security over sales,” said Frank Cilluffo, director of the Center for Cyber and Homeland Security at George Washington University and a former senior homeland security official to former President George W. Bush.

“Obviously source code could be used in ways that are inimical to our national interest,” Cilluffo said. “They took a principled stand, and that’s the right decision and a courageous one.”

Reuters last week reported that Hewlett Packard Enterprise (HPE) <HPE.N> allowed a Russian defense agency to review the inner workings of cyber defense software known as ArcSight that is used by the Pentagon to guard its computer networks.

HPE said such reviews have taken place for years and are conducted by a Russian government-accredited testing company at an HPE research and development center outside of Russia. The software maker said it closely supervises the process and that no code is allowed to leave the premises, ensuring it does not compromise the safety of its products. A spokeswoman said no current HPE products have undergone Russian source code reviews.

ArcSight was sold to British tech company Micro Focus International Plc <MCRO.L> in a sale completed in September.

On Monday, Micro Focus said the reviews were a common industry practice. But the company said it would restrict future reviews of source code in its products by “high-risk” governments, and that any review would require chief executive approval.

“SLIPPERY SLOPE”

Earlier this year, Beijing enacted a cyber security law that foreign business groups have warned could adversely impact trade because of its data surveillance and storage requirements. The law has further fueled concern that companies increasingly need to choose between compromising security to protect business or risk losing out on potentially lucrative markets.

Clark said Symantec had not received any requests to review source code from the Chinese government, but indicated he would not comply if Beijing made such a demand.

“We just have taken a policy decision to say, ‘Any foreign government that wants to read our source code, the answer is no’,” Clark said.

The U.S. government does not generally require source code reviews before purchasing commercially available software, according to security experts.

“As a vendor here in the United States,” Clark said, “we are headquartered in a country where it is OK to say no.”

Some security experts fear heightened requests may further splinter the tech world, leading to an environment where consumers and governments only feel safe buying products made in their own countries.

“We are heading down a slippery slope where you are going to end up balkanizing (information technology), where U.S. companies will only be able to sell software to parts of Europe,” said Curtis Dukes, a former head of cyber defense at the National Security Agency now with the non-profit Center for Internet Security, “and Russia won’t be able to sell products in the U.S.”

(Additional reporting by Jack Stubbs in Moscow; Editing by Paul Thomasch)

U.S. top court asks Justice Department for views in Apple antitrust case

Apple’s new iPhone 8 (R) and 8 Plus are seen after they go on sale at the Apple Store in Tokyo’s Omotesando shopping district, Japan, September 22, 2017. REUTERS/Issei Kato

By Andrew Chung

WASHINGTON (Reuters) – The U.S. Supreme Court on Tuesday asked the Trump administration for its views on whether to hear Apple Inc’s <AAPL.O> bid to avoid a class-action lawsuit accusing the tech giant of inflating consumer prices by charging illegally high commissions on iPhone software sales through its App Store.

The justices are considering whether to take up Apple’s appeal of a lower court ruling that allowed the proposed class-action suit alleging it violated federal antitrust law to proceed. Apple said the case should be thrown out because only developers of the apps who were charged the commissions, not consumers, should be entitled to bring such a suit. Apple charges app developers a 30 percent commission on App Store consumer purchases.

The Justice Department will provide the high court with its stance on the matter.

The dispute could have a major impact on electronic commerce, which has seen explosive growth, with $390 billion in U.S. retail sales last year alone.

Electronic marketplaces like the App Store, ticket site StubHub, Amazon’s <AMZN.O> Marketplace and eBay <EBAY.O> where individual sellers set prices rather than the marketplace itself potentially could be sued by consumers.

The antitrust claims date back to a 2011 lawsuit filed by several iPhone buyers in California federal court, including lead plaintiff Robert Pepper of Chicago, according to court papers. They allege that Cupertino, California-based Apple has monopolized the sale of apps like messaging programs and games, leading to inflated prices.

The company has sought to have the antitrust claims dismissed, saying the plaintiffs did not have legal standing to bring the case because they are not charged the commission.

The plaintiffs countered that they, not the developers, pay Apple for apps at prices that include the commission, which they called a “monopolistic surcharge.”

The San Francisco-based 9th U.S. Circuit Court of Appeals in January sided with the plaintiffs, ruling that because consumers directly bought products from Apple they were entitled to sue.

(Reporting by Andrew Chung; Editing by Will Dunham)

Honeywell sticks with aerospace, spins off other units

A worker is seen building an aircraft engine at Honeywell Aerospace in Phoenix, Arizona, U.S. on September 6, 2016. Picture taken on September 6, 2016. REUTERS/Alwyn Scott

By Arunima Banerjee and Alwyn Scott

(Reuters) – Honeywell International Inc unveiled a corporate makeover on Tuesday that will tie its growth more strongly to aerospace technology and spin off other businesses as two publicly-traded companies by the end of 2018.

The company also raised the low-end of its full-year 2017 earnings guidance by 5 cents to $7.05 – $7.10, and said it would spend the proceeds from the spin-offs on share buybacks, acquisitions and paying down debt.

Its shares fell 1 percent after Wall Street opened.

Honeywell Chief Executive Officer Darius Adamczyk, like his peers at other industrial conglomerates, has been under pressure to pull apart a portfolio of disparate businesses that includes automotive turbo chargers, burglar alarms and the Xtratuf boots popular in Alaska’s fishing industry.

Honeywell had been under pressure from hedge fund Third Point to spin off the aerospace division, which accounted for about 36 percent of total revenue in 2016 and which Third Point said could generate $20 billion in shareholder value if sold.

The changes announced on Tuesday split off its home and ADI global distribution business – which deal with building systems running from air conditioning to smoke alarms – into one unit and transportation systems into a second.

They include the low-margin automotive turbocharger business, joining other companies, including auto supplier Delphi Automotive Plc, in shedding technology tied to the internal combustion engine as regulators around the world crack down on emissions and talk of mandating a switch to battery-electric vehicles over the next two decades.

Honeywell said the two spun-off business units together would generate annualized revenue of about $7.5 billion. It said it would gain $3 billion from the spin-offs.

Ahead of its quarterly earnings report, the company also said third quarter sales were expected to be $10.1 billion, up 5 percent in organic terms compared to an earlier forecast range of +/-1 percent.

(Reporting by Alwyn Scott in New York and Arunima Banerjee in Bangalore; editing by Patrick Graham)

Bill Gross of Janus blames Fed for ‘fake markets’

FILE PHOTO: Bill Gross, Portfolio Manager, Janus Capital Group, listens during the Milken Institute Global Conference in Beverly Hills, California, U.S., May 3, 2017. REUTERS/Lucy Nicholson

By Jennifer Ablan

NEW YORK (Reuters) – Influential bond investor Bill Gross of Janus Henderson Investors said on Monday that financial markets are artificially compressed and capitalism distorted because of the U.S. Federal Reserve’s loose monetary policy.

“I think we have fake markets,” Gross said at a Janus Henderson event. Investors should brace for higher Treasury bond yields as the Fed begins to unwind its quantitative easing program but yields will edge up “only gradually,” he said.

Gross, who oversees the $2.1 billion Janus Henderson Global Unconstrained Bond Fund, said the Fed’s loose monetary policy had resulted in investors chasing yield and thus producing tight corporate spreads everywhere around the globe.

“Even China and South Korea – perfect examples of the risk trade – are at very narrow (corporate spread) levels. There is no real advantage in the global marketplace. Everything is so tight, it is hard to pick a winner from a group that is fake.”

Gross reiterated his warning that Fed Chair Janet Yellen and other global policy makers should not rely on historical models such as the Taylor Rule and the Phillips curve “in an era of extraordinary monetary policy.”

Economists John Taylor and A.W. Phillips devised models for guiding interest-rate policy based, respectively, on inflation and the unemployment rate. Those models disregard the importance of private credit in the economy, according to Gross.

(Reporting by Jennifer Ablan; Editing by Andrew Hay and Tom Brown)

Google uncovered Russia-backed ads on YouTube, Gmail: WashPost

FILE PHOTO – The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017. REUTERS/Mike Blake/File Picture

WASHINGTON (Reuters) – Google has discovered that Russian operatives spent tens of thousands of dollars on ads on YouTube, Gmail, Google search and other products, The Washington Post reported on Monday.

The ads do not appear to be from the same Kremlin-affiliated entity that bought ads on Facebook Inc, which may indicate a broader Russian online disinformation effort, the paper reported. Google runs the world’s largest online advertising business and YouTube is the world’s largest online video site.

Google, owned by Alphabet Inc, did not immediately respond to a request for comment on the story.

Google has downplayed the possibility of Russian influence on its platforms, but launched a probe into the matter, according to the Post. Both Twitter Inc and Facebook have said that Russia bought ads and had accounts on their platforms.

A source who was briefed on Google’s review but who did not work for the internet and search group said Google had uncovered less than $100,000 in ad spending that had potentially been linked to Russian actors.

Facebook, on the other hand, unearthed $100,000 in spending from just one Russia-affiliated entity, the Internet Research Agency, the source said.

Meanwhile, Congress has started multiple investigations into the Russian interference in the 2016 election, with lawmakers on both political sides saying Russia intended to sow discord in the United States, spread propaganda and sway the election to elect President Donald Trump.

Google officials are expected to testify publicly before both the House and Senate intelligence committees on Nov. 1 alongside Facebook and Twitter about Russian attempts to use their platforms to influence the election.

(Reporting by Dustin Volz; Additional reporting by Makini Brice; Editing by Doina Chiacu and Jeffrey Benkoe)

Dove faces PR disaster over ad that showed black woman turning white

Two bottles of Dove’s Deep Moisture body wash are displayed in Toronto, Ontario, Canada, October 8, 2017. REUTERS/Chris Helgren

By Estelle Shirbon

LONDON (Reuters) – A social media outcry over an advertisement for Dove body wash which showed a black woman removing her top to reveal a white woman has escalated into a public relations disaster for the Unilever brand. <UNLVR.L>

The 3-second video clip, posted on Dove’s U.S. Facebook page on Friday, reminded some social media users of racist soap adverts from the 19th century or early 20th century that showed black people scrubbing their skin to become white.

Dove removed the clip and apologized, saying on Twitter that the post had “missed the mark in representing women of color thoughtfully”.

But the apology failed to stem a torrent of online criticism, with some social media users calling for a boycott of Dove products, while conventional media outlets in the United States and Europe were also seizing on the story.

In Britain, the controversy featured prominently in Monday’s television breakfast shows, with guests debating how the ad got through the company’s approval process and whether it was indicative of a broader problem with racism in marketing.

On Twitter, posts including the hashtag #BoycottDove, which started over the weekend among U.S. users, were appearing in multiple European languages.

“In short, racism is back in fashion and brands are looking to benefit,” wrote user @Beatrix B. in French.

In the full clip, the black woman removed her t-shirt to reveal the white woman, who then lifted her own top to reveal an Asian woman.

“The short video was intended to convey that Dove body wash is for every woman and be a celebration of diversity, but we got it wrong,” Dove said in a statement.

The black-to-white transition was reminiscent in the eyes of some viewers of infamous soap ads from history, some of which were posted on social media.

In one example from the 1880s, a black child is pictured bathing in a tub while a white child offers him a bar of soap. After using the soap, the black child looks delighted to see that his skin has turned white.

Dove declined to say how the ad was produced and approved. It said it was “re-evaluating our internal processes for creating and approving content”.

A previous Dove ad, which showed three women side by side in front of a before-and-after image of cracked and smooth skin, caused an uproar in 2011 because the woman positioned on the “before” side was black while the “after” woman was white. Dove said at the time all three were supposed to “demonstrate the ‘after’ product benefit”.

(Reporting by Estelle Shirbon; Editing by Peter Graff)

Wal-Mart to speed up returns for items bought online

People line up at a Walmart store that reopened Friday after Tropical Storm Harvey in Port Arthur, Texas, U.S., September 1, 2017. REUTERS/Carlo Allegri

(Reuters) – Wal-Mart Stores Inc said on Monday it was launching a process to speed up returns of items bought on its website, in time for the busy holiday season, as it looks to compete better with e-commerce giant Amazon.com.

Under Wal-Mart’s Mobile Express Returns, starting in early November, customers can use the retailer’s app to return an item. The process can then be completed at “express” lanes in a store by scanning a QR code and handing over the item.

The new process reduces the time taken for returning products at stores to as little as 30 seconds from the 5 minutes that the previous process required, said Daniel Eckert, head of Wal-Mart’s U.S. services and digital acceleration business.

The new returns process also allows customers to get refunds as soon as the next day. Some items, including shampoo and color cosmetics, will be eligible for instant refunds even without the products being returned in store.

Wal-Mart is investing billions to get its online business right to stave off marketshare losses to Amazon, which has shaken up the industry with its acquisition of upmarket grocer Whole Foods.

Wal-Mart said it planned to extend the new returns process to items bought in its stores by early next year, and is working on a similar returns policy for items bought from third-party sellers on Walmart.com.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Saumyadeb Chakrabarty)

Exclusive: Honeywell prepares to spin off businesses -sources

A view of the corporate sign outside the Honeywell International Automation and Control Solutions manufacturing plant in Golden Valley, Minnesota, January 28, 2010. REUTERS/Eric Miller

By Greg Roumeliotis

(Reuters) – Honeywell International Inc <HON.N> plans to spin off non-core assets and create at least two new publicly listed companies, as the U.S. industrial conglomerate seeks to streamline its business, according to people familiar with the matter.

The move would represent the first major shakeup at the Morris Plains, New Jersey-based company since Darius Adamczyk succeeded David Cote as chief executive in April. It comes after Honeywell said in September it would raise its annual dividend by 12 percent.

The sources said on Sunday that while Honeywell would defy calls by one of its shareholders, activist hedge fund Third Point LLC, to spin off its aerospace division, it would still seek to carve out assets worth several billions of dollars.

Honeywell is considering placing its turbochargers business, which produces components that improve the performance and efficiency of cars and trucks, into one of the newly created companies, the sources said. Honeywell lists turbochargers as part of its aerospace business.

The sources did not disclose which other assets Honeywell was looking to spin off and asked not to be identified because the deliberations were confidential.

Honeywell is hoping to unveil the spinoff plan as early as this week, though the announcement could be delayed, the sources added.

Honeywell, which has a market capitalization of $109 billion, declined to comment.

Honeywell’s businesses include energy efficient products and solutions for homes, specialty chemicals, electronic and advanced materials, and sensing, safety and security technologies for buildings, homes and industries.

Third Point has argued that Honeywell is undervalued compared to peers in industrial automation, and that spinning off the entire aerospace business would create $20 billion in shareholder value.

Honeywell’s aerospace business, its biggest, also makes auxiliary power units and engines for aircraft manufactured by companies such as Bombardier Inc <BBDb.TO>, Textron Inc <TXT.N> and General Dynamics Corp <GD.N>.

Last year, Honeywell approached peer United Technologies Corp <UTX.N> to discuss a potential combination but was rebuffed. Last month, United Technologies struck a $30 billion agreement to buy avionics and interiors maker Rockwell Collins Inc <COL.N>. Analysts have said this deal positions United Technologies to also spin off assets down the line, though no such deal has been announced.

(Reporting by Greg Roumeliotis in New York; Additional reporting by Alwyn Scott in New York; Editing by Richard Chang)

U.S. Chamber warns against Trump’s ‘highly dangerous’ NAFTA demands

U.S. President Donald Trump enters the East Room to host an event to commemorate Hispanic Heritage Month at the White House in Washington, U.S., October 6, 2017. REUTERS/Kevin Lamarque

By David Lawder

WASHINGTON (Reuters) – The U.S. Chamber of Commerce warned on Friday that the Trump administration was making “highly dangerous demands” in the North American Free Trade Agreement modernization talks that could erode U.S. business support and torpedo the negotiations.

John Murphy, the chamber’s senior vice president for international policy, said the largest U.S. business lobby was urging the administration to drop some of its more controversial NAFTA proposals, including raising rules of origin thresholds to “extreme” levels.

“We’re increasingly concerned about the state of play in negotiations,” Murphy told reporters.

U.S., Canadian and Mexican negotiators are preparing for a fourth round of talks to update the 23-year-old trade pact next week in a Washington suburb, Oct. 11-15.

U.S. companies large and small were worried about a proposal by U.S. Trade Representative Robert Lighthizer to add a five-year termination clause to NAFTA, Murphy said.

He said there was also concern about Lighthizer’s proposal to reduce Canadian and Mexican companies’ access to U.S. public procurement contracts, and to include a U.S.-specific content requirement for autos and auto parts.

“We see these proposals as highly dangerous, and even one of them could be significant enough to move the business and agriculture community to oppose an agreement that included them,” Murphy said.

He also voiced similar concerns about U.S. proposals for revamping dispute settlement mechanisms and trade protections for seasonal U.S. produce.

Some U.S. lawmakers and congressional staff are also growing increasingly concerned that the talks can reach a successful conclusion. House Ways and Means Committee Chairman Kevin Brady, a pro-trade Republican, has invited Canadian Prime Minister Justin Trudeau to speak to the tax- and trade-focused panel on Wednesday as negotiators return to the table, a committee spokeswoman said.

WORRY ON AUTOS CONTENT

Inside U.S. Trade, a trade publication, stirred concerns among auto industry groups by quoting unnamed sources as saying that the Trump administration was also moving forward with a bid to increase North American content requirements for autos to 85 percent from the current 62.5 percent, with a new 50 percent U.S. content requirement.

U.S. Trade Representative (USTR) spokeswoman Emily Davis declined to comment on the report, but said President Donald Trump had been clear about the need to shake up the agreement governing one of the world’s biggest trade blocs.

“NAFTA has been a disaster for many Americans, and achieving his objectives requires substantial change,” she said. “These changes of course will be opposed by entrenched Washington lobbyists and trade associations.”

Officials from auto industry trade groups said they had not seen a rules of origin proposal with such stringent targets.

“Forcing unrealistic rules of origin on businesses would leave the U.S. unable to compete by increasing the cost of manufacturing and raising prices for consumers,” said Cindy Sebrell, a spokeswoman for the Motor Equipment Manufacturers Association, which represents auto parts manufacturers.

Karen Antebi, the trade counselor at Mexico’s embassy in Washington, told a forum on Friday that while there were “rumors” of a 50 U.S. percent content demand for autos, formal texts had not been proposed on rules of origin.

“Mexico has been firm and consistent that country specific rules of origin within the NAFTA would be unacceptable,” she said.

(Reporting by David Lawder; Editing by Tom Brown and James Dalgleish)

Hurricanes Harvey, Irma sink U.S. payrolls in September

A man walks through floods waters and onto the main road after surveying his property which was hit by Hurricane Harvey in Rockport, Texas, U.S. August 26, 2017. REUTERS/Adrees Latif

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employment fell in September for the first time in seven years as Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring, the latest indication that the storms undercut economic activity in the third quarter.

The Labor Department said on Friday nonfarm payrolls decreased by 33,000 jobs last month amid a record drop in employment in the leisure and hospitality sector.

The decline in payrolls was the first since September 2010. The Department said its analysis suggested that the net effect of Harvey and Irma, which wreaked havoc in Texas and Florida in late August and early September, was to “reduce the estimate of total nonfarm payroll employment for September.”

“While nonfarm payrolls declined last month, investors will find solace in a whole host of other labor market indicators that reveal an underlying labor market that continues to show evidence of resilience and continued tightening,” said Scott Anderson, chief U.S. economist at Bank of the West in San Francisco.

Economists had forecast payrolls increasing by 90,000 jobs last month. Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed.

Many of the dislocated people will probably return to work. That, together with rebuilding and clean-up is expected to boost job growth in the coming months. Leisure and hospitality payrolls dived 111,000, the most since records started in 1939, after being unchanged in August.

There were also decreases in retail and manufacturing employment last month. Stripping out the effects of the hurricanes, the labor market remains strong. The government revised data for August to show 169,000 jobs created that month instead of the previously reported 156,000.

Harvey and Irma did not have an impact on the unemployment rate, which fell two-tenths of a percentage point to 4.2 percent, the lowest since February 2001. The smaller survey of households from which the jobless rate is derived treats a person as employed regardless of whether they missed work during the reference week and were unpaid as result.

The decrease in the unemployment rate reflected a 906,000 surge in household employment, which offset a 575,000 increase in the labor force.

The dollar was trading higher against a basket of currencies after the data, while prices for U.S. Treasuries fell. Stocks on Wall Street fell marginally.

DISRUPTIONS BOOST WAGES

Underscoring the disruptive impact of the hurricanes, the household survey showed 1.5 million people stayed at home in September because of the bad weather, the most since January 1996. About 2.9 million people worked part-time, the largest number since February 2014.

The length of the average workweek was unchanged at 34.4 hours. With the hurricane-driven temporary unemployment concentrated in low-paying industries like retail and leisure and hospitality, average hourly earnings increased 12 cents or 0.5 percent in September after rising 0.2 percent in August.

That pushed the annual increase in wages to 2.9 percent, the largest gain since December 2016, from 2.7 percent in August.

The mixed employment report should not change views the Federal Reserve will raise interest rates in December. Fed Chair Janet Yellen cautioned last month that the hurricanes could “substantially” weigh on September job growth, but expected the effects would “unwind relatively quickly.”

“The Fed has been hyper-focused on wage growth, so the above-average increase will be a welcome relief, even if there is some storm impact embedded in the number,” said Marvin Loh, senior global markets strategist at BNY Mellon in Boston. “We think that the report strengthens the Fed’s December hike hand.”

The U.S. central bank said last month it expected “labor market conditions will strengthen somewhat further.” The Fed left interest rates unchanged in September, but signaled it expected one more hike by the end of the year. It has increased borrowing costs twice this year.

Annual wage growth of at least 3.0 percent is need to raise inflation to the Fed’s 2 percent target, analysts say.

The employment report added to August consumer spending, industrial production, homebuilding and home sales data in suggesting that the hurricanes will dent economic growth in the third quarter.

Economists estimate that the back-to-back storms, including Hurricane Maria which destroyed infrastructure in Puerto Rico last month, could shave at least six-tenths of a percentage point from third-quarter gross domestic product.

Growth estimates for the July-September period are as low as a 1.8 percent annualized rate. The economy grew at a 3.1 percent rate in the second quarter.

Private payrolls fell by 40,000 jobs, the biggest drop since February 2010. Manufacturing employment slipped by 1,000 jobs pulled down by declines at motor vehicle assembly and chemical plants as well as textile mills.

Retail employment fell by 2,900 jobs as food stores payrolls tumbled 6,900. There were also declines in employment at department stores. Construction payrolls rose 8,000 in September as a 3,900 drop in jobs at homebuilding sites was offset by increases elsewhere.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Costco shares down on fears of grocery delivery eating into margins

FILE PHOTO: A Costco Wholesale retail club is photographed in Austin, Texas, U.S. on December 12, 2016. REUTERS/Mohammad Khursheed/File Photo

By Sruthi Ramakrishnan

(Reuters) – Shares in Costco <COST.O> fell 6 percent on Friday after the retailer reported a decline in quarterly gross margins and underlined the growing competition in the industry by launching new grocery delivery services.

The membership-based chain on Thursday reported a quarterly profit which scraped past estimates and said it had rolled out two grocery delivery services this week, a new step in its efforts to fight growing competition from Amazon.com <AMZN.O> and Wal-Mart Stores Inc <WMT.N>.

Chief Financial Officer Richard Galanti said in the company’s post-results call that the retailer had started offering two-day delivery of dry groceries as well as a same-day delivery service for groceries including fresh foods.

The two-day delivery would be free for online orders over $75 across the United States, while the same-day service – offered through its partner Instacart – is available at 376 U.S. stores.

BMO Capital Markets analyst Kelly Bania said the new offerings were a huge positive for Costco given the perception that it has been slow with its pace of digital transformation.

“(But) we also see risk these initiatives will weigh on margins over time and may be viewed as defensive,” she said.

Shares in Walmart and Kroger <KR.N>, the leading U.S. grocery retailers, were also down around 1 percent.

Groceries, while a low-margin business, bring more customers into stores, and major players including Wal-Mart and Target Corp <TGT.N> have poured millions into the area as they look to boost store traffic as well as online sales.

Competition has further tightened since Amazon bought Whole Foods and reduced prices at the upmarket grocer in August, a move which has hit Wal-Mart and Kroger hardest in terms of lost customers.

Galanti said Whole Foods’ price cuts had not impacted Costco and that it had not reduced its in-store prices in response to the deal.

“(Costco’s) new online delivery initiatives improve its competitive offering and could drive increased engagement with millennials,” Jefferies analyst Daniel Binder wrote in a note.

The retailer said it was lowering online prices and adding more high-end and well-known brands such as GE appliances and Spyder skiing apparel to its ecommerce site.

“Costco made e-commerce a core part of its earnings call for the first time in memory,” Susquehanna analyst Bill Dreher said. “We believe this shows a new focus on a key engine of growth.”

(Reporting by Sruthi Ramakrishnan in Bengaluru; editing by Patrick Graham and Arun Koyyur)

Bankrupt U.S. retailers begin to catch a break

FILE PHOTO: An American Apparel store logo is pictured on a building along the Lincoln Road Mall in Miami Beach, Florida, U.S. on March 17, 2016. REUTERS/Carlo Allegri/File Photo

By Jessica DiNapoli and Tracy Rucinski

(Reuters) – An unexpected helping hand from creditors, landlords and vendors is allowing more U.S. retailers to stay in business following bankruptcy with most of their stores and employees in the fold.

The new approach marks a turning point for the beleaguered sector, which has seen at least 19 brick-and-mortar retail chains shut down the bulk of their operations since 2014.

Until this year, most bankrupt retailers, including American Apparel, Sports Authority and The Limited, were dismantled during their bankruptcy process. Investors and companies acquired their intellectual property and other assets, but refused to take on their business as a going concern because they saw little value in assuming costly store leases. Instead, they often opted to revamp some of the battered brands online.

For a graphic, click http://tmsnrt.rs/2yWXSjs

However, several creditors, landlords and vendors now see more value left in some retailers, and are seizing on an opportunity to minimize their own losses in the retail rout.

This could spell a slowdown in the decline in brick-and-mortar retail jobs, which fell by more than 100,000 this year, as more than 6,000 stores shuttered under increasing pressure from competition among traditional retailers as well as e-commerce firms such as Amazon.com Inc <AMZN.O>.

“We’re seeing a set of situations come together in which the constituencies have more interest in the retailer surviving than not,” said Holly Etlin, a managing director at AlixPartners LLP, a consulting firm that worked on the bankruptcy of Gymboree.

Jeans company True Religion Apparel Inc and perfume wholesaler and retailer Perfumania Holdings Inc <PERF.O> are set to emerge from bankruptcy with at least some of their stores in operation, according to interviews with bankruptcy attorneys and a Reuters review of financial information of more than 15 retailers shared with bankruptcy courts.

These chains will follow a path blazed by Payless ShoeSource, which in August emerged from bankruptcy while keeping more than 3,400 out of its 4,200 stores worldwide, and preserving 19,000 of its 22,000 employees.

Last month, teen clothing shop rue21 Inc and children’s apparel chain Gymboree Corp came out of bankruptcy in similar fashion, preserving much of their store footprints and employee headcount.

Most of these retailers were owned by private equity firms, which saddled them with debt in a risky bid to juice returns. But in bankruptcy talks, the chains are arguing successfully that they can generate enough cash to withstand the sector’s woes if their debt mountains are slashed and payment obligations eased.

Creditors, landlords and vendors are more receptive to this approach, because their own financial projections show that liquidations would result in a limited recovery of what they are owed, according to interviews with debt investors and bankruptcy court filings.

Had rue21 liquidated, for example, many loan holders would have seen almost the entire value of their investment wiped out by the end of its five-month bankruptcy process, according to bankruptcy court filings and people familiar with the matter.

This new reality offers grounds for optimism for Toys “R” Us Inc, which last month became the largest retail bankruptcy in 13 years. The biggest U.S. specialty toy retailer plans to emerge from Chapter 11 bankruptcy with many of its about 1,600 stores, employing 64,000 people, remaining open.

Toys “R” Us plans to argue that its annual cash flow of roughly $800 million would make it viable if its $5.2 billion in debt is significantly reduced, according to court papers and people familiar with the matter.

CREDITOR SUPPORT KEY

If a retailer’s brand is strong enough and its operations can be improved, creditors see greater value in forgiving some of their debt in exchange for equity stakes, rather than recouping pennies on the dollar in a liquidation.

David Tawil, president at distressed-focused hedge fund Maglan Capital, said it makes sense for creditors to extend new money, often at high interest rates, in exchange for a fully restructured balance sheet and a better business plan.

“Otherwise, there may be a very, very steep haircut (in the value of the debt) to be taken upon a liquidation,” Tawil said.

For example, a group of Gymboree investors, including distressed debt-oriented hedge fund Brigade Capital Management LP and buyout firm Searchlight Capital Partners LP, agreed to keep it in business by writing off most of their term loan and investing another $95 million, in exchange for equity ownership, court filings showed.

Gymboree and Brigade declined to comment.

“There is always risk taking (the company) through bankruptcy, but we believed that it was a better path with more upside versus liquidating, where the recovery is pretty minimal and you forego any upside opportunities,” said Searchlight partner Eric Sondag. He added that Gymboree’s strong brand was a key consideration in Searchlight deciding to back it.

Many landlords that rent out store space are also willing to provide relief rather than seeking another tenant amid a glut of unused mall space. Rue21’s landlords granted rent reductions of about 20 percent on its remaining 758 stores, according to a person who asked not be identified because the terms of the lease deals are not public.

VENDORS WAIT LONGER TO BE PAID

Supplier support is also critical. Vendors can offer longer payment terms, helping retailers free up working capital to operate. They are often promised full repayment on their claims in return.

Hong Kong-based Li & Fung Ltd, a supply chain manager that helps retailers work with apparel and accessories makers, gave Gymboree a 75-day repayment period in exchange for full payment on its claims in the bankruptcy, people familiar with the matter said.

Before Gymboree filed for bankruptcy, the retailer also extended Li & Fung a $20 million secured claim, helping keep merchandise flowing to its stores, the sources added. Li & Fung declined to comment.

Toys “R” Us has also fought to keep suppliers onboard, accelerating its plan to file for bankruptcy to be able to pay them. It has been making progress in winning back vendors who curbed shipments over payment fears.

“We believe (in Toys ‘R’ Us)… they are a good channel and important to the toy industry,” said Michael Araten, chief executive of K’Nex Limited Partnership Group, a toymaker that is now negotiating new shipment terms.

(Reporting by Jessica DiNapoli in New York and Tracy Rucinski in Chicago; Editing by Greg Roumeliotis and Edward Tobin)

Bombardier spends $2.4 billion a year on aerospace in U.S.: document

A logo of jet manufacturer Bombardier is pictured on their booth during the European Business Aviation Convention & Exhibition (EBACE) in Geneva, Switzerland, May 22, 2017. REUTERS/Denis Balibouse

By Alwyn Scott

NEW YORK (Reuters) – Bombardier Inc’s aerospace business spent $2.4 billion in the United States last year, tapping more than 800 suppliers in all but three U.S. states, according to a confidential Bombardier report seen by Reuters on Thursday.

The report shows the potential impact on the U.S. economy and companies if the Canadian company’s new CSeries jetliner is effectively kept out of the U.S. market by a trade row initiated by Boeing Co earlier this year.

Boeing has accused Bombardier of receiving taxpayer subsidies that allowed it to sell the CSeries in the United States at prices below cost. Last week, the U.S. Department of Commerce proposed a duty of nearly 220 percent to compensate for the subsidies, and the agency is due to issue a decision on potential additional duties for dumping later on Thursday.

The imposition of additional duties would effectively keep Bombardier out of the United States because it would make its planes too expensive to be competitive

The report said more than half of the materials Bombardier buys for the new CSeries plane come from U.S. suppliers, with the most spending in California, Connecticut, Illinois, Iowa and Kansas, the report said.

The duties, which would affect an order for 75 planes by Delta Air Lines, would not take effect unless approved by the U.S. International Trade Commission early next year.

Bombardier has already said that its spending supports 22,700 jobs in the United States, and it has identified major CSeries suppliers such as Connecticut-based engine maker Pratt & Whitney, a unit of United Technologies Corp, and Iowa-based avionics maker Rockwell Collins Inc. United Technologies is in the process of acquiring Rockwell Collins.

The report identifies the 10 largest CSeries suppliers, including French interiors supplier Zodiac Aerospace SA, through its operations in California; Honeywell International Inc, which makes auxiliary power units in Arizona; Spirit AeroSystems Holdings Inc in Kansas; and Parker Aerospace, a unit of Parker-Hannifin Corp which has operations in Utah, California and Michigan.

(Reporting by Alwyn Scott; Editing by Leslie Adler)

Wells Fargo executives, board must face lawsuit over fake accounts, federal judge says

Wells Fargo & Company CEO and President Tim Sloan testifies before the Senate Banking Committee on Capitol Hill in Washington, U.S., October 3, 2017. REUTERS/Aaron P. Bernstein

By Jonathan Stempel

(Reuters) – A federal judge said current and former Wells Fargo & Co officers and directors, including Chief Executive Officer Tim Sloan, must face nearly all of a lawsuit by shareholders seeking to hold them personally liable for sales abuses and the creations of millions of unauthorized accounts.

U.S. District Judge Jon Tigar in San Francisco said shareholders may pursue claims that Wells Fargo officials looked the other way as employees facing “unrelenting” pressure to meet sales quotas unlawfully opened accounts, and misled the public about fraudulent practices at the nation’s third-largest bank.

“Where, as here, plaintiffs’ claims arise from a pervasive and undisputed fraud going to the core of the company’s business, it is reasonable to infer senior executives knew about, or at least recklessly turned a blind eye to, the stream of red flags,” Tigar wrote in a decision dated Wednesday.

The judge also said that in the “unlikely” event Sloan did not know about the suspect practices before 2013, when he was chief financial officer, he was “certainly aware of these issues” by December 2013 when he told the Los Angeles Times: “I’m not aware of any overbearing sales culture.”

Wells Fargo spokesman Peter Gilchrist said in an email that the bank was taking “decisive steps” to rebuild trust, including from employees and shareholders. “We will continue to advocate strongly for our positions before the courts,” he added.

Lawyers for the plaintiffs did not immediately respond to requests for comment.

The shareholder derivative lawsuit seeks to force officers and directors – or their insurers – to reimburse Wells Fargo for losses caused by their alleged poor oversight and misleading statements, as well as governance changes.

Wells Fargo has been rocked since September 2016 by a series of scandals, including the San Francisco-based bank’s creation of as many as 3.5 million unauthorized accounts.

Many lawsuits have been filed, including on behalf of customers, and several top officials including onetime Chief Executive John Stumpf and retail banking chief Carrie Tolstedt have left the bank.

Stumpf and Tolstedt are defendants in the derivative lawsuit.

Sloan testified on Tuesday before the Senate Banking Committee about Wells Fargo’s response to the scandals, and faced attacks from Republican and Democratic senators.

Senator Elizabeth Warren, a Massachusetts Democrat, called for Sloan to be fired.

The case is In re: Wells Fargo & Co Shareholder Derivative Litigation, U.S. District Court, Northern District of California, No. 16-05541.

(Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy)

As Ford pushes into electric vehicles, U.S. union aims to save jobs

The Ford and Virginia Tech research simulated a self-driving vehicle using a “seat suit” to conceal the human driver. This was done to explore pedestrian reaction to external lighting signals that indicate when the vehicle is driving, yielding or accelerating from a stop in Arlington, Virginia, in this handout photo obtained by Reuters September 13, 2017. Ford Motor Company/Handout via Reuters

By Nick Carey

DETROIT (Reuters) – The United Auto Workers is talking with Ford Motor Co <F.N> about ways to avoid layoffs as the No. 2 U.S. automaker builds more electric vehicles, a senior union official told Reuters on Thursday.

Ford told investors Tuesday it planned to slash $14 billion in costs over the next five years and shift investments away from internal combustion engines and sedans to develop more trucks, plus electric and hybrid cars.

“We’ve been doing our due diligence to find out how much it (electrification) means to us,” UAW Vice President Jimmy Settles, head of the union’s Ford department said in a telephone interview. “We put them on notice early on that we want to be part of this process.”

“Up to this point they (Ford) have been agreeable that it’s in the best interest of the company and also our members for us to be part of the process,” he added.

Ford’s push into electric comes after Detroit rival General Motors Co <GM.N> unveiled plans to add 20 new battery electric and fuel cell vehicles to its global lineup by 2023.

Ford’s presentation to investors this week under new chief executive Jim Hackett, included a slide touting a 30 percent reduction in “hours per unit” to build electric vehicles.

Fewer hours mean fewer workers.

German automaker Daimler AG <DAIGn.DE> warned last month that electric Mercedes models would initially be just half as profitable as conventional alternatives – forcing the group to find savings by outsourcing more component manufacturing, which may in turn threaten German jobs.

The UAW’s Settles said he had met one-on-one with Hackett, a former CEO of office furniture maker Steelcase Inc <SCS.N> and in a meeting with union leaders in recent weeks.

He said Hackett’s message had been that he wants to find new opportunities for UAW workers as electrification evolves.

“The assembly may be different, but he’s not looking to eliminate any jobs,” Settles said of Hackett. “He’s been consistent in what he’s saying and I’m optimistic he means it.”

The UAW vice president said the union and automaker had assembled teams to discuss future jobs, including for production workers and skilled trades workers, Settles said.

Settles said Ford’s announcement in March that it would invest $200 million on a new data center in Michigan could create new union-represented, technology-related jobs.

“We need further communications on what it means in terms of jobs,” he said.

Ford has completed 85 percent of its 2015 union contract target of creating or retaining 8,500 union jobs by 2019 and could hit 100 percent by the end of 2017, Settles said.

A Ford spokeswoman said the company and the UAW are in “constant communications about the business.”

(Reporting by Nick Carey; Editing by Andrew Hay)

Wall Street indexes touch fresh record-highs

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 4, 2017. REUTERS/Brendan McDermid

By Ankur Banerjee and Gayathree Ganesan

(Reuters) – The three main U.S. indexes climbed to fresh record-highs for the fourth day in a row on Thursday, propelled by gains in technology stocks.

Eight of the 11 major S&P indexes were higher, led by the information technology <.SPLRCT> sector, which got a boost from Apple <AAPL.O>, Microsoft <MSFT.O> and Amazon.com <AMZN.O>.

Tech stocks, which have led much of the recent rally, have risen about 26 percent this year.

Data on Thursday pointed to underlying strength in the economy despite weather-related disruptions, with the trade deficit narrowing in August and jobless claims falling more than expected last week.

Focus will now shift to the more comprehensive monthly jobs report, which is due on Friday.

Global stocks came off all-time highs on Thursday as minutes from the European Central Bank’s last meeting showed policymakers were concerned about the euro’s rapid rise.

Investors are also gearing up for the upcoming third-quarter corporate earnings.

Earnings of S&P 500 companies are expected to rise 5.5 percent in the quarter from a year earlier, according to Thomson Reuters data. That would be down from double-digit growth in the first two quarters, but many strategists are optimistic results will be better than expected.

At 9:46 a.m. EDT, the Dow Jones Industrial Average <.DJI> was up 16.86 points, or 0.07 percent, at 22,678.5, the S&P 500 <.SPX> was up 4.39 points, or 0.17 percent, at 2,542.13.

The Nasdaq Composite <.IXIC> was up 22.88 points, or 0.35 percent, at 6,557.51.

Shares of Constellation Brands <STZ.N> were up 3.4 percent after the brewer beat Wall Street’s profit estimates for the ninth straight quarter.

Microsoft was up 0.4 percent after Canaccord Genuity raised its rating on the stock to “buy”.

Biogen <BIIB.O> was up 4.6 percent after Morgan Stanley upgraded its rating on the stock to “overweight”.

Advancing issues outnumbered decliners on the NYSE by 1,657 to 839. On the Nasdaq, 1,452 issues rose and 924 fell.

(Reporting by Gayathree Ganesan and Ankur Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty)

U.S. jobless claims fall; trade deficit narrows on strong exports

Job seekers listen to a recruiter at the Colorado Hospital Association job fair in Denver, Colorado, U.S., October 4, 2017. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell more than expected last week, but the continued impact of Hurricanes Harvey and Irma on the data made it difficult to get a clear picture of the labor market.

Other data on Thursday pointed to underlying economic strength despite the weather-related disruptions. The trade deficit narrowed in August as exports of goods and services rose to more than a 2-1/2-year high, tempering expectations of a sharp slowdown in third-quarter GDP growth due to the storms.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 260,000 for the week ended Sept. 30, the Labor Department said.

Harvey and Irma along with Hurricane Maria affected claims for Texas, Florida, Georgia, Puerto Rico and the Virgin Islands, a Labor Department official said. Economists had forecast claims falling to 265,000 in the latest week.

Claims shot up from a low of 236,000 in late August, hitting 298,000 at the start of September. As a result, Harvey and Irma are expected to cut into job growth in September.

According to a Reuters survey of economists, the Labor Department’s closely watched employment report on Friday will likely show that nonfarm payrolls increased by 90,000 jobs last month after rising by 156,000 in August.

The labor market disruptions are expected to be temporary, with the job market generally remaining strong.

Claims have now been below the 300,000 threshold, which is associated with a robust labor market, for 135 consecutive weeks. That is the longest such stretch since 1970, when the labor market was smaller.

Prices of U.S. Treasuries were mixed in early morning trading while U.S. stock index futures were slightly higher. The dollar <.DXY> rose against a basket of currencies.

U.S.-CHINA TRADE DEFICIT WIDENS

In a separate report on Thursday, the Commerce Department said the trade gap declined 2.7 percent to $42.4 billion, the smallest since September 2016.

The department said the effects of Harvey, Irma and Maria would be “embedded in source data” for trade, and the impact of the hurricanes will likely be “reflected in subsequent trade reports until normal trade activities resume in affected areas.”

Economists had forecast the trade shortfall narrowing to $42.7 billion in August. When adjusted for inflation, the trade deficit was little changed at $61.8 billion.

The so-called real trade deficit average for July and August was below the second-quarter average of $62.4 billion.

That suggests trade could contribute to gross domestic product in the third quarter and help to soften the economic blow of the hurricanes. The storms are expected to cut at least six-tenths of a percentage point from economic growth in the third quarter. Trade added two-tenths of a percentage point to the second quarter’s 3.1 percent annualized growth pace.

In August, exports of goods and services increased 0.4 percent to $195.3 billion, the highest level since December 2014. Goods exports were the highest since April 2015. There were increases in exports of consumer and capital goods.

Fuel exports, however, fell by $0.7 billion. Food exports also declined. Exports to China increased 8.8 percent.

Imports of goods and services dipped 0.1 percent to $237.7 billion in August. Imports of industrial supplies and materials were the lowest since November 2016. There were also declines in capital goods imports. Motor vehicle imports, however, increased in August.

Imports of goods from China were up 5.1 percent to a record high. The politically sensitive U.S.-China trade deficit rose 4.0 percent to $34.9 billion in August, the highest level since September 2015.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. financial regulator must beef up cyber security: inspector

A man poses inside a server room at an IT company in this June 19, 2017 illustration photo. REUTERS/Athit Perawongmetha/Illustration

By Lisa Lambert

WASHINGTON (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB), one of Wall Street’s top regulators, must strengthen its protections against hacking, according to a report the agency’s internal inspector released on Wednesday as the financial sector reels from recent revelations of two major data breaches.

The former head of the Equifax <EFX.N> credit bureau is testifying before Congress this week about the company’s disclosure that personal information for millions of individuals had been stolen from its systems.

At the same time, the Securities and Exchange Commission – the country’s lead securities regulator – is facing lawmakers’ questions about information stolen last year from its filing system that may have been used for illicit trades.

The CFPB, which gathers sensitive information on individuals, banks, credit card companies and other financial firms as the government’s consumer finance watchdog, could suffer similar intrusions that might undermine public trust or limit its ability to carry out its mission, its inspector general said in a report dated Sept. 27 and released on Wednesday.

The agency “has not fully implemented processes, such as data loss prevention technologies, within its internal network that would enable the agency to detect and better protect against unauthorized access to and disclosure of its sensitive information,” the report said.

It also needs to run automated feeds through security checks and move away from manually tracking system security by putting alerts and continuous monitoring tools in place, the inspector general found.

In the five years since it was established, the CFPB has had to quickly erect sound information systems that can repel cyber attacks. All federal agencies are struggling to keep up with a steady rise in the number and sophistication of attempted intrusions, as criminal demand for stolen Social Security numbers and other personally identifiable information swells.

The inspector general also said the CFPB will soon implement a job succession plan to try to close possible staffing and skill gaps, hopefully clarifying what the future holds after Richard Cordray, the CFPB’s first director, leaves the agency.

Cordray, whose term expires in July, was appointed by President Barack Obama after the agency was created under the 2010 Dodd-Frank financial reform law.

Many expect him to depart earlier, however, and there is no precedent for replacing him.

President Donald Trump will likely appoint a successor who cuts back on the agency’s reach, raising questions about the direction of open CFPB investigations and rulemakings.

(Reporting by Lisa Lambert, editing by G Crosse)