pcloudy.png
Wednesday April 8th, 2020 12:23PM

First signs of disruption appear in housing; markets "calm"

By The Associated Press
Related Articles
  Contact Editor

The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed as it continues to spread across the world. Here is a look at some of the latest developments Wednesday related to the global economy, particular economic sectors, and the workplace:

HOUSING: Economists have been waiting for the first signs of virus-related disruptions in housing with the expectation that they will be seismic. Federal housing data looks further back for trends, meaning there is a lag in real world activity. But details have begun to emerge in private surveys.

On Wednesday, the Mortgage Bankers Association reported that mortgage applications plunged 29.4% last week. People trying to sell homes have cancelled showings during the outbreak and because closings are done in person, economists expect sales will decline sharply. But the virus has affected the market in other, unforeseen ways as well.

Despite additional cuts to benchmark interest rates by the U.S. Federal Reserve, mortgage rates have actually been rising.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said that's partially because lenders amid the outbreak are wrestling with capacity issues, backlogs in the pipeline, and the challenge of working remotely in real estate.

“Home purchase applications were notably impacted by rising rates and the widespread economic disruption and uncertainty over household employment and incomes," Kan wrote. “Last week’s purchase index fell 15% to its lowest level since August 2019.”

While mortgage applications fall, refinancing, which can be done from home, is soaring. Lending Tree says the economic effects of the virus outbreak have led to unprecedented volatility in mortgage interest rates and an overwhelming surge of borrower demand. The company's data shows that refinance mortgage applications through its marketplace tripled from a year ago in each of the 50 largest cities and in all but five states. In San Francisco, refinance loan requests skyrocketed 417%.

RETAIL: Local groceries and other mom-and-pop shops have become a lifeline for millions of people ordered by states or cities to shelter at home. Major retailers are another, and the impact of the virus has reordered priorities.

Target has been aggressively remodeling and opening new stores as competition from Amazon.com grows increasingly intense. On Wednesday, it significantly rolled back those plans. Target said it will remodel 130 stores this year, less than half of 300 it has planned. It will open only 15 to 20 smaller format stores this year, down from the 36 it had hoped to. It will also push back plans to incorporate fresh food and alcohol in its online pickup service.

The Minneapolis company warned Wednesday that it is absorbing rising costs, including higher pay for workers. Target expects an additional $300 million in costs this quarter from a $2 bump in hourly pay, and increased investments in online operations. The company withdrew its annual and quarterly financial guidance and suspended its share repurchase program to raise much-needed cash.

Fast food chains are offering another lifeline, but at a cost. The owner of Pizza Hut, KFC and Taco Bell said in a regulatory filing that 7,000 of its restaurants worldwide are closed, including over 1,000 Pizza Hut Express locations in the U.S. and over 900 KFCs in the U.K.

“In markets where governments have imposed restrictions on travel outside of the home or where customers are practicing social distancing, restaurant traffic has also been significantly impacted,” Yum Brands said in its filing. It too is compiling cash.

Yum increased borrowing under an existing credit facility to $525 million from $425 million. The company also suspended its $2 billion stock buyback program.

Yum said because the situation is ongoing and the duration and severity are unclear, it's difficult to forecast results. It expects COVID-19 to impact its same-store sales for the quarter ended June 30 more significantly than in the current quarter due to the increasing number of markets currently impacted.

MARKETS: Stocks are seesawing in Wednesday trading after Congress and the White House reached a deal to inject nearly $2 trillion of aid into an economy ravaged by the coronavirus. The S&P 500 is drifting up and down.

Travel-related stocks are a bright spot, bouncing back from lows as investors bargain hunt. Shares of Norwegian Cruise Line and Royal Caribbean are up double digits, while hotel operators including InterContinental Hotels, Wyndham Hotels & Resorts and Marriott International have single-digit gains.

EXECUTIVE PAY: Dick's Sporting Goods CEO and president are giving up their salaries amid the virus outbreak. The sporting goods retailer said in a regulatory filing that the two executives will only get an amount covering their benefits starting on March 29. The base salary of the company's chief financial officer will be cut in half. Other companies have made similar moves, including Marriott and GE Aviation.

Dick's said it's also significantly reducing planned capital expenditures, suspending stock buybacks and evaluating its dividend program.

TRAVEL: The Associated Press reported this week that airline services are teetering on the brink. Travel bans are rolling out across the globe, businesses are cancelling travel, conferences have been cancelled and vacationers are staycationing.

On Wednesday, American Airlines took out of circulation half of all middle seats and all seats adjacent to flight attendant jump seats on every flight to provide more social distancing. The airline will also be able to proactively reassign seats to create more space between customers beginning March 24.

American will offer limited food and drink options from March 27 through April 30 to provide minimal contact between flight attendants and customers and offer more social distancing. The reduced service will be based on flight length and destination.

Canada's second-biggest airline says almost half its employees are leaving amid the pandemic. WestJet says 6,900 employees are leaving the company, 90% of them voluntarily. The company had 14,000 employees before the announcement. The departures include early retirements and both voluntary and involuntary layoffs.

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, Top General short headlines, AP Business, AP Business - Corporate News, AP Business - Economy, AP Business - Industries, AP Business - Financial Services, AP Business - Real Estate
© Copyright 2020 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Spain's coronavirus deaths leap; Prince Charles now infected
The coronavirus outbreak hit home Wednesday among the well-born and the desperately poor alike
10:40AM ( 10 minutes ago )
Some US leaders take 'do as I say, not as I do' virus stance
Even as the U.S. has largely hunkered down, some powerful people in Washington have defied preventative measures aimed at curbing the spread of the contagious coronavirus
10:35AM ( 14 minutes ago )
'We are collapsing': Virus pummels medics in Spain and Italy
The coronavirus is waging a war of attrition against health care workers around the world
10:32AM ( 17 minutes ago )
Associated Press (AP)
The Latest: Germany has low death rate so far from virus
Germany’s health minister says his country has about 1,000 COVID-19 patients in intensive care and its health system can cope with the numbers for now
9:47AM ( 1 hour ago )
US big-ticket factory orders up 1.2% in February
Orders to US factories for big-ticket manufactured goods rose 1.2% in February before coronavirus struck with force.
9:37AM ( 1 hour ago )
Stocks open higher on Wall Street after deal on virus aid
Stocks are opening higher on Wall Street after Congress and the White House reached a deal to inject nearly $2 trillion of aid into an economy ravaged by the coronavirus
9:36AM ( 1 hour ago )
AP Business
The Latest: Putin orders military to help with virus
Russian President Vladimir Putin has ordered the military to train to help handle the coronavirus
8:00AM ( 2 hours ago )
WStocks rise on US stimulus deal, rally fades before US open
Japan's Nikkei 225 has surged 8% and other world markets also largely rose after Congress and the White House reached a deal to inject nearly $2 trillion of aid into an economy ravaged by the coronavirus
7:42AM ( 3 hours ago )
The Latest: Japan urges no trips outside of country
Japan’s foreign ministry says it has raised its travel warning to its people and urged them not to make any non-essential trips outside of the country
7:25AM ( 3 hours ago )
AP Business - Economy
India's 1.3 billion locked down as US reaches virus aid deal
The world's largest democracy is under the world's biggest lockdown, with India's 1.3 billion people ordered to stay home in a bid to stop the coronavirus
6:20AM ( 4 hours ago )
Trump, Congress agree on $2 trillion virus rescue bill
The White House and Senate leaders of both parties have agreed on unprecedented emergency legislation to rush sweeping aid to businesses, workers and a health care system slammed by the coronavirus pandemic
2:27AM ( 8 hours ago )
The Latest: India locked down, U.S. deal for $2 trillion aid
The world's largest democracy went under the world's biggest lockdown Wednesday, with India's 1.3 billion people ordered to stay home in a bid to stop the coronavirus pandemic from spreading and overwhelming its fragile health care system as it has done elsewhere
2:23AM ( 8 hours ago )
AP Business - Industries
Business Fallout: Nike cites jump in online sales in China
Nike CEO John Donahoe says the company moved swiftly to leverage its digital platforms in China after it closed more than 5,000 stores there due to the outbreak, most of which have since reopened
8:16PM ( 14 hours ago )
Fed to suspend some bank supervision during viral outbreak
The Federal Reserve says it will suspend some of its bank supervisory activities to give banks more leeway in dealing with financially strapped customers
6:45PM ( 16 hours ago )
Business Fallout: US manufacturing pivot; Facebook fallout
Manufacturers are reconfiguring operations to help produce desperately needed medical gear
5:49PM ( 17 hours ago )
AP Business - Financial Services
New home sales drop 4.4% in February
New home sales drop 4.4% in February with bigger virus-related declines expected
10:29AM ( 1 day ago )
Monday: Big layoffs, bigger hirings, massive markets swings
The viral outbreak is causing massive market actions and reactions with companies laying off thousands at the same time other companies are hiring even more people
4:55PM ( 1 day ago )
US home sales jumped to 13-year high before viral outbreak
U.S. home sales jumped in February to their highest level in 13 years, a trend that will almost certainly be reversed as the viral outbreak keeps more people at home
6:45PM ( 4 days ago )
AP Business - Real Estate
Spain's coronavirus deaths leap; Prince Charles now infected
The coronavirus outbreak hit home Wednesday among the well-born and the desperately poor alike
10:40AM ( 10 minutes ago )
Some US leaders take 'do as I say, not as I do' virus stance
Even as the U.S. has largely hunkered down, some powerful people in Washington have defied preventative measures aimed at curbing the spread of the contagious coronavirus
10:35AM ( 15 minutes ago )
'We are collapsing': Virus pummels medics in Spain and Italy
The coronavirus is waging a war of attrition against health care workers around the world
10:32AM ( 18 minutes ago )
Police struggle to enforce India's sweeping virus lockdown
Indians are struggling to comply with the world's largest coronavirus lockdown as their government begins the gargantuan task of keeping 1.3 billion people indoors during a Hindu holiday season
10:19AM ( 31 minutes ago )
Stocks drift up and down in tentative trading on Wall Street
Stocks are limping along in tentative trading early Wednesday, as a historic, worldwide rally downshifts dramatically after just a day
10:15AM ( 35 minutes ago )