Business Highlights

AP News
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Posted: Jan 25, 2016 6:08 PM

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A month after raising rates, Fed faces darker global economy

WASHINGTON (AP) — Since the Federal Reserve raised interest rates from record lows last month, the global picture has darkened. And that raises a delicate question: Did the Fed err in raising rates for the first time in nearly a decade?

Don't expect the central bank to answer or even acknowledge that question after its policy meeting Wednesday. But policymakers will likely grapple with the issue of how to respond to a different landscape.

While no one thinks the Fed will suddenly reverse course, some analysts say the Fed might signal that the pace of future rate increases may become more gradual.

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Apple's iPhone success may be reaching its peak

SAN FRANCISCO (AP) — Apple could soon face one of its biggest challenges to date: Peak iPhone.

There are signs that iPhone sales in the first three months of 2016 will — for the first time ever — show an abrupt decline from the same period a year earlier.

That could mark a pivotal moment for the Silicon Valley giant, which makes most of its money from iPhone sales.

The iPhone contributed nearly two-thirds of Apple's $234 billion in revenue last year. None of the other new products Apple has launched in recent years have emerged as blockbusters.

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Twitter parts with 4 key execs in latest sign of turmoil

SAN FRANCISCO (AP) — Four of Twitter's key executives are leaving the company in an exodus that has escalated the uncertainty facing the messaging service as it struggles to broaden its audience and lure back disillusioned investors.

Twitter CEO Jack Dorsey announced the management shake-up late Sunday. The departures were characterized as voluntary, by both Dorsey and three of the four exiting executives.

The upheaval leaves Twitter without its top engineering executive, top products executive, its head of human resources and leader of the company's media partnerships.

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Breakfast bump: McDonald's US sales jump 5.7 percent

NEW YORK (AP) — McDonald's says offering breakfast around the clock helped jolt its sales.

Sales at the world's biggest hamburger chain rose 5.7 percent in the U.S. for the final three months of 2015, boosted by unseasonably warm weather and the launch of an all-day breakfast menu in October.

That marked the second straight quarter of domestic growth as McDonald's fights to win back customers, and the best showing since early 2012. Globally, sales rose 5 percent at established locations.

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Ford blames market conditions, pulls out of Japan, Indonesia

DETROIT (AP) — Ford Motor Co. is pulling out of Japan and Indonesia, saying that market conditions in each country have made it difficult to grow sales or make sustained profits.

Ford said Japan is the "most closed, developed auto economy in the world" and in Indonesia, it struggled to compete without local manufacturing and vehicles to sell in key market segments.

Neither market is large for the automaker. Last year Ford sold only 6,100 cars and trucks in Indonesia and only 5,000 in Japan.

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Flight cancellations, delays persist in wake of US blizzard

NEW YORK (AP) — Airlines canceled around 1,600 flights Monday, and another 1,200 experienced delays, in the aftermath of a massive weekend blizzard that slammed into the eastern U.S., wreaking havoc on travel in the nation's busiest cities.

Even as the airlines resumed operations, the remnants of the storm posed problems. For instance, Delta said snow continued to hamper operations at LaGuardia and Newark airports.

On Monday, airports in the New York City area and Washington D.C. metro areas suffered the highest number of cancellations.

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Stocks slip as oil skids 6 percent, hitting energy companies

NEW YORK (AP) — U.S. stocks fell Monday as the price of oil slumped again, giving up some of the ground it gained late last week. That forced energy companies lower.

The stock market opened lower and stayed in the red all day. The selling accelerated in the last hour of trading. The biggest losses came in the energy sector and companies that make chemicals and paper goods.

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Business economists expect slower sales, economic growth

WASHINGTON (AP) — Business economists are more pessimistic about their firms' future sales and profits than they were last fall, and more predict slower economic growth, a survey found.

At the same time, a majority of economists surveyed by the National Association for Business Economics said their firms plan to raise wages in the January-March quarter. That is the largest proportion that expects to raise pay since mid-2014.

Aside from the planned pay rise, the survey paints a mostly gloomy view of the economy at the start of 2016.

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Hilton launches new budget hotel chain aimed at young guests

LOS ANGELES (AP) — Hilton is launching a new hotel brand, focusing on budget travelers looking to spend $75 to $90 a night.

The new brand, named Tru, aims to compete with economy and midscale chains like Comfort Inn, Fairfield Inn and La Quinta.

Hilton Worldwide — which has more than 4,500 hotels globally — already has "limited service" brands like Hilton Garden Inn, Hampton Inn, Homewood Suites and Home2 Suites. This would be a new market for the chain.

Hilton CEO Chris Nassetta notes that 40 percent of the demand for hotel rooms comes in this price segment, the largest of any market.

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Mergers continue in 2016, Johnson controls and Tyco tie up

NEW YORK (AP) — Johnson Controls and Tyco will combine as the unprecedented pace of buyouts and mergers from last year rolls over into 2016.

Shareholders of Johnson Controls Inc., based in Milwaukee, will own about 56 percent of the new company, which would have a combined value of about $36 billon, and Tyco shareholders the rest. Dealogic, a research firm that tracks Wall Street mergers and acquisitions, pegged the deal's value at $14.6 billion, excluding debt. Johnson Controls spokesman Fraser Engerman said he wasn't familiar with Dealogic's calculation.

But the global headquarters will be in Cork, Ireland, where Tyco is based. Tyco International PLC has its U.S. headquarters in Princeton, New Jersey.

The new company, named Johnson Controls PLC, will have its operational headquarters for the U.S. in Milwaukee.

Its legal domicile, which could have tax implications, will be in Ireland.

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Sprint cutting 2,500 and closing call centers to cut costs

NEW YORK (AP) — Cellphone company Sprint is eliminating more jobs as it seeks to cut costs and turn around its business.

Sprint spokesman Dave Tovar says the country's No. 4 wireless service provider has cut about 2,500 jobs since last fall, or about 8 percent of its workforce. Last week, it notified employees at six customer service centers around the country that it would be closing those locations or reducing the staff there.

The latest round of layoffs follows 2,000 job cuts announced in November 2014.

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The Dow Jones industrial average fell 208.29 points, or 1.3 percent, to 15,885.22. The Standard & Poor's 500 index shed 29.82 points, or 1.6 percent, to 1,877.08. The Nasdaq composite index lost 72.69 points, or 1.6 percent, to 4,518.49.

The price of benchmark U.S. crude fell $1.85, or 5.7 percent, to $30.34 a barrel in New York. Brent crude, a benchmark for international oils, lost $1.68, or 5.2 percent, to $30.50 a barrel in London.

In other energy trading, wholesale gasoline fell 5 cents, of 5 percent, to $1.03 a gallon. Heating oil dropped 6 cents, or 6.1 percent, to 93.5 cents a gallon. Natural gas rose 1.9 cents to $2.158 per 1,000 cubic feet.