Business briefing

The daily business briefing: September 6, 2017

Renewed North Korea fears weigh on stocks, Lego slashes workforce, and more

1

Stocks take a hit from renewed North Korea fears

U.S. stocks plunged on Tuesday as investors expressed concerns about rising tensions with North Korea after its sixth and most powerful nuclear test, which occurred on Sunday. The S&P 500 fell by 0.8 percent, its biggest single-day loss in three weeks. The Dow Jones Industrial Average dropped by 1.1 percent, and the Nasdaq Composite lost 0.9 percent. Markets also are being weighed down by concerns over a possible impasse on the federal budget and raising the federal debt ceiling. Shares in home insurers also took a hit as the super powerful Hurricane Irma headed for a possible landfall in Florida so soon after Hurricane Harvey unleashed deadly flooding in Texas. European stocks dropped and U.S. futures were flat early Wednesday.

2

Lego cuts 8 percent of workforce in 'reset'

Toy maker Lego will cut 8 percent of its workforce, or about 1,400 jobs globally, in an attempt to "reset the company" following declining revenue in the first half of 2017. With the U.S. and European markets struggling, the Danish company added that it is looking to China as a "growing market" to bolster its mainstays. "We are disappointed by the decline in revenue in our established markets, and we have taken steps to address this," explained Lego chairman Jorgen Vig Knudstorp. Lego employs more than 19,000 people worldwide. "Unfortunately, it is essential for us to make these tough decisions," said Knudstorp.

3

Houston businesses struggle to resume operations after Harvey

Many Houston businesses opened on Tuesday for the first time since Hurricane Harvey made landfall on Aug. 25. Houston's airports and shipping lanes reopened last week, starting out with limited traffic, and some workers went back to their offices at the end of the week. Many businesses, however, took advantage of the three-day Labor Day weekend to continue cleaning up and preparing to resume operations. The storm dropped more than four feet of rain, causing widespread flooding and killing at least 65 people. "The big boxes and big chains can absorb hits like this; small businesses can't," says Craig Fugate, who served as administrator of the Federal Emergency Management Agency in the Obama administration. "Some will make the decision not to reopen. Others won't be able to."

4

Factory orders slump in July

U.S. factory orders fell by 3.3 percent in July, reversing 3.2 percent June gains fueled by a burst of orders for Boeing aircraft, the Commerce Department reported Tuesday. The July slump was the biggest monthly drop in nearly three years. It was roughly in line with economists' expectations of a 3.4 percent drop. Orders for non-defense capital goods, not counting aircraft, rose by 1 percent. That surge in shipments of core capital goods, used to calculate business spending in the gross domestic product report, was good news. "The recovery in business equipment investment that began late last year appears to have continued into the second half of 2017," said John Ryding, chief economist at RDQ Economics in New York.

5

HP Enterprise shares surge after unexpectedly strong quarter

Hewlett Packard Enterprise shares jumped by 4 percent in after-hours trading Tuesday after the data-center technology company reported better-than-expected quarterly revenue. HPE reported a 2.5 percent increase in quarterly revenue to $8.21 billion, crushing analysts' average expectations of $7.49 billion. Revenue rose by nearly 3 percent in the company's enterprise group division, which includes its storage and networking businesses and accounts for most of its revenue, reaching $6.79 billion, beating estimates of $6.37 billion. The growth came after CEO Meg Whitman spent two years shrinking the company, starting with a split from printer and computer maker HP Inc., to make it more responsive to key markets.

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