The daily business briefing: April 23, 2018
Southwest cancels dozens of flights as it inspects engines, U.S. brands complain of heavy-handed Alibaba tactics, and more
Southwest struggles to limit flight cancellations during inspections
Southwest Airlines canceled about 40 flights Sunday as the company ramped up engine inspections on its Boeing 737s following a midair engine explosion that killed one passenger on a flight last week. The airline voluntarily announced inspections of the CFM56-type engines, which power most of its fleet, after the accident. Investigators believe the accident last week started when one of the engine's fan blades broke off. Southwest said it has "minimized flight disruptions" by routing aircraft, including spare planes, to cover open trips. A spokesperson said the roughly 40 flights canceled Sunday were out of a schedule of 4,000 flights.
Brands complain Alibaba retaliates if they don't sign exclusive contracts
Chinese e-commerce giant Alibaba has punished U.S. companies that refused to sign exclusive contracts by taking steps to cut traffic to their online storefronts, The Associated Press reported Monday, citing executives from five major consumer brands. One major clothing company said it had been expecting a 20 percent jump in online sales on Alibaba's Tmall. After it declined an exclusive contract and participated in a sale promotion with Alibaba rival JD.com Inc., the company's advertising banners disappeared from prime Tmall spots and sales plunged by up to 20 percent. "That's a clear manipulation of traffic," the brand's e-commerce director said. "That's a clear punishment." Alibaba denied punishing companies, but said some choose exclusive contracts to take advantage of "attractive services and value."
Professor apologizes for helping Cambridge Analytica collect Facebook data
Aleksandr Kogan, the psychology professor hired by Cambridge Analytica to mine information from tens of millions of Facebook profiles, said he was "sincerely sorry" for the scandal. He said that at the time he thought "everybody knows and nobody cares" about such use of the data, and that he "never heard a word" of objection from Facebook. "Back then, we thought it was fine," he said. "Right now my opinion has really been changed." Both Facebook and Cambridge Analytica, a data-mining firm that did work for the Trump presidential campaign, have faced intense criticism since the breadth of Cambridge Analytica's data collection was revealed last month in a report by The New York Times.
Stocks weighed down by surge in U.S. bond yields
U.S. stock futures slipped early Monday ahead of another week of big earnings reports. Oil services company Halliburton kicks it off early Monday, with closely watched quarterly results from tech giants, including Google-parent Alphabet, Facebook, and Twitter, coming later in the week. Dow Jones Industrial Average futures fell by 0.2 percent, while those of the S&P 500 and the Nasdaq-100 edged down by 0.1 percent. All three of the major U.S. indexes posted weekly gains last week, despite dropping on Friday due largely to weakness among technology and consumer staple shares. Global stocks fell Monday as U.S. bond yields neared 3 percent, approaching peaks that have rattled markets in the past.
Business economists say strong growth will fuel more hiring
U.S. business economists are forecasting rising sales and expect their companies to continue hiring and hiking pay, according to a survey being released Monday by the National Association of Business Economists. Most said the optimism is being driven mostly by strong growth and the ongoing expansion since the economy hit bottom in the Great Recession. Nearly two-thirds said that President Trump's $1.5 trillion in tax cuts, which Republicans said would encourage hiring and investment, had not affected their companies' plans for adding jobs and investment. Sixty-eight percent said Trump's tariffs on imported steel and aluminum weren't affecting their plans, either.