The daily business briefing: January 28, 2020

Stocks drop on fear of economic fallout from China's coronavirus crisis, authorities sue "Pharma Bro" Martin Shkreli, and more

A passenger from China
(Image credit: GUILLERMO ARIAS/AFP via Getty Images)

1. Stocks plunge on fear of economic fallout from coronavirus outbreak

U.S. stocks dropped sharply on Monday as investors continued to worry that China's fast-spreading coronavirus outbreak could hurt global economic growth. The Dow Jones Industrial Average fell by more than 454 points, a 1.6 percent drop. The S&P 500 and the Nasdaq closed down by 1.6 percent and 1.9 percent, respectively. "Over the weekend you saw more cases," said Quincy Krosby, chief market strategist at Prudential Financial. "That got investors and traders worried that this may be a longer event. The next question is, 'What happens to global growth if this does continue and magnify?'" U.S. stock index futures bounced back somewhat early Tuesday, although Chinese authorities reported that the death toll from the outbreak had risen to 106 people with 4,515 infections.

The Associated Press CNBC

2. Authorities accuse 'Pharma Bro' Shkreli of trying to maintain drug monopoly

Federal and state officials on Monday filed a lawsuit accusing imprisoned drug entrepreneur Martin Shkreli and Vyera Pharmaceuticals of running an "elaborate anticompetitive scheme" to control the market for Daraprim, a life-saving drug. Shkreli, widely known as "Pharma Bro," is serving a seven-year sentence for securities fraud. The Federal Trade Commission and New York's attorney general are seeking to ban him from the drug industry for life, accusing him of trying to maintain a monopoly on Daraprim, which is used to treat a parasitic infection that can kill HIV/AIDS patients, after engineering a 4,000 percent price hike. He and the company "held this critical drug hostage," New York Attorney General Letitia James said in a statement. Shkreli's lawyer called the allegation "baseless."

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The Associated Press

3. Report: Automakers to withdraw workers from China due to coronavirus

Automakers are pulling workers out of China and considering suspending manufacturing in the country as a coronavirus outbreak continues to spread rapidly, CNBC reported Monday, citing people familiar with the plans. Manufacturing in China was temporarily halted for the Lunar New Year holiday that kicked off last weekend, but was due to resume this week. Automakers are considering keeping plants closed. Companies that have operations in Wuhan, the central China city at the heart of the outbreak, include General Motors, Honda, and Nissan. "We take the health and safety of our employees and their families seriously," a Nissan spokesman said in an emailed statement, without providing information on the withdrawal plans.


4. Bar Louie files for bankruptcy protection

Restaurant chain Bar Louie on Monday announced that it had filed for bankruptcy protection and closed 38 underperforming locations. The company, known for its cocktails and burgers, said its lenders had agreed to a deal to buy it in a bankruptcy sale. Bar Louie said its remaining restaurants would conduct business as usual until the company emerges from bankruptcy, which it said would be within 90 days. Bar Louie, which started in Chicago and later opened more than 90 locations in 26 states, said it recently shut down the weak outlets to "strengthen its operational and financial position." CEO Tom Fricke said the company is profitable and can now focus on its strongest restaurants and "expand in areas that have a proven track record of success." The company's restaurants are primarily located near malls.


5. Fed to start two-day policy meeting with no expectations of rate change

Federal Reserve policy makers on Tuesday start a two-day meeting that is expected to end Wednesday with no change to the central bank's target short-term interest rate. Fed Chair Jerome Powell has expressed confidence that last year's three rate cuts had helped keep the economy's record-long expansion on track, with unemployment at a 50-year low and growth at a solid 2 percent annual rate. Powell and other Fed officials have credited their rate cuts, which followed four hikes in 2018, with boosting the housing market and offsetting headwinds from President Trump's trade war with China. Trump has accused the Fed of creating a drag on growth by raising rates too high, and lowering them too slowly.

The Associated Press

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Harold Maass

Harold Maass is a contributing editor at He has been writing for The Week since the 2001 launch of the U.S. print edition. Harold has worked for a variety of news outlets, including The Miami Herald, Fox News, and ABC News. For several years, he wrote a daily round-up of financial news for The Week and Yahoo Finance. He lives in North Carolina with his wife and two sons.