The daily business briefing: July 17, 2020

1. Netflix warns of slowdown after new-subscriber surge

Netflix announced Thursday that it added 26 million new paying subscribers in the first half of the year as people confined at home under coronavirus lockdowns streamed more movies and TV shows. The gain nearly equaled Netflix's increase of 28 million subscribers in all of 2019. Still, the company warned that it is starting to see a slowdown in customer growth, as it had been predicting. Under what executives called a "new normal," the company projected a third-quarter gain of 2.5 million subscribers, down from 6.8 million in the same period last year. The guidance, half what analysts anticipated, sent the company's stock plunging by about 9 percent in after-hours trading. Netflix also promoted content chief Ted Sarandos to join Reed Hastings as co-CEO, underlining the company's focus on original content.

The Verge CNBC

2. 30-year mortgage rate drops below 3 percent for 1st time

The benchmark 30-year fixed-rate mortgage has dropped below 3 percent for the first time since Freddie Mac started tracking rates in 1971. For the week ending July 16, the rate fell to an average 2.98 percent, marking the seventh record low this year. Many economists expect the figure to remain below 3 percent into 2021. Concerns about the economic fallout from the coronavirus pandemic have driven down the benchmark interest rate since the beginning of 2020. The bad news, said Zillow economist Matthew Speakman, is that lenders have stepped up restrictions due to uncertainties caused by the pandemic, so "while rates are historically accommodative, only a portion of the market can take advantage."

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MarketWatch

3. Labor Department reports another 1.3 million weekly jobless claims

The Labor Department on Thursday reported that another 1.3 million Americans filed first-time claims for unemployment benefits last week, slightly more than expected. Another 920,000-plus filed for Pandemic Unemployment Assistance in 47 states. The Economic Policy Institute's Heidi Shierholz noted that it was the 17th straight week with more than twice as many Americans filing for unemployment benefits than did during the worst week of the Great Recession, when the most jobless claims filed in one week was 665,000 in March 2009. Over the course of the past 17 weeks, more than 50 million Americans have filed for unemployment.

CNN MarketWatch

4. United, pilots' union reach deal to limit furloughs

United Airlines reached a deal with its pilots' union on Thursday aiming to reduce involuntary furloughs expected in the fall. The deal with the Air Line Pilots Association International offers early retirement for pilots age 62 and up, and provides options for certain pilots to reduce their hours or take leave while keeping health benefits as long as they keep up on training, which the airline will pay for. ALPA Chairman Todd Insler said these "groundbreaking provisions" would keep idle pilots qualified, "allowing a faster recall once passenger demand returns." U.S. airlines, facing a sharp downturn due to the coronavirus crisis, have warned they could have to cut tens of thousands of jobs in October when a government bailout expires.

Reuters

5. Stocks fight to rebound after Thursday's fall

Stock futures struggled for traction early Friday after Thursday's losses. Futures for the Dow Jones Industrial Average were flat, while those of the S&P 500 were up slightly and those of the Nasdaq gained nearly 1 percent. On Thursday, the Dow dropped by 0.5 percent, while the S&P 500 and the Nasdaq fell by 0.3 percent and 0.7 percent, respectively, after the release of mixed economic data. Weekly first-time jobless claims hit 1.3 million, slightly more than expected, while retail sales increased by 7.5 percent in June, beating a Dow Jones estimate of a 5.2 percent gain. Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, said investors are taking even good financial news with "a grain of salt" due to rising coronavirus cases and new lockdowns imposed to fight the pandemic.

CNBC