The daily business briefing: August 26, 2020

July new home sales jump by 13.9 percent, the Justice Department accuses Teva of conspiring to hike generic-drug prices, and more

 "SOLD" sign is visible below a realtor's "FOR SALE" sign in front of a single-family home July 27, 2004 in Park Ridge, Illinois.
(Image credit: Tim Boyle/Getty Images)

1. July new-home sales surge

July new-home sales jumped by 13.9 percent, the Commerce Department reported Tuesday. The gains far exceeded analysts' expectations. Sales also rose sharply in May and June. July's increase lifted sales of new homes in the month to a seasonally adjusted annual rate of 901,000, the best since 2006. The National Association of Realtors reported last week that sales of existing homes surged by a record 24.7 percent in July. Home sales dropped sharply in March and April as most Americans stayed home due to coronavirus lockdowns, but the market bounced back as mortgage rates dropped, with 30-year fixed-rate loans falling below 3 percent for the first time in nearly 50 years. Low inventory of existing homes helped lift new home sales by steering buyers into that market.

The Associated Press

2. DOJ charges Teva with conspiring to hike generic-drug prices

The Justice Department on Tuesday charged Teva Pharmaceutical Industries with conspiring with rivals to raise generic-drug prices. The move came after Teva refused a proposed settlement under which it would have had to pay a criminal penalty and admit wrongdoing, Reuters reported, citing a person familiar with the matter. The Justice Department investigated after Teva was accused of working with other pharmaceutical companies to push up prices of generics, including a widely used drug for patients with high cholesterol. "Today's charge reaffirms that no company is too big to be prosecuted for its role in conspiracies that led to substantially higher prices for generic drugs relied on by millions of Americans," Assistant Attorney General Makan Delrahim said.

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3. U.S. stock futures mixed after S&P 500's latest record

U.S. stock index futures were mixed early Wednesday following the S&P 500's latest record close. Futures for the Dow Jones Industrial Average edged down, while those of the S&P 500 were flat. Nasdaq futures inched higher. Shares of Salesforce, soon to replace Exxon Mobil as a Dow member, jumped by more than 13 percent in overnight trading after the software company reported earnings that smashed expectations after the bell. HP Enterprise, homebuilder Toll Brothers, and retailer Urban Outfitters also gained after the bell following strong earnings reports. On Tuesday, the Dow fell by 0.2 percent as Apple, the index's biggest influence, broke a five-day winning streak and closed down by 0.8 percent. The S&P 500 set its 17th record of 2020 with a 0.4 percent gain.


4. American Airlines to lay off 19,000 unless it gets more federal help

American Airlines will have to lay off or involuntarily furlough 19,000 workers starting Oct. 1 unless Congress provides more help to an airline industry devastated by a fall in travel during the coronavirus pandemic, American CEO Doug Parker and President Robert Isom said Tuesday in a letter to employees. American, the world's largest airline, started the year with 133,700 employees. It says it needs to cut that by 40,000; 12,500 have taken early retirement or buyout packages, and 11,000 more have agreed to voluntary furloughs. "Even with those sacrifices, approximately 19,000 of our team members will be involuntarily furloughed or separated from the company" without an extension of federal aid, Parker and Isom said in the letter.


5. Consumer confidence falls for second straight month

U.S. consumer confidence has dropped in August for the second consecutive month as a resurgence in coronavirus infections eroded hopes for a strong economic rebound. The Conference Board, a New York research organization, reported Tuesday that its Consumer Confidence Index fell to 84.8 in August, the lowest since May 2014. The drop came after the index fell to a level of 91.7 in July. The index is now 36 percent below its 2020 high, which was set in February before the coronavirus crisis hit the United States. "Consumer spending has rebounded in recent months but increasing concerns among consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead," said Lynn Franco, senior director of indicators at the Conference Board.

The Associated Press

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