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The daily business briefing: October 11, 2018

Harold Maass
Traders on the NYSE floor in NYC after a Dow drop
Spencer Platt/Getty Images
The daily business briefing newsletter
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1.

Dow drops by more than 800 points

The Dow Jones Industrial Average plunged by 832 points or 3.2 percent on Wednesday, its worst drop since February and its third worst point drop ever. The S&P 500 dropped by 3.1 percent, its fifth straight daily loss and its biggest since February. The Nasdaq Composite did even worse, falling by 4.1 percent as technology stocks led the declines. Stocks have been struggling as Treasury bond yields rise, scaring investors with the prospect of higher borrowing costs. "When rates spike like they have, some reaction is unavoidable," said Brad McMillan, chief investment officer at Commonwealth Financial Network. President Trump blamed the Federal Reserve for raising interest rates too fast, saying it had "gone crazy." U.S. stock futures fell further early Thursday as global stocks dropped. [MarketWatch, The Washington Post]

2.

Sears shares plunge after report of looming bankruptcy

Sears shares plummeted by 35 percent on Wednesday to record lows after The Wall Street Journal reported that the struggling, debt-plagued retailer had hired advisors to prepare for a possible bankruptcy filing. Eddie Lampert, the 125-year-old department store chain's largest shareholder and chief executive, warned last month that the company "faces significant near-term liquidity constraints" that can only be addressed if the company's board approves his restructuring plan. Sears Holdings has a $134 million debt payment due on Oct. 15, and it is unclear whether the company has enough cash to cover it. Sears reportedly has started skipping payments to vendors. [New York Post, Reuters]

3.

DOJ approves $69 billion CVS-Aetna merger

The Justice Department announced Wednesday that it had approved the proposed $69 billion merger between pharmacy chain CVS Health and health insurance giant Aetna. The approval requires Aetna to sell off its private Medicare drug plans before the deal goes through. CVS Health was the last of the large independent pharmacy managers to strike a deal with a major insurer as companies partner up to save money and boost revenue by broadening the services they offer. Consumer advocates said the trend could leave customers with fewer choices and higher expenses. "This type of consolidation in a market already dominated by a few, powerful players presents the very real possibility of reduced competition that harms consumer choice and quality," said George Slover, senior policy counsel for Consumers Union, an advocacy group. [The New York Times]

4.

Trump administration to expand review of Chinese investments in U.S. companies

The Trump administration said Wednesday it would expand reviews of foreign investments in U.S. companies, a move mainly aimed at giving it greater authority to prevent China from acquiring American technology by buying or partnering with American businesses. The stepped up vetting of foreign transactions and their impact on national security marks the latest attempt by President Trump to punish Beijing for trade practices the White House says force American companies to hand over trade secrets to gain access to Chinese markets. The Treasury Department said it would begin a pilot program using the new powers, which Congress gave it earlier this year. Trump also has pressured China over its trade policies by imposing tariffs on $250 billion worth of Chinese imports. [The New York Times]

5.

Alleged Chinese spy charged with stealing U.S. trade secrets

A Chinese intelligence officer lured to Belgium by federal agents has been arrested and charged with conspiring and attempting to commit economic espionage and steal trade secrets from a U.S. aerospace company, the Justice Department announced Wednesday. Investigators say the man, Yanjun Xu, was arrested April 1 in Belgium, and was extradited to the U.S. on Tuesday. Court documents say he is an official with China's Ministry of State Security, who targeted an aviation firm. The case "is part of an overall economic policy of developing China at American expense," said John Demers, assistant attorney general for the Department of Justice's national security division. China said the charges were "made out of thin air." U.S. officials said it is the first time an alleged Chinese spy has been brought to the U.S. for prosecution. [NBC News, The Associated Press]