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Consumer Cos Down As Nestle Asks Employees to Postpone International Travel -- Consumer Roundup

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02/26/2020 | 05:05pm EDT

Shares of retailers and other consumer companies fell as the ramifications of the coronavirus outbreak looked increasingly dire.

Swiss food conglomerate Nestle asked hundreds of thousands of its world-wide employees to temporarily postpone all overseas business travel -- an extreme measure by one of the world's largest multinationals.

Nestle's measure is the latest suggestion that the epidemic is the most serious challenge to travel and international commerce since the financial crisis.

In China, where the outbreak began earlier this year, the Beijing government is under pressure to lift quarantine conditions in Wuhan and other major cities, even as it weighs the risks of re-infection from overseas.

Shares of cruise lines and airlines continued a historic slide, as investors increasingly anticipate a major slowdown in travel.

Besides the human toll, investors are trying to assess the impact of the outbreak and public-health response for earnings, according to one strategist.

"Will people travel? Will people go to stores? All these questions are still up in the air," said Joe Kinahan, chief market strategist at TD Ameritrade.

"Until we have some kind of inoculation or feel like it is contained, those questions are going to persist."

American Airlines, Delta Air Lines, and United Airlines fell as they offered incentives for alternate routes or otherwise cut back on flights to Italy and South Korea.

Deutsche Lufthansa, Germany's flagship airline, said it would start slashing costs in anticipation of a coming hit to revenues and profits from canceled flights to China.

Deutsche Lufthansa is asking staff to take voluntary unpaid leave. That move echoes Hong Kong airline Cathay Pacific Airways' request of all employees to take three weeks unpaid leave.

Shares of Royal Caribbean Cruises fell by more than 6% for their ninth straight retreat.

One major South Korean department-store chain forecast a sharp decline in February same-store sales due to the outbreak, according to analysts at brokerage Nomura Securities.

New home sales in the U.S. increased 7.9% in January from the prior month to a seasonally adjusted annual rate of 764,000 in January, the Commerce Department said.

Shares of the SPDR S&P Homebuilders exchange-traded fund fell, amid fears that the coronavirus -- or the slowdown in global economic activity -- will spread to the U.S.

Papa John's International shares slid even as the pizza chain forecast a rebound in same-store sales growth this year in the U.S. and Canada.

Write to Rob Curran at rob.curran@dowjones.com

 

Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. -12.75% 12.25 Delayed Quote.-51.05%
CATHAY PACIFIC AIRWAYS LIMITED 2.48% 7.85 End-of-day quote.-0.63%
DELTA AIR LINES INC. -2.98% 28.67 Delayed Quote.-50.97%
LUFTHANSA GROUP AG -4.05% 8.682 Delayed Quote.-47.09%
NOMURA CO., LTD. 5.57% 739 End-of-day quote.4.23%
ROYAL CARIBBEAN CRUISES LTD -13.71% 29.77 Delayed Quote.-77.70%
TD AMERITRADE HOLDING CORPORATION 2.69% 35.44 Delayed Quote.-28.69%
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