The daily business briefing: June 17, 2021
The Fed moves up plans for raising interest rates, GM and Ford step up investments in electric vehicles, and more
Fed accelerates timetable for raising interest rates
Federal Reserve leaders left interest rates and economy-boosting bond purchases unchanged Wednesday at the close of their two-day policy meeting, but said they were moving up their timeline for raising rates to keep surging inflation in check. "You can think of this meeting that we had as the 'talking about talking about' meeting," Fed Chair Jerome Powell said. But Powell said the shift did not mean the economy was nearing "liftoff," saying that despite progress on vaccinations and the lifting of business restrictions due to the coronavirus pandemic the economy is "not out of the woods" yet. Fed leaders have kept interest rates near zero through the pandemic. They said previously they expected to keep rates there until 2024, but indicated Wednesday they now expect two rate hikes in 2023.
GM, Ford step up electric vehicle push
General Motors announced Wednesday that it would increase its investment in electric- and autonomous-vehicle technologies to $35 billion through 2025, a 75 percent increase over its initial commitment a year and a half ago. The money will help the automaker increase capacity at its car assembly factories and build two new battery plants. "We are investing aggressively in a comprehensive and highly-integrated plan to make sure that GM leads in all aspects of the transformation to a more sustainable future," GM CEO Mary Barra said in a statement. Rival Ford said it would make its entire Lincoln luxury brand lineup electric or gas-electric hybrid by 2030.
Senators press Haaland on ruling blocking suspension of oil lease sales
Republican and Democratic senators on Wednesday grilled Interior Secretary Deb Haaland about the Biden administration's plans for the government's oil and gas leasing program after a federal judge blocked President Biden's suspension of new oil and gas leases on federal lands and waters. "I expect to hear your plans to resume implementation of those lease sales," Sen. Lisa Murkowski (R-Alaska) said at a Senate hearing on the Interior Department's budget. Haaland said the ruling by U.S. District Judge Terry Doughty in Louisiana was "a fresh decision," and that the department was still reviewing it but would respect it. Sen. Jon Tester (D-Mont.) pressed Haaland on when a review of the leasing program ordered by Biden would be finished. She said it was due this summer as previously promised.
Stock futures fall after Fed signals rate hikes in 2023
U.S. stock futures dropped early Thursday after the Federal Reserve said that with inflation rising it expected to raise interest rates as early as 2023. Futures tied to the Dow Jones Industrial Average fell by 0.3 percent, while those of the S&P 500 and the tech-heavy Nasdaq dropped by 0.4 percent and 0.5 percent, respectively, several hours before the opening bell. All three of the main U.S. indexes closed lower on Wednesday following the central bank's announcement at the close of a two-day policy meeting. The Dow lost 0.8 percent. The S&P 500 and the Nasdaq fell by 0.3 percent and 0.2 percent, respectively, as investors reacted to the prospect of the end of near-zero interest rates and other Fed policies that have boosted the economic recovery from the coronavirus crisis and helped lift markets to record highs.
Airlines, banks suffer outages due to content-delivery failure
Several airlines, banks, and stock exchanges reported brief website outages early Thursday after a failure at Akamai Technologies, a content delivery network that companies use to make their websites and apps load faster. Virgin Australia, Southwest, and United were among the airlines that were affected. The outage also caused problems for Commonwealth Bank of Australia, Westpac Bank, and Australia and New Zealand Banking Group. The Hong Kong Stock Exchange website also was bumped offline briefly. The outages came just over a week after another content delivery network, Fastly, suffered a failure that affected numerous websites and apps around the world, knocking them offline for an hour.