Business briefing

The daily business briefing: June 25, 2021

Biden and senators reach bipartisan infrastructure deal, big banks pass the Fed's annual stress test, and more

1

Biden and senators reach bipartisan infrastructure deal

President Biden announced Thursday that he and a bipartisan Senate group agreed to an infrastructure package costing $973 billion over five years and $1.2 trillion over eight years. The deal includes money for traditional infrastructure projects such as roads, bridges, tunnels, rail, and broadband, with $579 billion in new spending. "This agreement signals to the world that we can function, deliver and do significant things," Biden, who had pitched a $1.7 trillion infrastructure package, said at the White House after meeting with the senators. Biden said "neither side got everything they wanted in this deal; that's what it means to compromise." He said other White House priorities would be addressed separately in a congressional budget process known as reconciliation, letting Democrats approve some spending without Republican votes.

2

Banks pass annual Fed stress test

The Federal Reserve announced Thursday that the biggest U.S. banks had passed its annual stress test. The Fed said all 23 institutions included in the 2021 exam were "well above" the minimum capital levels they would need to withstand a hypothetical downturn, including a "severe global recession" that resulted in 10.8 percent unemployment and a 55 percent stock market decline. That scenario would result in $474 billion in losses, but the banks would have more than double the capital they would need to get through, the Fed said. The result came as no surprise, as the banks all survived a real-life stress test in the past year as the economy was devastated by the coronavirus pandemic. Bank shares jumped after the Fed released the news.

3

CDC extends eviction moratorium for another month

The Centers for Disease Control and Prevention on Thursday extended the national moratorium on evictions for a month, but said it would be the last time the deadline would be pushed back. The CDC put the moratorium in place last September. It had been scheduled to expire June 30. CDC Director Dr. Rochelle Walensky signed the extension to continue the program through July 31. The moratorium has been credited with limiting the financial damage that renters have suffered during the coronavirus pandemic. White House officials had urged the CDC to extend the policy to provide more time to distribute $21.5 billion in emergency federal housing aid included in the coronavirus relief bill passed this spring. The Justice Department also is urging housing court judges to slow evictions by making landlords accept federal money to cover back rent.

4

Nike stock surges after sales and profit exceed expectations

Nike shares jumped by 12 percent in overnight trading after the sports apparel giant reported earnings far beyond analysts' expectations. Nike reported that its quarterly sales nearly doubled, reaching $12.3 billion compared to $6.3 billion in the same period a year earlier. Analysts had expected sales of $11 billion. The company reported a profit of $1.5 billion, compared to a loss of $790 million in the same period last year, when the coronavirus pandemic forced stores to close and hurt sales. Pivotal Research Group said its May Footwear Survey indicates that "even as U.S. consumers are now buying a wider range of footwear, they continue to buy shoes to get outdoors (for a run, walk, or hike), which is right in NKE's sweet spot."

5

Stock futures rise after S&P 500's latest record

U.S. stock futures made modest gains early Friday after the S&P surged to its latest record high on Thursday. Futures tied to the S&P 500 were up by 0.1 percent several hours before the opening bell. Futures for the Dow Jones Industrial Average and the tech-heavy Nasdaq, which also set an all-time high on Thursday, were up by 0.3 percent and 0.2 percent, respectively. Nike shares jumped overnight after the company reported earnings that beat analysts' expectations. Big bank shares also rose after the Federal Reserve announced that its annual stress test found that the 23 institutions in the 2021 exam were "well above" the minimum capital levels they would need to withstand a hypothetical severe recession. The S&P 500 and the Dow rose by 0.6 percent and nearly 1 percent, respectively, on Thursday after President Biden and bipartisan senators reached a $1 trillion infrastructure deal.

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