The daily business briefing: April 29, 2022
The economy shrank in early 2022 but fundamentals remained strong, Amazon reports a $3.8 billion quarterly loss, and more
U.S. economy shrank in 1st quarter
The U.S. economy shrank by 1.4 percent on an annualized basis in the first quarter of 2022, the first such retreat since early in the pandemic. About 0.8 percent of the dent stemmed from decisions by businesses to buy goods aggressively before the 2021 holiday shopping season so they wouldn't get caught short by supply shortages during the winter coronavirus surge, which let them restock slowly in the new year. Economists said the slowdown was unlikely to build into a recession, because economic fundamentals remained strong despite high inflation, the war in Ukraine, and ongoing pandemic worries. Rising wages resulted in strong consumer spending, and companies were able to make big investments thanks to higher profits.
Amazon lost $3.8 billion in 1st quarter
Amazon on Thursday reported that it lost $3.8 billion in the first quarter, its first quarterly loss since 2015. The online retail giant made an $8.1 billion profit in the same period last year as online sales soared due to the pandemic, which kept shoppers at home more. Amazon's sales growth was slowed down by higher costs and stagnant online shopping as the winter coronavirus surge eased and people ventured out more. Amazon also took a hit from its stake in electric vehicle maker Rivian Automotive's stock drop of more than 65 percent this year.
China unveils measures to ease economic harm from lockdowns
China's leaders this week announced plans for a series of measures to ease the economic impact of lockdowns imposed to fight an increasing number of COVID-19 outbreaks. Many companies will get to suspend unemployment insurance payments as long as they don't resort to mass layoffs. The measures also include reduced electricity and internet charges for businesses, more passes for truck drivers to bypass COVID-19 roadblocks, and government allowances for migrant workers unable to find jobs. "We need to place greater importance on stabilizing employment," Premier Li Keqiang said after a cabinet meeting late Wednesday. "The new round of COVID flare-ups has hit employment quite hard."
Stock futures fall after disappointing news from Amazon, Apple
U.S. stock futures fell early Friday after a wave of tech earnings that included disappointing reports from Amazon and Apple. Futures tied to the tech-heavy Nasdaq were down 1 percent at 6:30 a.m. ET. Dow Jones Industrial Average and S&P 500 futures were down 0.4 percent and 0.7 percent, respectively. Amazon shares fell by about 9 percent after the online retail giant reported a $3.8 billion quarterly loss, its first since 2015. Apple shares jumped after it reported better-than-expected earnings, then fell by more than 2 percent in extended trading after CFO Luca Maestri said supply problems could hurt third-quarter revenue. Things were different during regular trading Thursday, when the Nasdaq jumped 3.1 percent. The Dow and the S&P 500 gained 1.9 percent and 2.5 percent, respectively.
Germany stops opposing EU embargo of Russian oil
Germany has stopped resisting calls to stop buying Russian oil, The Wall Street Journal reported Thursday, citing government officials. Berlin's decision removed a crucial obstacle to a European Union ban on crude imports from Russia in retaliation for Moscow's invasion of Ukraine. German representatives to EU institutions said Wednesday that the country would lift its objection provided it gets enough time to find supplies to replace its Russian crude imports, two officials told the Journal. An EU embargo is likely to be phased in, the Journal's sources said. The United States is urging Europe to move carefully to avoid a shock that could push oil prices higher.