The daily business briefing: May 5, 2022
The Federal Reserve raises interest points a half-point, Intuit will pay $141 million in TurboTax settlement, and more
Federal Reserve announces half-point interest rate hike
The Federal Reserve on Wednesday announced a rare but expected half-percentage-point interest rate hike as part of its intensifying effort to fight the highest inflation in four decades. The central bank also revealed that in June it plans to start reducing the $9 trillion asset portfolio it piled up as it was pumping money into the economy to boost the recovery from the coronavirus crisis. Now that demand is bouncing back and coronavirus restrictions have been lifted, the Fed is unwinding the economic stimulus, which contributed to higher prices. Fed Chair Jerome Powell said after the meeting that the Fed isn't "actively considering" raising rates by three-quarters of a percentage point at a time.
Intuit to pay $141 million in TurboTax settlement
Intuit will pay $141 million to users of its TurboTax tax-preparation program who were deceived by its offer of free tax-filing, New York Attorney General Letitia James announced Wednesday. The settlement was signed by the attorneys general of all 50 states. It calls for Intuit to halt TurboTax's "free, free, free" ads and pay restitution to 4.4 million customers. James' investigation started after ProPublica published a 2019 report on deceptive tactics to lure low-income people away from federally supported free services. "For years, Intuit misled the most vulnerable among us to make a profit," James said. "Today, every state in the nation is holding Intuit accountable" and "putting millions of dollars back into the pockets of impacted Americans."
Levi Strauss joins companies offering abortion-travel benefit
Levi Strauss & Co. on Wednesday became the latest company to tell employees it would reimburse them for travel to other states to obtain abortions and other health-care services not available where they live. The company said women make up 58 percent of its global workforce, and many of them have expressed growing alarm in recent years "over the rollback of all forms of reproductive care." The move came shortly after Amazon announced a similar policy on the day when Politico published a leaked draft Supreme Court opinion that could strike down the landmark 1973 Roe v. Wade decision that established the constitutional right to abortion. Other companies, including Citigroup, Yelp, Uber, and Lyft announced travel health-care benefits earlier, as Republican-led states tightened abortion restrictions.
Lyft shares fall 30 percent on disappointing rider numbers
Lyft shares plunged 30 percent on Wednesday after the ride-hailing company reported fewer first-quarter active riders, 17.8 million, than analysts had expected. Investors also were concerned about Lyft's spending, particularly on subsidies to woo new drivers, said Wedbush analyst Dan Ives. Lyft's first-quarter revenue reached $875.6 million, up 44 percent over the same period last year. But it had a $196.9 million net loss. Rival car and delivery service Uber reported $6.9 billion in revenue, a 136 percent jump from the same quarter in 2021. Trips fell 3 percent from the last quarter in 2021, possibly due to the Omicron coronavirus surge, but they were up 18 percent compared to the same period last year. Uber's shares fell 4.7 percent.
Stock futures fall after Wednesday's Fed-fueled rally
U.S. stock futures fell early Thursday after a Wednesday rally that followed the Federal Reserve's decision to raise interest rates by a half percentage point to fight inflation. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.3 percent and 0.5 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were down 0.7 percent. The Dow and the S&P 500 jumped 2.8 percent and 3 percent, respectively, on Wednesday. The tech-heavy Nasdaq rose by 3.2 percent. The rally came after the Fed announced the rate hike, as expected, and said it would start reducing its balance sheet in June. The thing that cheered investors, analysts said, was a statement by Fed Chair Jerome Powell dousing concerns about a 75-basis-point rate hike.