Business briefing

The daily business briefing: May 6, 2022

Stocks hammered in worst day since 2020, Musk secures another $7.1 billion to finance Twitter deal, and more


Stocks plummet as investors worry about rising interest rates 

U.S. stocks plunged Thursday as concerns intensified about rising interest rates. The Dow Jones Industrial Average and the Nasdaq fell 3.1 percent and 5 percent, respectively, in their biggest single-day declines since 2020. The S&P 500 fell 3.6 percent. The devastation wiped out a stellar Wednesday, when the Dow and the S&P 500 posted their biggest gains since 2020, rising 2.8 percent and 3 percent, respectively. The Nasdaq jumped 3.2 percent after the Federal Reserve said it would raise interest rates a half percentage point, as expected, to fight inflation, but wasn't considering a bigger hike. Stock futures fell slightly early Friday ahead of a Labor Department report expected to show the economy added 400,000 jobs in April, down slightly from 431,000 in March.


Musk lines up another $7.1 billion in funding to buy Twitter

Tesla and SpaceX CEO Elon Musk has lined up another $7.1 billion in financing for his deal to buy Twitter, according to Thursday news reports. The 19 new investors include Prince al-Waleed bin Talal of Saudi Arabia, Oracle co-founder Larry Ellison, and a bitcoin exchange. The prince's stake would be valued at $1.9 billion, making him the biggest investor in the new group. Ellison will chip in $1 billion. Lining up more outside cash reduces the personal risk that Musk, the world's richest person, will have to take on to close the $44 billion purchase of the social media company. Musk's borrowing against his Tesla stake has driven down shares in the electric-car company.


Energy Department to start replenishing oil reserve

The Biden administration said Thursday it plans to buy 60 million barrels of crude oil this fall as a first step toward replenishing the country's strategic oil reserves, CNN reported. The Strategic Petroleum Reserve was already at a 20-year low, largely due to sales mandated by Congress, when President Biden in March promised to release 180 million barrels to help bring down a sharp increase in fuel costs tied to Russia's invasion of Ukraine and the resulting disruptions to global supplies. The planned buying spree will mark the first time in two decades that the Energy Department has added a large amount of crude to the reserve, which is used as a buffer for national security and the economy when oil prices spike.


Popular mortgage rate rises to highest level since 2009

The average U.S. 30-year, fixed-rate mortgage rose to 5.27 percent this week, the highest level since 2009, mortgage buyer Freddie Mac reported Thursday. The increase, from 5.1 percent last week, came as the Federal Reserve was preparing for its Wednesday decision to hike its benchmark short-term interest rate by a half percentage point as part of its effort to dial back its economic stimulus programs to fight high inflation. The average 15-year, fixed-rate loan rose to 4.52 percent from 4.4 percent last week. Rising mortgage rates, limited supply, and rising home prices, along with the highest inflation in four decades, have started putting home purchases out of reach for an increasing number of Americans.


Zillow shares fall on disappointing home-sale outlook

Zillow shares fell 9.9 percent in pre-market trading Friday as a gloomy housing outlook overshadowed first-quarter profits that beat Wall Street's expectations. The company reported earnings of 49 cents a share, up from 44 cents a share a year earlier and far exceeding the 24 cents a share analysts expected, on average. Revenue came in at $4.26 billion, up from $1.22 billion a year ago and surpassing the $3.36 billion analysts expected, according to FactSet. Home sales normally gain speed in the spring, but this year Zillow's forecast suggests that rising mortgage rates and low inventory will slow sales. "The market is softening, full stop," Chief Executive Officer Rich Barton said in an interview, Bloomberg reported.


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