The daily business briefing: August 3, 2022
Stephen King testifies against blockbuster publishing merger, job openings fall to lowest level in nine months, and more
Stephen King testifies against book-publishing merger
Bestselling author Stephen King testified Tuesday as a witness for the Justice Department as it challenges Penguin Random House's proposed $2.2 billion acquisition of rival Simon & Schuster. The government is arguing in the antitrust trial that letting Penguin Random House, the biggest U.S. book publisher, buy the No. 4 U.S. book publisher would reduce competition, resulting in less pay for authors and fewer books for readers. "I think that consolidation is bad for competition," said King, who has long been published by Simon & Schuster. As the industry consolidates, he added, "it becomes tougher and tougher for writers to find money to live on." Attorney Daniel Petrocelli, who represents the companies, unexpectedly told King he had no questions for him.
Job openings drop to lowest level in 9 months
U.S. job openings dropped in June to their lowest level in nine months, the Labor Department reported Tuesday. There were a seasonally adjusted 10.7 million job openings, down from 11.3 million in May. The number of times people quit jobs fell to 4.2 million from 4.3 million, although June's turnover rate was still considered unusually high, as it has been since early 2021. Layoffs dropped to 1.3 million from 1.4 million. Hiring edged down to 6.4 million, compared to 6.5 million the previous month. The data pointed to a cooling labor market, and economists predicted that hiring fell again in July. The Labor Department's July jobs report, due Friday, will help clarify the employment situation.
Credit card debt surges as households borrow to keep up with inflation
U.S. household debt rose above $16 trillion for the first time during the second quarter, the New York Federal Reserve reported Tuesday. Credit card balances jumped by $46 billion, even as interest rates rose. Credit card debt has increased by $100 billion, or 13 percent, in the last year, the biggest proportional increase in more than two decades. The New York Fed said people are adding to their credit card balances to keep up with the highest inflation in four decades, and borrowing costs are rising as the Federal Reserve aggressively hikes interest rates to cool down the economy and curb inflation. "The impacts of inflation are apparent in high volumes of borrowing," New York Fed researchers wrote in a blog post.
Robinhood announces it's cutting staff by 23 percent
Trading platform Robinhood is laying off 23 percent of its staff in response to a trading slump triggered by economic conditions and the cryptocurrency market crash. Robinhood, which pushed to revolutionize stock-trading by helping millions of amateur investors play the market, posted a 44 percent decline in quarterly revenues due to decreased trading. CEO Vladimir Tenev said in a blog post that he approved increased staffing last year because the company expected the COVID-era trading boom to continue, only to see trading dive as inflation surged to 40-year highs and the crypto market crashed. The company cut staff by 9 percent in April. Robinhood shares fell more than 3 percent after the earnings report, which came a day earlier than scheduled.
Stock futures rise after two straight days of losses
U.S. stock futures rose early Wednesday after concerns about rising U.S.-China tensions and the need for further interest-rate hikes to fight high inflation contributed to two straight losing sessions. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.4 percent at 6:45 a.m. ET. The Nasdaq was up 0.3 percent. The Dow and the S&P 500 fell 1.2 percent and 0.7 percent, respectively, on Tuesday as investors expressed concern that House Speaker Nancy Pelosi's visit to Taiwan could intensify tensions between the U.S. and China, the world's two biggest economies. Three Federal Reserve presidents said further interest rate hikes could be needed to bring down the highest inflation in four decades.