The daily business briefing: August 5, 2022
Democrats, Sinema reach a deal on tax and climate bill, Warner Bros Discovery to merge HBO Max and Discovery Plus streaming services, and more
Democratic leaders and Sinema reach deal on tax, climate bill
Sen. Kyrsten Sinema (D-Ariz.) announced Thursday that she will "move forward" with her party's health care, climate, and deficit-reduction package after Democratic leaders agreed to drop a $14 billion tax increase on some wealthy investors and adjust a new 15 percent minimum tax on corporations. Sinema was the last Democratic holdout after party leaders reached an unexpected deal with another moderate, Sen. Joe Manchin (D-W.V.). Provided the Senate's top rules official signs off on the plan, Democrats will be able to try to approve the legislation as soon as this weekend using a process known as budget reconciliation, which requires a simple majority and allows Democrats to sidestep a Republican filibuster. With the Senate split 50-50, Democrats can't afford a single defection.
HBO Max and Discovery streaming services to merge
Warner Bros Discovery CEO David Zaslav announced Thursday that the company plans to merge its HBO Max and Discovery Plus streaming services in 2023. "HBO Max has a competitive feature set, but it has had performance and customer issues," Zaslav said during an earnings call. Discovery Plus, which hasn't had streaming glitches like HBO's, will provide the technology, with HBO Max contributing featured content. The company aims to reach 130 million paying subscribers by 2025, and is considering launching a free, ad-supported streaming option to attract viewers. The news came days after Warner Bros announced it was pulling the nearly finished Batgirl from its release calendar as it tries to limit losses on projects unlikely to be profitable.
Weekly jobless claims rise ahead of July employment report
The number of Americans applying for jobless benefits rose last week to 260,000 from 254,000 the previous week, the Labor Department reported Thursday. The four-week average, which evens out fluctuations and gives a more accurate picture of layoffs, climbed to 254,750. The total number of people collecting unemployment benefits rose by 48,000 to 1,416,000, but remained near a 50-year low, signaling continued strength in the labor market. The Labor Department's July jobs report on Friday is expected to show that employers added about 250,000 jobs last month, down from 372,000 in June. That would be the lowest number since December 2020, although it would have been considered a sign of strong hiring before the coronavirus pandemic slammed the economy.
Stock futures little changed as investors brace for jobs report
U.S. stock futures were nearly flat early Friday ahead of the Labor Department's July jobs report. Futures tied to the Dow Jones Industrial Average were up 0.1 percent at 6:30 a.m. ET, while S&P 500 futures were flat. Nasdaq futures were down 0.2 percent. "Investors will be waiting to see if the labor market can withstand the Fed's rate-hike campaign as well as it did in June," said Mike Loewengart, managing director of investment strategy at E-Trade. Economists expect the report to show slowing job growth, with U.S. employers projected to have added about 250,000 jobs in July, down from 372,000 in June, which would still reflect strong hiring. Unemployment is expected to remain at 3.6 percent.
Mortgage rates drop to a 4-month low
Mortgage rates dropped in the week ending Thursday, with the 30-year fixed-rate mortgage falling below 5 percent for the first time since mid-April. The rate for the popular mortgage was 4.99 percent, down from 5.3 percent the week before, according to Freddie Mac. A year earlier, it was 2.77 percent. Rates have risen significantly, hitting 5.81 percent in mid-June, as the Federal Reserve aggressively raised its benchmark rates to cool the economy and bring down the highest inflation in 40 years. The Fed doesn't set mortgage rates, but its policies indirectly affect borrowing costs to consumers. "Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth," said Sam Khater, Freddie Mac's chief economist.