The daily business briefing: September 16, 2022
FedEx shares dive after warning of sales shortfall, Biden issues an executive order blocking some China investment in U.S. technology, and more
FedEx shares plunge after warning of delivery slump
FedEx shares fell 19 percent in premarket trading on Friday after the company said its quarterly revenue fell below expectations as its package deliveries declined around the world. CEO Raj Subramaniam announced several moves to cut costs, including freezing hiring and closing 90 FedEx Office locations. Subramaniam, who took over at FedEx in June, said the company will also park some cargo aircraft and reduce Sunday ground operations. FedEx, which reports quarterly results in a week, is considered a bellwether of the global economy, so its withdrawal of its previous forecast jolted markets. FedEx's premarket losses were bigger than its steepest full-day loss ever, a 16.4 percent decline on Black Monday in 1987.
Biden executive order seeks to block China investment in some U.S. technology
President Biden signed an executive order Thursday stepping up efforts to block Chinese investment in U.S. technology and keep Americans' private data away from Beijing. In a move likely to intensify tensions with China, Biden ordered the secretive Committee on Foreign Investments in the United States to focus on preventing a foreign power from getting access to technologies Biden has singled out for their importance to U.S. economic growth. The committee will review cases related to "microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy, and climate adaptation technologies," the White House said. The order doesn't mention China by name, but focuses on technologies prioritized in President Xi Jinping's "Made in China 2025" drive.
Last-minute rail strike deal faces ratification challenges
A tentative labor deal brokered Thursday by the Biden administration averted a strike by freight-rail workers that had threatened to disrupt passenger train service and add to supply problems already hurting the economy. But it could still be difficult to get union members to ratify the agreement. Engineers and conductors are especially upset about difficult working conditions, including unpredictable schedules and long periods away from home. President Biden said as he announced the agreement that it was a "big win for America" that could lead to more deals between workers and their employers. "I'm optimistic that we can do this in other fields as well," Biden said. "Unions and management can work together for the benefit of everyone."
Stock futures fall, adding to week's losses
U.S. stock futures dropped early Friday as Wall Street threatens to test June lows following a hotter-than-expected August inflation report and a troubling earnings warning from FedEx. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.8 percent and 0.9 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were down 1.1 percent. The Dow fell 0.6 percent on Thursday to its lowest close since mid-July. The S&P 500 and the tech-heavy Nasdaq dropped 1.1 percent and 1.4 percent, respectively. The Dow has fallen 3.7 percent this week. The S&P 500 is down 4.1 percent. The disappointing August consumer price index report increased concerns that the Federal Reserve will increase already aggressive interest rate hikes at its next meeting.
Tech companies join White House push to fight violent extremism
The White House announced Thursday during the "United We Stand" summit hosted by President Biden that tech companies would adopt policies and tools to help fight hateful rhetoric. In coordination with the event, social media and tech giants, including YouTube, Twitch, Microsoft, and Facebook's Meta, announced new initiatives to limit the spread of hateful rhetoric. The companies have faced pressure to address their roles in spreading and amplifying violent rhetoric since mass shootings in Buffalo, New York, and Uvalde, Texas, in which the suspects had histories of violent online posts. The Biden administration announced several steps at the summit to strengthen federal efforts to counter hate-fueled violence like the 2016 Orlando Pulse Nightclub attack and the 2019 Walmart attack in El Paso.