The daily business briefing: September 27, 2022
"Unprecedented" Nord Stream pipeline leaks raise suspicion of sabotage, the Dow enters bear market territory, and more
'Unprecedented' underwater leaks reported in Nord Stream gas pipeline
Sweden and Denmark said Tuesday they were investigating leaks in the two Nord Stream gas pipelines built to carry natural gas from Russia to Europe. The operator of the pipelines, which have been at the center of Europe's energy crisis since Russia invaded Ukraine, said three underwater lines in the Baltic Sea had suffered "unprecedented" damage. The reports triggered suspicion of sabotage. Two of the pipes are part of Nord Stream 1, a major source of gas for Europe. The other is part of Nord Stream 2, which Western nations blocked under sanctions to punish Russia for invading Ukraine. Russia has squeezed Nord Stream 1 deliveries in retaliation. The leaks won't immediately affect gas supply. Russia halted the flow through Nord Stream 1 this month.
Dow enters bear market territory, but futures rebound
The Dow Jones Industrial Average officially entered a bear market on Monday, with a 1.1 percent decline leaving it 20 percent below its recent high. The S&P 500 fell 1 percent to its lowest level of the year, and the tech-heavy Nasdaq fell 0.6 percent. Stock futures rose early Tuesday. The Dow was up 0.5 percent at 6:30 a.m. ET. The S&P 500 and the Nasdaq were up 0.7 percent and 1.0 percent. The move in futures followed five straight days of losses for Wall Street that were fueled by concerns about economic fallout from the Federal Reserve's aggressive interest rate hikes to fight high inflation. The slide of the British pound, which touched a record low against the dollar early Monday before stabilizing, also caused alarm among investors.
CBO estimates Biden student debt relief plant to cost $400 billion
The nonpartisan Congressional Budget Office released a report Monday estimating that President Biden's student loan forgiveness plan will cost taxpayers more than $400 billion. The CBO said in a letter responding to questions made by Sen. Richard Burr (R-N.C.) and Rep. Virginia Foxx (R-N.C.) that Biden's extension of the coronavirus-era student loan payment moratorium, now set to expire Dec. 31, will push up the cost of outstanding student loans by about $20 billion. Biden's decision to cancel $10,000 for each borrower below certain income limits, along with another $10,000 for Pell Grant recipients, would cost $400 billion, CBO Director Phillip Swagel said in the letter. Foxx said the letter showed the White House had "lost all sense of fiscal responsibility."
Congress to consider deal to prevent shutdown
Top lawmakers unveiled a proposal to avert a government shutdown later this week. The stopgap funding package includes $12 billion more emergency aid for Ukraine as it fights off a Russian invasion, as well as a plan championed by Sen. Joe Manchin (D-W.V.) that would make it easier to build energy infrastructure. The measure emerged from a Democratic deal that secured the centrist Democrat's key vote for the party's Inflation Reduction Act, but some lawmakers in both parties don't want it in the stopgap bill to keep the government funded through Dec. 16. "With four days left in the fiscal year, we cannot risk a government shutdown; we must work to advance this bill," said Sen. Patrick Leahy (D-Vt.), chair of the Senate Appropriations Committee.
Another top executive leaves struggling Peloton
Peloton's chief marketing officer, Dara Treseder, has become the latest executive to leave the struggling exercise equipment maker. Treseder is leaving to run marketing at Autodesk, Peloton announced Monday. The news came two weeks after the company's co-founder and former CEO, John Foley, announced his departure as part of flurry of leadership changes. Peloton said Treseder, who will stay on through Oct. 4, helped more than double Peloton's membership for its streaming exercise classes to more than 6.9 million, The New York Times' DealBook newsletter reported. Peloton boomed early in the coronavirus pandemic as lockdowns forced more people to exercise at home, but its expansion came to a halt in the last year as restrictions were lifted.