The daily business briefing: October 28, 2022
Musk closes his $44 billion deal to buy Twitter, Amazon's holiday sales warning adds to market worries, and more
Musk closes $44 billion deal to buy Twitter
Elon Musk, Tesla's CEO and the world's richest person, closed his $44 billion deal to buy Twitter on Thursday, ending months of drama and legal fighting after Musk tried to back out of the purchase. Musk reportedly fired the social media company's chief executive, chief finance officer, and at least two other top executives as he began following through on his plan to impose sweeping changes on the social media company. Musk, who calls himself a "free speech absolutist," has said he would loosen Twitter's restrictions against toxic and misleading content. He has also said he will probably "reverse the permanent ban" of former President Donald Trump, whose Twitter account was shut down after the Jan. 6 Capitol attack.
Amazon holiday warning sends shares tumbling
Amazon shares dropped 14 percent in pre-market trading Friday after the online retail giant warned Thursday that its holiday sales growth would slow this year. Amazon has been trying to counter a drop in consumer spending amid high inflation. The company offered a second Prime sales event this month to drum up business, after selling a record number of items to Prime subscribers during the first event in June. Net third quarter sales came in at $127.1 billion, just under the $127.5 billion analysts expected, according to IBES data from Refinitiv. Amazon forecasts net fourth quarter sales of $140 billion to $148 billion, representing 2 percent annual growth, compared to 9 percent holiday quarter sales growth in 2021 and 38 percent in 2020.
U.S. economy grows after 2-quarter slump
The U.S. economy grew at an annual pace of 2.6 percent in the third quarter, returning to growth after two quarters of contraction, the Commerce Department reported Thursday. Economists said international trade, which varies widely from one quarter to the next, probably contributed significantly to the uptick, so the report did little to ease concerns about a possible recession as consumer spending slows and the recently booming housing market weakens amid sharp Federal Reserve interest rate hikes. "Ignore the headline number — growth rates are slowing," said Michael Gapen, chief U.S. economist for Bank of America. "It wouldn't take much further slowing from here to tip the economy into a recession."
Stock futures fall as Amazon's troubling forecast fuels tech concerns
U.S. stock futures dropped early Friday after disappointing news from Amazon fueled concerns about how economic headwinds are affecting big technology earnings. Futures tied to the tech-heavy Nasdaq were down 1.1 percent at 6:30 a.m. ET. Dow Jones Industrial Average and S&P 500 futures were down 0.2 percent and 0.7 percent, respectively. Amazon shares plunged overnight after the online retail giant reported disappointing holiday guidance and weaker-than-expected revenue. Apple shares fluctuated before turning positive after the company reported disappointing iPhone numbers but better-than-expected quarterly earnings and revenue. The Dow gained 0.6 percent on Thursday. The S&P 500 and the Nasdaq fell 0.6 percent and 1.6 percent, respectively.
DOJ, securities regulators investigate Tesla Autopilot statements
The Justice Department and securities regulators have launched an investigation into whether Tesla misled customers and investors about its Autopilot system, The Wall Street Journal reported Thursday, citing a person familiar with the matter. Tesla's Autopilot, which comes standard in its electric vehicles, helps drivers with steering, keeping a safe distance from other cars, and other tasks, but does not enable the vehicles to drive themselves. Tesla tells drivers they must pay attention and keep their hands on the wheel when using Autopilot, but critics say it sends conflicting signals to the public, causing many people to overestimate the system's capabilities.