The daily business briefing: November 3, 2022
Powell says it's "premature" to consider slowing rate hikes, Russia rejoins the deal to allow Ukraine grain shipments, and more
Fed hikes interest rates 0.75 points as Powell warns 'soft landing' less likely
The Federal Reserve on Wednesday announced its fourth straight 0.75-percentage-point interest rate hike as it continues working to cool the economy to bring down the highest inflation in decades. The Fed said at the close of a two-day meeting of the Federal Open Market Committee that it is raising its benchmark short-term interest rate target to 3.75 percent to 4 percent, the highest since January 2008. The string of unusually big hikes amount to the central bank's most aggressive moves since the 1980s. Federal Reserve Chair Jerome Powell said after the meeting that it's "premature" to consider slowing rate hikes, the Fed will have to "be more restrictive" to contain stubborn high inflation, "and that narrows the path to a soft landing."
Russia rejoins deal guaranteeing safety for Ukraine grain shipments
Russia said Wednesday it will resume its participation in a deal guaranteeing safe passage for ships exporting grain from Ukraine. Days earlier, Moscow suspended the agreement, citing drone attacks against its Black Sea Fleet ships in the port of Sevastopol in occupied Crimea. The restoration of the pact after talks in Turkey eased concerns about disrupted grain shipments threatening already strained global food supplies. After speaking with Russian President Vladimir Putin, Turkish President Recep Tayyip Erdoğan said the agreement was set to resume Wednesday. The U.S. ambassador to the United Nations, Linda Thomas-Greenfield, told CNN she was "delighted" because the shipments are "providing needed food to the world."
Report describes alleged CBS coverup to hide Moonves allegations from shareholders
The New York Attorney General's Office on Wednesday released a report describing an alleged attempt by CBS executives in 2017 and 2018 to cover up accusations of sexual harassment against Leslie Moonves, head of CBS at the time. An unidentified Los Angeles Police Department captain who had worked on Moonves' security detail at the Grammy Awards reportedly tipped off CBS leaders that a woman told the LAPD that Moonves assaulted her in the 1980s. Moonves texted the captain saying, "Hopefully we can kill the media from PD." New York Attorney General Letitia James' office said CBS "intentionally concealed" the allegations from regulators and shareholders, and CBS and Moonves will pay $30.5 million, much of it going to shareholders.
Stock futures fall slightly after Fed-fueled losses
U.S. stock futures edged lower early Thursday after Wednesday's big losses, which came after Federal Reserve Chair Jerome Powell warned it's "premature" to consider pausing interest rate hikes due to stubbornly high inflation. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.3 percent and 0.4 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were down 0.5 percent. The Dow and the S&P 500 closed down 1.6 percent and 2.5 percent, respectively, on Wednesday after Powell's comments, which came as the Fed announced its fourth straight jumbo 0.75-percentage-point interest rate increase. The Nasdaq, heavy with growth-dependent tech stocks that are sensitive to higher borrowing costs, fell 3.4 percent.
Pilots union board rejects American Airlines contract offer
The Allied Pilots Association said Wednesday that its board rejected a contract offer by American Airlines in a 15-5 vote. American proposed a new contract with a 19 percent raise in three steps over two years. Union spokesman Dennis Tajer said American was failing "to invest in a pilot contract that levels up to meet passenger demand," creating "more uncertainty for the holiday travel season." Pilots' leverage has increased due to a shortage of personnel and rising travel demand following the lifting of coronavirus restrictions. American, which has about 15,000 pilots, did not immediately comment. United Airlines pilots recently rejected 14.5 percent raises over 18 months. Delta pilots have voted to authorize a strike if negotiations fail.