The daily business briefing: November 11, 2022
U.S. stocks soar after October inflation comes in below expectations, Musk warns of possible Twitter bankruptcy, and more
Stocks skyrocket after unexpectedly cool inflation report
U.S. stocks soared on Thursday after the Bureau of Labor Statistics reported consumer prices rose less than expected in October. The S&P 500 jumped 5.5 percent, its best day since April 2020. The Dow Jones Industrial Average rose 3.7 percent, and the tech-heavy Nasdaq shot up by 7.3 percent. The key inflation gauge showed that prices increased by 7.7 percent in October compared to a year earlier, less than the 7.9 percent analysts had expected, and a significant drop from 8.2 percent in September. The news suggested that the Federal Reserve's aggressive interest-rate hikes were proving effective in cooling the economy and bringing down the highest inflation in decades. U.S. stock futures rose early Friday.
Musk warns bankruptcy is a possibility for Twitter
Elon Musk, who just acquired Twitter in a $44 billion deal, told the social media platform's employees on Thursday that bankruptcy "isn't out of the question" as advertisers pull back and the company bleeds cash. Musk's comment, first reported by Platformer's Zoë Schiffer, came during an employee meeting days after Musk ordered layoffs for half of Twitter's 7,500 employees. Musk, Tesla's CEO, told workers he had recently sold Tesla stock — securities filings put the shares' value at nearly $4 billion — to "save" Twitter. "Elon has shown that he cares only about recouping the losses he's incurring as a result of failing to get out of his binding obligation to buy Twitter," an employee said in an internal memo obtained by The New York Times.
Juul secures financing from early investors to avoid bankruptcy
Embattled e-cigarette maker Juul Labs has lined up funding from its early investors to help it avoid bankruptcy as it struggles to get federal regulators to let it keep selling its products in the United States, The Wall Street Journal reported Thursday, citing company officials. Juul also plans to lay off about 400 employees, a third of its workers worldwide, as part of a push to cut its operating budget by 30 percent to 40 percent. The financing deal is part of a bailout plan company leaders are discussing with Hyatt Hotels heir Nick Pritzker and California billionaire Riaz Valani, two of the vaping company's biggest early investors.
Bahamas securities regulator freezes assets of FTX subsidiary
The Securities Commission of The Bahamas on Thursday froze the assets of FTX Digital Markets, the FTX subsidiary in the island nation, as entrepreneur Sam Bankman-Fried struggled to raise $8 billion to save the crumbling crypto company. The regulator said it was appointing a liquidator, and none of the business' assets can be transferred without the liquidator's approval. "The commission is aware of public statements suggesting that clients' assets were mishandled, mismanaged and/or transferred to Alameda Research," the announcement said. Alameda is Bankman-Fried's crypto trading business. The crisis has spread to other crypto businesses, prompting digital assets lending platform BlockFi to pause client withdrawals.
U.K. economy contracts in third quarter
The British economy shrank by 0.2 percent in the third quarter compared to the previous three months, the United Kingdom's Office for National Statistics reported Friday. The data suggested that the country's economy could be at the beginning of a recession predicted by its central bankers. The slowdown affected everything from manufacturing to the service sector. The backsliding picked up in September, when gross domestic product fell by 0.6 percent compared to August, although part of the slowdown was due to business closures after Queen Elizabeth II died. Britain and other European countries are struggling with slowing growth and rising prices of food, fuel, and fertilizer that have been blamed on Russia's invasion on Ukraine.