The daily business briefing: December 1, 2022
Jerome Powell says Fed could soon slow interest-rate hikes, House passes bill to prevent devastating rail strike, and more
Powell says Fed poised to slow interest rate hikes
Federal Reserve Chair Jerome Powell said Wednesday that the central bank will continue raising interest rates to cool the economy and bring down the highest inflation in decades, but indicated the central bank would likely start making smaller hikes, possibly at its next meeting. The Fed has made four straight three-quarter point increases, stoking concerns that the unusually aggressive moves would push the economy into a recession. But Powell suggested in a speech to the Brookings Institution that the Fed might raise its benchmark short-term interest by just a half percentage point in December. "We think that slowing down at this point is a good way to balance the risks," Powell said. Stocks soared after Powell's remarks.
House approves bill seeking to prevent devastating rail strike
The House on Wednesday passed a bill seeking to impose a new contract on rail workers to prevent a strike that could devastate the economy. President Biden called for Congress to intervene as railway workers vowed to strike by Dec. 9 if unions and rail companies couldn't reach a new agreement. The bill passed the House 290-137 and now heads to the Senate, where Majority Leader Chuck Schumer (D-N.Y.) and Minority Leader Mitch McConnell (R-Ky.) have both called for approving the legislation quickly. A separate measure requiring seven days of paid sick leave for railroad employees — a key demand of rail worker unions and progressive Democrats — passed by a narrower margin, and faces uncertain prospects in the evenly divided Senate.
Stock futures fall slightly after Fed-fueled rally
U.S. stock futures edged lower early Thursday after Wednesday's big gains, which came after Federal Reserve Chair Jerome Powell suggested the central bank was preparing to slow its aggressive interest rate hikes. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.2 percent and 0.1 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were down 0.3 percent. The Dow and the S&P 500 jumped 2.2 percent and 3.1 percent, respectively, on Wednesday, and the tech-heavy Nasdaq soared 4.4 percent after Powell's comments. "The market is taking comfort in Powell's balanced tone – particularly the indication of slowing interest rate hikes ahead and 'risk management' to mitigate risk of overtightening," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
Amazon had its biggest Thanksgiving shopping weekend ever
Amazon said Wednesday this year's Thanksgiving holiday shopping weekend was its biggest ever. The online retail giant's independent sellers brought in more than $1 billion in sales, as inflation-weary shoppers sought deals. Adobe Analytics, which tracks transactions at leading online stores, said total holiday-weekend sales reached $35.27 billion. That's 4 percent more than last year, suggesting that a key reason for the weekend's record sales figures was inflation. The consumer price index was up 7.7 percent in October, compared to a year earlier. Gasoline prices are falling as global economic problems reduce demand. Pump-price tracker GasBuddy says average prices could drop to $3 by Christmas. Experts say the savings are giving consumers holiday spending money they didn't expect to have.
DoorDash becomes latest tech company to announce layoffs
Food-delivery company DoorDash announced Wednesday that it would lay off 1,250 employees — about 6 percent of its workforce — making it the latest tech company to cut staff. DoorDash CEO Tony Xu called the layoffs "the most difficult change" he had made in the company's nearly 10-year history. "I know that for many of you, today's news will come as a shock, especially because our business remains strong and continues to grow," Xu said on the company's blog. DoorDash and other high-profile tech companies hired aggressively earlier in the coronavirus pandemic, when lockdowns and fear of infection forced people to work, study, shop, and seek entertainment online, but many now need to make cuts as life returns to normal.