The daily business briefing: December 22, 2022
Bankman-Fried to face charges as FTX associates plead guilty, Tesla reportedly plans more layoffs, and more
Bankman-Fried extradited from Bahamas as FTX associates plead guilty
Bahamian authorities handed over FTX founder Sam Bankman-Fried to U.S. authorities on Wednesday to face charges related to the collapse of the cryptocurrency platform. Bankman-Fried is accused of diverting money from FTX to cover losses at his hedge fund, Alameda Research. His extradition came as two of his associates pleaded guilty to charges connected to FTX. Carolyn Ellison, the former CEO of Alameda Research, and Gary Wang, who co-founded FTX with Bankman-Fried, pleaded guilty to charges "related to their roles in the fraud that contributed to FTX's collapse," U.S. Attorney Damian Williams said Wednesday. Ellison and Wang agreed to plead guilty to wire, securities, and commodities fraud.
Report: Tesla plans more layoffs as stock hits 2-year low
Tesla has told employees it is freezing hiring and laying off more employees in the next quarter, Elektrek reported Wednesday, citing a source familiar with the matter. CEO Elon Musk paused hiring and slashed the electric-car maker's salaried staff by 10 percent in June, citing various reasons, including a "very bad feeling" about the economy. The news of the latest cutbacks came after Tesla's shares hit a two-year low this week. Investors have complained that Musk's controversial takeover of Twitter has hurt Tesla, distracting him and prompting him to sell billions of dollars' worth of Tesla stock. "Tesla stock price now reflects the value of having no CEO," Ross Gerber, a prominent Tesla investor, tweeted Tuesday.
Existing-home sales fall to slowest pace since May 2020
Existing-home sales fell in November by 7.7 percent to a seasonally adjusted annual rate of 4.09 million, the lowest rate since May 2020, the National Association of Realtors said Wednesday. It was a record 10th straight month of declines, as higher mortgage rates and prices continued to make homes unaffordable for some buyers. The housing market slowdown has come as the Federal Reserve aggressively raises interest rates to fight the highest inflation in decades. The Fed moves increase the cost of borrowing, putting the brakes on the economy. The Fed has hiked rates seven times this year, pushing mortgage rates and other loan costs up.
Stock futures slip after Wednesday's rally
U.S. stock futures edged lower early Thursday after Wednesday's big gains. Futures tied to the Dow Jones Industrial Average and the Nasdaq were up 0.2 percent. S&P 500 futures were up 0.1 percent. The Dow jumped 1.6 percent on Wednesday. The S&P 500 and the tech-heavy Nasdaq rose 1.5 percent. The rally came as a flurry of better-than-expected quarterly earnings reports boosted investor sentiment. Nike and FedEx shares gained after they released encouraging quarterly results. Strong December consumer sentiment data also boosted markets. Liz Ann Sonders, Charles Schwab's chief investment strategist, said the market was oversold after recent losses, which contributed to the rally.
Micron Technology to cut staff by 10 percent after rough quarter
Micron Technology announced Wednesday that it planned to cut staff by 10 percent and trim capital spending after posting disappointing quarterly results. On an adjusted basis, Micron lost 4 cents a share. Analysts had forecast a loss of a penny a share. The chip maker said it expected conditions to improve late next year, but in the quarter that ended Dec. 1 it took a hit from softening demand and high customer inventories in key end markets, including PCs, smartphones, and servers. Micron said it would have to reduce cost in the next few quarters, but after that economic conditions should get better. "The supply/demand imbalance has been pretty challenging," Sumit Sadana, Micron's chief business officer, told Barron's.