The daily business briefing: February 2, 2023

1. Federal Reserve announces smaller interest rate hike as inflation eases

The Federal Reserve said Wednesday it was raising its benchmark short-term interest rate a quarter percentage point. The change, which was widely expected, marked a slowdown in the Fed's aggressive campaign to raise borrowing costs to cool the economy and fight persistent high inflation. The central bank raised rates seven times in 2022, with unusually large half- and three-quarter point increases. The hikes have lifted rates from near zero to a range of 4.5 percent to 4.75 percent. Recent data indicate that inflation is slowing, but remained far above the Fed's 2-percent target. That means more hikes will be needed, Fed Chair Jerome Powell said. "We're talking about a couple more rate hikes," Powell said after a two-day policy meeting.

The New York Times

2. Meta shares soar on strong earnings, $40 billion stock buyback

Meta shares shot up by nearly 20 percent in extended trading on Wednesday after the Facebook parent reported fourth quarter earnings that beat analysts' expectations, and announced a $40 billion stock buyback as its business outlook brightens. Microsoft announced during the quarter that it was laying off 13 percent of its workers to become what co-founder and CEO Mark Zuckerberg said would be "a leaner and more efficient company." The company reduced its estimate for 2023 costs, and forecast first-quarter revenue as high as $28.5 billion, more than it made in the same period in 2021 before Apple imposed privacy measures that curbed Meta's data access, reducing its revenue.

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CNBC The Wall Street Journal

3. India's Adani Enterprises reverses share sale after stock plummets

India's embattled Adani Enterprises said Wednesday it was reversing a share sale it used to raise $2.5 billion and would return investors' money after the share price plunged 26 percent. Adani Enterprises, the flagship of Indian billionaire Gautam Adani's Adani Group conglomerate, had gone ahead with the share sale, which attracted nearly 51 million bids on the 45.5 million offered to the public, despite losing tens of billions of dollars in value since a U.S. short seller, Hindenburg Research, released a report last week accusing the group of "brazen" stock manipulation and accounting fraud. Adani denies the allegations. Gautam Adani was the third richest person in the world on the Forbes real-time billionaires list before the turmoil. Now he's 15th.

BBC News The Associated Press

4. Biden, McCarthy start talks on raising the debt ceiling

President Biden and House Speaker Kevin McCarthy (R-Calif.) met Wednesday to start talks on raising the $31.4 trillion debt ceiling to prevent the country from defaulting on its debt for the first time in history. Republicans are demanding cuts to government spending as part of any deal to increase the borrowing limit, but haven't decided on the details of the programs they want to cut. McCarthy said he and Biden had a "good meeting," and would likely "find common ground." Biden said he "made clear that it's the shared duty of every leader in Congress not to allow a default," but added that he told McCarthy he would "welcome separate talks about how best to continue reducing the deficit while growing the economy."

The Wall Street Journal

5. S&P 500, Nasdaq futures add to Wednesday's gains after Fed decision

S&P 500 and Nasdaq futures rose early Thursday, putting Wall Street on track to extend Wednesday gains that came after the Federal Reserve announced it was slowing its interest rate hikes as it made progress in bringing down high inflation. Futures tied to the S&P 500 and the tech-heavy Nasdaq were up 0.5 percent and 1.2 percent, respectively, at 6:30 a.m. ET. Dow Jones Industrial Average futures were down 0.1 percent. On Wednesday, the S&P 500 gained 1.1 percent and the Nasdaq jumped by 2.0 percent after the Fed's policy meeting, which concluded with Fed Chair Jerome Powell saying the "disinflation process has started." "The more he talked, the more dovish he was," Charles-Henry Monchau, chief investment officer at Banque Syz, said on Bloomberg Television.

Bloomberg