The daily business briefing: March 14, 2023
Regulators scramble to show the banking system is safe, Biden administration approves a controversial Alaska drilling project, and more
Bank stocks dive as government insists banking system is safe
Bank stocks plunged on Monday after the collapse of Silicon Valley Bank and Signature Bank. President Biden tried to reassure Americans that the banking system was safe despite the second- and third-largest bank failures in the U.S. history, all within 48 hours. Shares of First Republic fell 62 percent despite funding from the Federal Reserve and JPMorgan Chase to shore up its finances. The Federal Reserve announced it would make money available to "to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors." "Your deposits will be there when you need them," Biden said.
Biden administration approves controversial Alaska drilling project
The Biden administration on Monday announced it was approving ConocoPhillips' massive Willow drilling project on Alaska's North Slope. Climate activists were outraged, saying the decision conflicted with President Biden's promise to do everything he could to fight climate change. The move came a day after the Biden administration said it would limit drilling in other parts of Alaska and the Arctic Ocean. The approval of the Willow project by the Bureau of Land Management will let ConocoPhillips drill up to 199 wells at three sites. The administration is denying the company permission to drill at two other proposed sites. ConocoPhillips Chairman and CEO Ryan Lance called the approval "the right decision for Alaska and our nation."
Banking crisis fuels biggest bond rally in decades
Short-term U.S. government bonds had their biggest one-day rally since 1987 on Monday as investors bet that the banking sector's sudden troubles signaled economic weakness that could lead the Federal Reserve to stop raising interest rates. Inflation concerns had pushed some bond yields to their highest levels in years less than a week ago, but the failures of two banks in two days stoked concerns about financial stability, prompting investors to shift money to Treasurys. That caused Treasury yields, which fall when bond prices rise, to drop as the Federal Reserve and other regulators rushed to take steps to limit the fallout. The key 10-year Treasury note fell to 3.515 percent from 3.694 percent on Friday and nearly 4.1 percent earlier in March.
Stock futures struggle for footing after bank rout
U.S. stock futures gained early Tuesday after a mixed day Monday that saw the Dow Jones Industrial Average fall for the fifth straight day. Futures tied to the Dow and the S&P 500 were up 0.5 percent at 6:30 a.m. ET. Nasdaq futures were up 0.4 percent. Bank stocks rebounded slightly in pre-market trading after a rout triggered by concerns about the sector in the wake of the failures of Silicon Valley Bank and Signature Bank. The Dow and the S&P 500 fell 0.3 percent and 0.2 percent, respectively, on Monday. The tech-heavy Nasdaq rose 0.5 percent, as investors speculated that the turmoil in the banking sector could prompt the Federal Reserve to pause interest rate hikes in its campaign to curb inflation.
California appeals court rules Uber, Lyft can treat drivers as contractors
A California appeals court on Monday ruled that gig-economy companies like Uber and Lyft can continue treating workers as independent contractors rather than employees in the state. The ruling reversed a lower court decision in 2021 that invalidated the state's gig economy law, Proposition 22, that voters approved in 2020. The appeals court struck down some parts of the law, including a provision restricting state lawmakers' ability to allow collective bargaining on things like drivers' working conditions, but ruled that Proposition 22 was largely constitutional. Some workers and labor groups say the law deprives them of such rights as sick leave. The pro-Proposition 22 Protect App-based Drivers & Services coalition called the ruling a "historic victory" for "drivers who rely on the independence and flexibility of app-based work."