The daily business briefing: April 28, 2023
Economic growth slowed in the first quarter of 2023, Eli Lilly says a study shows its diabetes drug helps people lose weight, and more
Economic growth slowed in 1st quarter
Economic growth slowed to a 1.1 percent annualized pace in the last quarter from a 2.6 percent increase in the fourth quarter of 2022, the Commerce Department reported Thursday. The slowdown came as many economists warn the economy could be heading into a recession as the Federal Reserve aggressively raises interest rates to cool the economy and bring down inflation. A Census Bureau analysis published Thursday said the end of extra pandemic-era food subsidies on March 1 also contributed to the slowdown by reducing consumption. About one in four households who received the benefits, or about eight million Americans, say they "sometimes" or "often" don't have enough to eat now that the program has been lifted in 32 states.
Eli Lilly says study shows diabetes drug Mounjaro effective for weight loss
Eli Lilly on Thursday released data from a second large study that found its drug Mounjaro, now used to treat diabetes, helps people lose weight. The study found that participants with diabetes lost nearly 16 percent of their weight during the 18-month trial, USA Today reported. Typically that amounted to a loss of more than 34 pounds. The drug-maker previously released data indicating that the drug, marketed under the generic name tirzepatide, helped people with obesity but not diabetes lose up to 20 percent of their weight. The drug has not been approved for weight loss yet, but Eli Lilly plans to ask for approval later this year, potentially disrupting the weight loss market.
Amazon sales bounce back but cloud-computing growth slows
Amazon on Thursday reported that its sales growth surged in the first quarter of this year, bouncing back from a post-pandemic slowdown. The online retail giant said sales increased 9 percent compared to the same period last year to $127.4 billion, beating analysts' expectations. Amazon's quarterly profit came in at $3.2 billion, nearly 50 percent better than expected. The company has taken steps to reduce costs, including two rounds of layoffs totalling 27,000 workers, as it focused on boosting profitability. Amazon shares jumped more than 10 percent in after-hours trading following the report, then gave back the gains after executives revealed that revenue growth in Amazon's cloud-computing unit had slowed in April.
Federal officials orchestrate private-sector talks on First Republic lifeline
The Federal Deposit Insurance Corporation (FDIC), the Treasury Department, the Federal Reserve and other government agencies are leading urgent talks on rescuing First Republic Bank, Reuters reported Friday. First Republic's stock plummeted this week after it reported that customers had moved $100 billion out of their accounts in the first quarter after two regional bank failures raised concerns about the industry's financial health. The federal officials got involved to coordinate meetings with financial companies after private-sector efforts to put together a rescue for the struggling lender failed to reach a deal. It wasn't immediately clear whether the government would participate in a primarily private-sector lifeline.
Stock futures edge down after Thursday's big gains
U.S. stock futures slipped early Friday as investors digested more corporate earnings after Thursday's big gains. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.4 percent at 7 a.m. ET. Nasdaq futures were down 0.3 percent. On Thursday, the Dow and the S&P 500 jumped 1.6 percent and 2.0 percent, respectively. The tech-heavy Nasdaq shot up by 2.4 percent after strong earnings from Facebook-parent Meta. Amazon shares surged then retreated overnight following mixed messages from the online retail giant. Snap shares dropped 14 percent after the instant-messaging company released disappointing growth projections for the second quarter. Analysts remain concerned about corporate earnings even though 80 percent of the 261 S&P 500 companies that have reported earnings so far have exceeded expectations.