The daily business briefing: May 12, 2023
Musk says he's stepping aside as Twitter's CEO, PacWest shares plunge as concerns about regional banks continue, and more
Musk stepping down as Twitter CEO
Elon Musk said Thursday that a new CEO will take over Twitter in six weeks. When the new leader, an as-yet unnamed woman, starts the job, Musk plans to transition "to being exec chair & CTO." NBCUniversal head of advertising Linda Yaccarino reportedly is in talks on taking the job. Twitter has lost advertisers as Musk eased content rules and offensive posts increased. The Twitter leadership change cheered Tesla investors, many of whom had expressed concern that Musk's purchase of Twitter last year and his hands-on leadership of the social media platform was distracting him from his duties as CEO of the electric-car maker. Tesla shares jumped more than 2 percent.
PacWest shares plunge as volatile trading continues
PacWest shares fell 25 percent on Thursday after the struggling regional bank said in a securities filing that it lost 9.5 percent of its deposits last week. Trading in the battered stock was halted several times. PacWest's troubles intensified last week after the collapse of First Republic, which renewed concerns about the financial health of regional banks. PacWest said most of its outflows occurred on May 4 and 5 after reports that it was exploring a possible sale. Concerns about regional banks emerged in March as some of the institutions started showing signs of stress due to high interest rates, and several banks collapsed. PacWest shares have plunged 80 percent since March 8.
Debt limit talks postponed
President Biden and congressional leaders decided to postpone a scheduled Friday meeting on raising the debt ceiling until next week. Staff members will continue negotiations as the threat of a catastrophic June default on the nation's obligations looms. Biden had planned to host a second White House meeting with House Speaker Kevin McCarthy (R-Calif.), Senate Minority Leader Mitch McConnell (R-Ky.), Senate Majority Leader Chuck Schumer, and House Minority Leader Hakeem Jeffries (D-N.Y.), but all sides reportedly balked at elements in a potential deal. Republicans are demanding spending cuts in exchange for raising the debt limit. Biden and his fellow Democrats have insisted on raising the cap without conditions.
Stock futures rise as investors digest regional bank concerns, easing inflation
U.S. stock futures rose early Friday as regional banks struggled to bounce back from a rough day Thursday. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.4 percent at 6:45 a.m. ET. Nasdaq futures were up 0.2 percent. The Dow fell 0.7 percent on Thursday in its fourth straight day of losses. Disney shares fell after the entertainment giant reported disappointing streaming-subscriber numbers, dragging down other stocks. Ongoing worries about the financial health of regional banks hurt sentiment, too. The April producer price index, a measure of wholesale prices, showed an increase of 0.2 percent, below the 0.3 percent estimated by Dow Jones, but the sign of easing inflation wasn't enough to soothe investors.
Peloton recalls 2.2 million exercise bikes
Peloton is recalling 2.2 million exercise bikes because of the danger that the seat post could break during use, the company announced Thursday. Thirty-five people have reported to Peloton that seat posts on the company's original bike have broken and detached. Thirteen of the cases resulted in injuries, from a fractured wrist to cuts and bruises, the company said. The U.S. Consumer Product Safety Commission said in a news release that the bikes were sold by Dick's Sporting Goods and online stores, including Peloton's website and Amazon, between January 2018 and May 2023. Owners were urged to stop using the bikes immediately and contact Peloton, which is offering free repairs.