The daily business briefing: May 24, 2023
Snags in debt-ceiling talks make investors nervous, Apple extends a deal with Broadcom to supply iPhone chips, and more
Debt ceiling snags stoke investor anxiety
House Speaker Kevin McCarthy (R) left the Capitol late Tuesday without a deal to raise the debt ceiling and avert an unprecedented default. His top negotiator suggested Republicans and Democrats were locked in a standoff. "Bottom line is that we're going to have to see some movement," the negotiator, Rep. Garret Graves (R-La.), said. The impasse, despite recent progress, made it more likely Congress would vote on any deal hours before June 1, the point at which Treasury Secretary Janet Yellen has said her department would start running short of money to pay all the country's bills. The standoff prompted investors worried about a potential default to shed their go-to safe haven, Treasury bills, and buy bonds of top-rated companies like Microsoft and Johnson & Johnson instead.
Apple extends Broadcom deal to supply iPhone chips
Apple announced Tuesday that it would extend its deal to buy chips from Broadcom despite a push by the iPhone maker to make more of the components itself. Apple has replaced Intel chips with its own versions in its laptops and desktops, but has made slower progress with chips for cell phones. As part of its new multi-year, multi-billion-dollar deal, Broadcom will supply Apple with 5G radio-frequency components and wireless-connectivity components to be built at manufacturing hubs in Fort Collins, Colorado, and several other U.S. locations. "We'll continue to deepen our investments in the U.S. economy because we have an unshakable belief in America's future," Apple Chief Executive Tim Cook said.
France bans short flights on routes served by high-speed rail
France on Tuesday finalized a law that will ban short domestic flights on routes that can be traveled in two-and-a-half hours by train under a push to fight climate change. "This is an essential step and a strong symbol in the policy of reducing greenhouse gas emissions," said Clement Beaune, France's transport minister. "As we fight relentlessly to decarbonize our lifestyles, how can we justify the use of the plane between the big cities which benefit from regular, fast, and efficient connections by train?" The ban immediately will affect only three routes connecting Paris-Orly airport with Bordeaux, Nantes, and Lyon. The European Union insisted on applying the rule only to routes with a convenient high-speed rail alternative available, with early and late departures for convenience.
Stock futures fall as debt ceiling negotiations continue
U.S. stock futures fell early Wednesday as investors continued to monitor negotiations between Democrats and Republicans on raising the debt ceiling. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.4 percent at 6:30 a.m. ET. Nasdaq futures were down 0.3 percent. The three main U.S. indexes fell on Tuesday. The Dow and the S&P 500 fell 0.7 percent and 1.1 percent, respectively. The tech-heavy Nasdaq dropped 1.3 percent. On Wednesday, investors also will be paying attention to Federal Reserve minutes from the central bank's May meeting, which will be released later in the day. Corporate earnings also continue, with apparel retailer American Eagle Outfitters and semiconductor maker Nvidia reporting quarterly results after the day's trading ends.
Netflix imposes password sharing crackdown in U.S.
Netflix announced in a blog post Tuesday that it was starting its crackdown on password sharing in the United States. "Netflix account is for use by one household," the company wrote in the post. The streaming giant said a "broad rollout" of the policy was coming this quarter after it got started in early February in several countries, including Canada, New Zealand, Portugal, and Spain, after being tested in Chile, Costa Rica, and Peru. Netflix said Tuesday that it was also extending the crackdown to the United Kingdom, France, Germany, Mexico, Brazil, and several other countries. The company says users can share their accounts with someone outside their household for $7.99 per month.