The daily business briefing: May 3, 2017
Auto sales fall in their longest slump since 2009, Apple announces an unexpected drop in iPhone sales, and more
Auto sales decline in longest slump since 2009
U.S. automakers reported Tuesday that their sales declined for the fourth straight month in April. That makes the slump their longest since 2009 during the financial crisis. "The market is tapped out," said Adam Silverleib, vice president of Silko Honda, a Massachusetts dealership. He added that recent consumer optimism "hasn't translated into what's happening in dealerships where we’re trying to sell cars." The top six auto makers in the U.S. market all posted retreating sales that were worse than expected, sending Ford and Fiat Chrysler stock falling by more than 4 percent, and General Motors by nearly 3 percent. Manufacturers already were getting ready to cut production, which could spell job losses just as President Trump is counting on the car industry to help add U.S. jobs.
Apple reports unexpected decline in iPhone sales
Apple shares fell by 1.9 percent in after-hours trading on Tuesday after the company reported an unexpected fall in iPhone sales in the second quarter. Apple sold 50.76 million iPhones in the fiscal quarter that ended at the beginning of April, down from 51.19 million in the same period last year. The news suggested that many customers have put off iPhone purchases, preferring to wait for a 10th-anniversary version of the company's popular smartphone later this year. The stock's tumble came despite an announcement that the company was stepping up its capital return program, increasing its share repurchases, and raising its quarterly dividend by 10.5 percent.
World stocks edge down ahead of Fed decision
Global stocks struggled early Wednesday ahead of the Federal Reserve's decision on interest rates, which the U.S. central bank will announce at 2 p.m. at the end of a two-day meeting. European stock markets fell back from 20-month highs, and Asian stocks declined as well, with Sydney's S&P-ASX 200 dropping by 1 percent to 5,892.30 points and the Shanghai Composite Index falling 0.25 percent. Since December, the Fed has resumed a long anticipated program to raise interest rates as jobs and inflation data show improvement toward the Fed's goals. Markets have priced in a 60 percent chance that the Fed's next rate hike will come in June.
House to vote on spending deal to avert shutdown
The House is scheduled to vote Wednesday afternoon on the bipartisan $1.1 trillion spending deal needed to keep the government funded through September. The measure, needed to avert a government shutdown when a stopgap spending measure expires at the end of the week, was hammered out after a showdown over President Trump's demand that the bill include funding to start his promised wall on the Mexican border. Trump dropped that demand, but now calls the deal "a clear win for the American people" after years of "partisan bickering and gridlock." Some reports have depicted Democrats as the winners of the negotiations, because they managed to block cuts to popular domestic programs and other GOP demands, and Sen. Lindsey Graham (R-S.C.) said his party "pretty well got our clock cleaned."
House passes bill seeking to change overtime pay rules
The House of Representatives on Tuesday passed a bill seeking to change overtime rules to allow private-sector employees to exchange overtime pay for "compensatory time" off. The legislation passed 229 to 197, roughly along party lines. House Republicans have passed similar legislation three times over the past two decades, but the measures have failed in the Senate. The current bill's prospects in the Senate remain unclear, although the White House supports it, saying it would "help American workers balance the competing demands of family and work by giving them flexibility to earn paid time off." Supporters say the bill will give workers flexibility, while opponents say they fear some workers will feel pressure to take comp time over extra pay.