The daily business briefing: July 11, 2017
Amazon shares gain as Prime Day begins, right to file class-action suits against banks restored, and more
Amazon's stock rises as Prime Day starts
Amazon.com shares gained 1.8 percent on Monday ahead of the start of Prime Day, the biggest marketing push of the year for the world's largest online retailer. The 30-hour Prime Day sale kicked off at 9 p.m. (ET) on Monday, offering deals intended to lure in more subscribers to Amazon's Prime service, which offers free two-day shipping on many items as well as other services such as video and music streaming. "Prime Day is the big overriding story and what's moved the stock up today," said Trip Miller, managing partner at Gullane Capital Partners in Memphis, Tennessee. Amazon also got a boost from its new service to help customers set up "smart" homes, which has weighed on electronics retail rival Best Buy's stock.
Federal watchdog revives right to file class-action suits against banks
The Consumer Financial Protection Bureau adopted a rule on Monday restoring the rights of Americans to pursue class-action lawsuits against banks and credit card companies. The move by the nation's consumer watchdog means financial firms can no longer force customers with complaints into arbitration, a potentially significant setback for Wall Street. The new rule promises to be controversial, setting up a potential clash with President Trump and House Republicans, who have sought to reduce the Consumer Financial Protection Bureau's power under a broad push to reduce regulation of the industry.
Abercrombie ends sale talks, sending stock plunging
Retailer Abercrombie & Fitch's stock dropped by more than 21 percent Monday on the news that the teen apparel retailer had ended talks about a possible sale. Abercrombie's plunge dragged down shares of other retailers, such as Gap, American Eagle, and Express. The latter two companies had been rumored to be considering acquiring Abercrombie. "The general state of apparel retail remains challenged and its future uncertain, likely contributing to a limited number of financial sponsors in the process with serious interest," Jefferies analyst Randal Konik wrote in a note about the end of the talks.
Snap shares drop below IPO price for first time
Snap Inc. shares dropped below their initial public offering price of $17 per share for the first time on Monday. The stock slipped as low as $16.95 and closed at $16.99 as investors and analysts expressed concern that the company, the parent of popular messaging app Snapchat, might not be able to grow at the pace once expected. "The pace of growth in monetization may not be as fast as we originally modeled," Mark May, an analyst at Citigroup Inc., said last month in a note downgrading the stock. "We expect user growth will remain modest near-term." Many other tech stocks have lost ground in the last month due to questions about their high valuations.
Electric vehicle company drops plan for $1 billion Nevada factory
Electric car company Faraday Future said Monday that it was scrapping a plan to build a $1 billion manufacturing plant in southern Nevada, saying it would search for an existing facility to use in California or Nevada instead. Faraday Future stopped work at the site outside Las Vegas in November after spending more than $120 million on the project, but said then that it was merely making a "temporary adjustment" to the project and would still meet its goal of starting production in 2018. Analysts said the move could be a sign of trouble at Faraday, as a push by traditional automakers to make electric vehicles and uncertainty over whether the Trump administration will push to end tax breaks for the industry and its customers have presented problems for electric vehicle startups.