The daily business briefing: February 6, 2018
The Dow's record plunge fuels a global stock sell-off, SpaceX prepares its massive Falcon Heavy rocket for launch, and more
Dow's record dive fuels global stock sell-off
The Dow Jones Industrial Average made its biggest single-day point drop ever on Monday, falling by 1,176 points, or 4.6 percent, and fueling a similar sell-off overseas. U.S. stock futures were swinging wildly early Tuesday, plunging before climbing briefly into positive territory, then falling sharply again in a battle to stabilize. The S&P 500 dropped by 4.1 percent and the Nasdaq Composite lost 3.8 percent on Monday, erasing their 2018 gains. The sell-off started Friday after strong wage and hiring data pointed toward quickening inflation that could prompt the Federal Reserve to raise interest rates faster. Analysts note that economic fundamentals remain strong. Many felt a correction was overdue. "Last month the market went up by 6 percent," said Donald Selkin of Newbridge Securities Corp. "That's unsustainable."
SpaceX to launch massive Falcon Heavy rocket
SpaceX is scheduled to launch its new Falcon Heavy rocket on its first flight from Kennedy Space Center at Cape Canaveral on Tuesday. The 27-engine rocket, which will send SpaceX founder Elon Musk's own Tesla Roadster electric car into space, is crucial for Musk's plans for the company. Musk said that the launch team had done all of the modeling and testing possible. "In theory it should work," Musk said. If it does, the Falcon Heavy will be the most powerful rocket since the Saturn V rockets used in NASA's Apollo moon missions. "It will be a really huge downer if it blows up but hopefully, if something goes wrong, it goes wrong far into the mission so we at least learn something along the way," Musk said.
Trump calls Democrats 'treasonous' for failing to applaud
President Trump on Monday called Democratic lawmakers "un-American" and "treasonous" for failing to applaud him when he mentioned positive jobs numbers during his State of the Union address last week. "Shall we call that treason? Why not?" Trump said in a speech focused on touting the benefits of the GOP tax cuts. "I mean, they certainly didn't seem to love our country very much." Democrats have accused Trump of taking undue credit for employment gains, particularly for blacks and Hispanics, that started under former President Barack Obama. Critics also noted that Trump was boasting about economic gains since he took office a year ago while the Dow Jones Industrial Average was taking its biggest one-day point dive in history.
Bitcoin falls by 13 percent as sell-off continues
Bitcoin dropped by 13 percent on Tuesday, falling below $6,000 as its spectacular plunge continued. The world's best-known cryptocurrency has now lost more than half of its value in 2018 in a sell-off triggered by fears of regulatory clampdowns around the world. The virtual currency went on a tear last year, hitting a peak of nearly $20,000 in December before investors started panicking. On Tuesday, it fell as low as $5,920 on the Luxembourg-based Bitstamp exchange, its lowest value since mid-November. Other cryptocurrencies also have been falling sharply.
Lululemon CEO Laurent Potdevin resigns under cloud
Lululemon Athletica announced Monday that its CEO, Laurent Potdevin, had resigned after failing to "exemplify the highest level of integrity and respect" it expects of all employees. Potdevin started as the yoga-pants and athletic-wear company's chief executive in January 2014 to lead it out of a crisis sparked by the costly recall of thousands of stretchy black yoga pants customers complained were too sheer. Potdevin also resigned from the company's board, although the company declined to get into the specifics of what he did wrong. Analyst Neil Saunders, managing director of GlobalData Retail, said Lululemon needs to be more open about the departure to avoid speculation that could "ultimately harm the brand."