The daily business briefing: February 13, 2018
Stocks post their second straight day of strong gains, Trump unveils a budget that boosts the military and the deficit, and more
Stocks post second day of strong gains, but futures droop
Global stocks came back strong on Monday after last week's sharp dive, which came after rising inflation stoked fears that the Federal Reserve would increase the pace of its interest rate hikes. The Dow Jones Industrial Average closed up by 410 points, or 1.7 percent. The S&P 500 and Nasdaq Composite also rose by more than 1 percent. Analysts warned that stocks would likely remain volatile, and a third straight day of gains appeared in doubt as U.S. stock futures fell early Tuesday. Jeff Schulze, investment strategist at ClearBridge Investments in New York, said stocks could drop some more, but that the economy's fundamentals were strong. "I do believe we haven't seen the low, we're pretty close to it and that this is a buying opportunity, just longer term in nature," Schulze said.
Trump unveils budget that would boost military, slash social programs
President Trump on Monday unveiled a $4.4 trillion budget proposal that would hike defense spending, slash social programs, and drive the annual deficit to $1 trillion, scrapping promises to balance the budget. Trump's budget plan acknowledges that the GOP tax cut package passed last year will increase shortfalls and won't "pay for itself" as Trump and GOP lawmakers claimed. Presidents' budgets rarely stand a chance of passing, but they provide a map of priorities. Over a decade, Trump's budget would slash $1.7 trillion in spending on domestic programs that help the poor and middle class, including food stamps and student loans. Trump also proposed separately an infrastructure plan counting on states to foot all but $200 billion of the $1.5-trillion bill.
Amazon trims staff in shift to fast-growing businesses
Amazon is making rare staff cuts, laying off hundreds of employees after years of rapid growth, The Seattle Times reported on Monday. The layoffs, mostly at the Seattle headquarters, are focused in Amazon's consumer retail business, which includes toys and books, to allow for shifting resources to growing units such as Alexa and digital entertainment. Amazon went from 5,000 workers in Seattle in 2010 to more than 40,000 now, and it said hiring would continue despite trimming in some areas. "As part of our annual planning process, we are making head count adjustments across the company — small reductions in a couple of places and aggressive hiring in many others," a spokesman said.
Facebook loses young users despite overall growth
Facebook is losing young users faster than previously believed, according to a report released Monday by eMarketer. The social network's tally of users between 12 and 17 years of age fell by 9.9 percent in 2017, exceeding the 3.4 percent drop the digital measurement firm had predicted for that demographic. The 9.9 percent decline represents a loss of about 1.4 million users, leaving Facebook with about 12.1 million users in the 12- to 17-year-old age group at the end of 2017. In 2018, eMarketer said, less than half of internet users ages 12 to 17 will use Facebook at least once a month. Facebook will lose 2 million users under age 24, while Instagram will add 1.6 million and Snapchat will pick up 1.9 million, eMarketer said. Facebook, which continues to gain users overall, declined to comment on the report.
Blue Apron shares jump on smaller-than-expected quarterly loss
Blue Apron shares jumped by about 8 percent in pre-market trading on Tuesday after it reported quarterly losses that weren't as deep as predicted. The meal-kit subscription company had to slash marketing after a costly distribution hub switch, and its customer total fell to 746,000 from 856,000 in the prior quarter and 879,000 a year earlier. The company's revenue was $187.7 million, down 13 percent from a year earlier but beating expectations of $185.1 million. The company's quarterly loss of 20 cents per share was lower than the anticipated 27 cents per share. The company is facing tough competition from other meal subscription services, as well as from Amazon.