The daily business briefing: May 3, 2018
The Federal Reserve leaves interest rates unchanged, Cambridge Analytica shuts down after Facebook privacy scandal, and more
Fed leaves benchmark interest rate unchanged
The Federal Reserve held interest rates unchanged at the close of a two-day policy meeting on Wednesday, as expected. The central bank's leaders signaled that their next rate hike would come in June, expressing confidence that inflation would remain where policy makers want it after rising recently to the Fed's 2 percent target. The decision to hold interest rates steady between 1.5 percent and 1.75 percent was unanimous. U.S. stocks jumped immediately after the announcement, then fell. The Dow Jones Industrial Average and the S&P 500 declined by 0.7 percent and the Nasdaq Composite fell by 0.4 percent. "The market continues to struggle with conflicting forces, including awesome earnings, higher rates, and fears of a trade war," said Crit Thomas, global market strategist at Touchstone Investments.
Cambridge Analytica is shutting down
Data-mining firm Cambridge Analytica shut down all operations Wednesday, reports The Wall Street Journal. The firm and its parent company have reportedly struggled to recover from the controversy over its misuse of Facebook user data, losing clients and getting buried in legal fees in recent months. Cambridge Analytica, known for working on data analytics for President Trump's 2016 campaign, came under fire when reports revealed that it had improperly obtained data from more than 80 million Facebook users. The company's chief executive, Alexander Nix, was suspended in March after a video showed him bragging about entrapping politicians as a business tactic. The company said it did nothing wrong, blaming a "siege of media coverage" for driving away customers.
Black men arrested at Philadelphia Starbucks settle with company, city
Two African-American men arrested for sitting at a Philadelphia Starbucks without ordering anything last month reached settlements Wednesday with the coffee chain and the city. The men, business partners Rashon Nelson and Donte Robinson, settled with Starbucks for an undisclosed sum and an offer to cover their tuition as they finish their college studies. They declined to sue the city in exchange for a symbolic $1 payment and an agreement to fund $200,000 for a grant program for high school students who are aspiring entrepreneurs. "We thought long and hard about it, and we feel like this is the best way to see that change that we want to see," Robinson said.
Tesla beats expectations but shares fall after Musk remarks
Tesla reported on Wednesday a quarterly net loss of $785 million, a record for the electric car company but still better than analysts expected. Tesla CEO Elon Musk said the company was on the verge of turning a corner that depends on meeting a revised production goal of 5,000 per week for its first mass-market car, the Model 3. "Our understanding of production is improving dramatically, exponentially in fact," he said in a conference call with analysts. The call turned sour, however, as Musk cut off analysts asking about profit potential. He criticized some of analysts' questions as "dry" and "boring." Tesla shares dropped sharply during the call, losing 5 percent and trimming Tesla's market capitalization by $2 billion.
NYT: Redskins cheerleaders say they endured sexist exploitation
Washington Redskins cheerleaders were often put in exploitative situations that appeared to be team-sanctioned, The New York Times reported Wednesday, citing comments from former cheerleaders. In one case, some cheerleaders were required to pose topless or nude during a 2013 photoshoot in Costa Rica while an all-male group of sponsors the team had invited was "skeezing around in the background," one woman said. Some of the cheerleaders were assigned to escort male sponsors to a club that night. "They weren't putting a gun to our heads, but it was mandatory for us to go," one cheerleader said. The team said in a statement that "each Redskin cheerleader is contractually protected to ensure a safe and constructive environment."