The daily business briefing: December 18, 2018

Johnson &amp; Johnson products on a store shelf

(Image credit: FREDERIC J. BROWN/AFP/Getty Images)

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1. Dow struggles to bounce back in worst December in years
2. CBS says Les Moonves won't get severance after sexual misconduct allegations
3. Johnson & Johnson announces buy-back of battered shares
4. Theresa May says postponed Brexit vote scheduled for Jan. 14
5. Fed to start meeting expected to end Wednesday with rate hike

published 18 December 2018

1. Dow struggles to bounce back in worst December in years

The Dow Jones Industrial Average plunged by 2.1 percent on Monday, adding to declines that have made December its worst month since 2010. The S&P 500 dropped 2 percent, and the tech-heavy Nasdaq Composite sank by 2.2 percent. December usually sees a "Santa Claus rally" fueled by holiday spending, but this year markets could see their worst December since the Great Depression as they are battered by U.S.-China trade tensions and evidence of a slowdown in China that could hurt global economic growth. Investor concerns were fueled Monday by a looming rate hike by the Federal Reserve and uncertainty following a judge's ruling that the Affordable Care Act is unconstitutional. Futures for the three main U.S. stock indexes rose by 0.3 percent or more early Tuesday.

CBS said Monday that its ousted former chief executive, Leslie Moonves, would not receive his $120 million severance because he misled the company about allegations of sexual misconduct he faced and tried to hide evidence in a bid to hold onto his exit package. "We have determined that there are grounds to terminate for cause, including his willful and material misfeasance, violation of company policies and breach of his employment contract, as well as his willful failure to cooperate fully with the company's investigation," the broadcasting giant's board said in a statement. The decision came after board members reviewed information provided by lawyers hired to investigate the allegations.

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Johnson & Johnson announced Monday that it would buy back $5 billion worth of its stock, sending its shares rising by about 0.8 percent in after-hours trading. The company's stock has struggled since reports last week that it knew of asbestos in its baby powder. CEO Alex Gorsky said the decision to buy back shares was based on "our continued strong performance and, more importantly, the confidence we have in our business going forward." Johnson & Johnson's stock fell by 10 percent on Friday after Reuters reported that the company's baby powders had at times tested positive for asbestos, a carcinogen, between 1971 and the early 2000s. More than 10,000 people are claiming in courts that the company's powders caused their cancers.

British Prime Minister Theresa May on Monday said that the postponed parliamentary vote on her government's Brexit agreement with the European Union will be held the week of Jan. 14. The one-month delay will put the vote just 10 weeks ahead of the U.K.'s scheduled departure from the trading bloc. May postponed the vote on her unpopular deal because she knew it would have been rejected. She has since sought concessions from European leaders, but they have said they will not renegotiate the terms of the agreement. May survived a no-confidence vote on her government last week, but Jeremy Corbyn, leader of the main opposition Labor Party, raised the possibility of a motion of no-confidence against May personally over the delays, although unlike last week's vote it would not threaten her job.

Federal Reserve policy makers on Tuesday start a two-day policy meeting that is expected to end with another quarter-point interest rate hike. President Trump on Monday urged the Fed to leave its benchmark rate unchanged to avoid slowing down the economy. "It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!" Trump tweeted on Monday. Wall Street traders have put the odds of another rate hike on Wednesday at nearly 80 percent. Interest rate hikes are meant to keep inflation in check, but they also can slow the economy by raising borrowing costs.

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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.