The daily business briefing: December 28, 2018

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1. Stocks rebound from early losses as volatility continues
2. Sears faces deadline with survival at stake
3. Jobless claims fall for third time in four weeks
4. Minimum wage set to rise in 20 states on Jan. 1
5. Shutdown drags on as economists warn delay could worsen market turmoil

published 28 December 2018

1. Stocks rebound from early losses as volatility continues

U.S. stocks pared earlier losses near the end of trading on Thursday in a tumultuous day following Wednesday's record gains. Stocks plunged early Thursday after a measure of U.S. consumer confidence posted its sharpest decline in more than three years. The Conference Board said its consumer confidence index fell by 8.3 points to 136.4 in December, the largest one-month drop since July 2015. The news stoked fears that a global economic slowdown will spread into the U.S., but the Dow Jones Industrial Average shook off the concerns and closed up by 1.1 percent. The S&P 500 gained 0.85 percent and the Nasdaq Composite was up by 0.4 percent. Futures pointed to further gains early Friday.

Struggling retail icon Sears could face liquidation and be broken into pieces if its chairman, Eddie Lampert, doesn't submit a valid bid to buy the company out of bankruptcy by a Friday deadline. Lampert has a $4.6 billion proposal to buy the company through his hedge fund, ESL Investments, and he's the only one offering to buy all of Sears, which employs more than 68,000 people. On the eve of the deadline, however, he had neither submitted his bid nor rounded up financing, CNBC reported, citing people familiar with the situation. If Lampert, already Sears' largest investor, submits the offer, Sears' advisers have until Jan. 4 to determine whether he is a "qualified bidder" to allow his hedge fund to participate in an auction against liquidation bids on Jan. 14.

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Claims for unemployment benefits fell by 1,000 to 216,000 last week, the Labor Department reported Thursday. The drop was the third in four weeks, adding to mounting evidence of a strong job market. The four-week average, which is considered a more reliable and less-volatile measure, dropped to a six-week low. Economists say employers are doing what they can to hold onto staff, showing unwillingness to fire people in such a tight job market. The employment picture is helping to support consumer spending, the biggest part of the economy, despite a trade war with China that is affecting businesses.

The minimum wage will increase in 20 states on Jan. 1, from a boost of five cents an hour in Alaska to $1.50 more an hour in New York City, where the minimum for most non-service jobs is rising gradually toward $15 an hour. In November, voters in Missouri and Arkansas passed ballot measures to increase their minimum wages, while increases in 18 other states were set by inflation adjustments or legislation that had already passed. At least five million Americans will see a raise, the Economic Policy Institute said. It has been nearly 10 years since Congress last increased the federal minimum wage, to $7.25 per hour.

Congress returned to session on Thursday but made little or no progress toward ending a shutdown affecting roughly a quarter of the federal government. Republicans all but abandoned hope of reopening the government before the new year, leaving Democrats, who take control of the House next week, to resolve an impasse over President Trump's demand for $5 billion for his promised wall on the U.S.-Mexico border. "We will vote swiftly to reopen government and show that Democrats will govern responsibly in stark contrast to this chaotic White House," House Democratic leader Nancy Pelosi (D-Calif.) said in a statement. Economists say a short government shutdown probably won't do much harm to the economy, but a prolonged spending battle in a period of market volatility could worsen the economic outlook.

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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.