The daily business briefing: September 16, 2019
Oil prices jump after drone attack disrupts Saudi oil production, UAW union goes on strike against General Motors, and more
Oil prices surge after attack disrupts Saudi production
Oil prices jumped by 15 percent on Sunday after weekend drone attacks on key oil production facilities in Saudi Arabia. Half of the country's oil production was halted, and a damage assessment is expected on Monday. The ongoing impact on oil prices and gasoline prices will depend on how bad the damage is and how long repairs take, industry analysts said. Saudi Arabia's stock market also was shaken by the news, and fell on Sunday. Houthi rebels in Yemen claimed responsibility for the attacks, but Secretary of State Mike Pompeo said there is "no evidence the attacks came from Yemen." U.S. officials have instead pointed the finger at Iran, but Tehran has denied involvement. President Trump said the U.S. is "locked and loaded" but waiting to decide how to react until after Saudi Arabia determines definitively who was behind the strikes.
UAW union goes on strike against General Motors
United Auto Workers went on strike against General Motors on Monday following the collapse of talks on a new contract over differences on pay and health-care benefits. The union represents more than 46,000 GM workers at 55 U.S. facilities. This is the UAW's first national strike since 2007. UAW contracts with Ford and Fiat Chrysler were extended while negotiations with those automakers continue. GM said Sunday the auto company's offer to the union includes more than $7 billion in investments, more than 5,400 jobs, higher pay, and improved benefits, but union leaders said the sides are far apart on economic issues, despite some progress being made in the negotiation.
Purdue Pharma files for bankruptcy
Purdue Pharma filed for bankruptcy Sunday days after reaching a tentative settlement with many of the state and local governments that accuse the drug manufacturer of fueling the opioid crisis. The settlement reportedly could be worth $12 billion. The Sackler family, which owns the company, agreed to pay at least $3 billion and relinquish control of the company. Some of Purdue's legal battles are continuing. About half of the states declined to sign onto the settlement, which is expected to lead to the end of the company. Purdue's profitable and highly addictive painkiller OxyContin has been closely linked to the opioid epidemic. Purdue Pharma marketed the time-released opioid as a safer narcotic painkiller, but it was blamed for a rise in addiction and overdose deaths.
Stock futures fall as oil prices surge
U.S. stock index futures fell early Monday after a drone strike on Saudi oil facilities disrupted production and sent oil prices rising sharply, stoking fears of a global economic slowdown. Futures for the Dow Jones Industrial Average, which gained in the last eight straight sessions, were down by about 0.4 percent. Futures for the S&P 500 and the Nasdaq also fell as oil prices jumped by as much as 15 percent. U.S. benchmark West Texas Intermediate futures were up by more than 11 percent early Monday. President Trump tweeted Sunday that he had authorized releasing oil from the U.S. Strategic Petroleum Reserve if necessary to keep the market "well-supplied."
Fed expected to cut interest rates again this week
The Federal Reserve is expected to cut interest rates by another 25 basis points at a two-day meeting this week. The Fed already reduced its benchmark short-term interest rate to a range from 2 percent to 2.25 percent in July as it seeks to stimulate a slowing economy. Economists are expecting the central bank to reduce its target range to 1.5 percent-1.75 percent by the end of the year, then leaving it there. Bloomberg said it expected Fed policy makers to steadily make quarter-point cuts until long-term bond yields are securely higher than those of short-term bonds. Yield curve inversions like the recent one often signal a looming recession.