The daily business briefing: August 13, 2020
Tesla shares soar after stock-split announcement, media mogul Sumner Redstone dies at 97, and more
Tesla shares jump after stock-split announcement
Tesla shares surged by more than 13 percent on Wednesday, a day after the electric-car maker announced plans for a 5-to-1 stock split. Tesla's stock has gained more than 500 percent over the last year as the company reached profitability and hit many of its targets for deliveries of its first mass market car. Tesla's rise above $1,500 a share has generated interest, but a share split does nothing to change a stock's fundamentals. "Any value in the stock that's created by this is false," CNBC's Jim Cramer said on Squawk Box. "But I think the idea of getting newer, younger people involved into the stock market who aren't just brainwashed to put money into index funds is terrific."
Sumner Redstone dies at 97
Billionaire media mogul Sumner Redstone died Tuesday, his family's holding company, National Amusements, announced in a statement Wednesday. He was 97. Redstone built a media empire from National Amusements, a chain of drive-in theaters. Over several decades, he accrued holdings that included CBS, Paramount Pictures, Simon & Schuster, Blockbuster, and Viacom. At their peak, The New York Times reports, the businesses he controlled were worth more than $80 billion. The Wall Street Journal described Redstone as a "mercurial" figure who was known for feuding both with his top executives and his family members, earning him the nickname "Grumpy" from his own grandchildren. Barry Reardon, who oversaw distribution for the rival Warner Brothers studio, said in 1994 that being the "relentless" Redstone's competitor "is a fate worse than death."
Stocks flat after Wednesday's surge lifts S&P 500 near record
U.S. stock index futures were flat early Thursday after a Wednesday surge that left the S&P 500 just shy of a record close. The S&P 500 gained 1.4 percent on Wednesday with a boost from rebounding big technology stocks, with Apple, Amazon, and Microsoft rising by 3.3 percent, 2.6 percent, and 2.8 percent, respectively. Health-care shares also showed strength. The Dow Jones Industrial Average rose by nearly 1.1 percent, and the tech-heavy Nasdaq gained 2.1 percent. Investors are continuing to watch for progress in Washington talks on a new coronavirus relief package, which is expected to include revived extra unemployment benefits and a second stimulus check for individuals. "The market still wants, and very much expects, an actual stimulus bill to be signed," wrote Tom Essaye, editor of the Sevens Report.
Mnuchin, Pelosi trade blame for stalled COVID-19 relief talks
Treasury Secretary Steven Mnuchin unsuccessfully reached out to House Speaker Nancy Pelosi (D-Calif.) on Wednesday to restart stalled negotiations on a new coronavirus relief package. Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) accused the Trump administration of "refusing to budge" even though Democrats agreed to shave $1 trillion from the $3 trillion House-approved package, essentially meeting in the middle of the gap between the House plan and the $1 trillion Senate Republican proposal. Mnuchin disputed that account, saying Pelosi "made clear that she was unwilling to meet to continue negotiations unless we agreed in advance to her proposal, costing at least $2 trillion." He said the White House is ready to move forward with funding for schools, food, hospitals, and other priorities.
Trump payroll tax deferral too confusing, business group warns
The U.S. Chamber of Commerce on Wednesday warned in a letter to Treasury Secretary Steven Mnuchin that President Trump's push to help workers weather the coronavirus crisis by deferring Social Security payroll taxes could be unworkable. Trump told the Treasury on Saturday to defer the 6.2 percent Social Security tax on wages starting Sept. 1, leaving workers to pay the money back later. The Chamber's chief policy officer, Neil Bradley, said in a statement that Trump's move was "well-intended to provide relief," but that the policy remained "surrounded by uncertainty as to its application and implementation," which adds to the challenges facing companies and workers who "need clarity not more confusion" as they try to get through the coronavirus crisis.