The daily business briefing: February 11, 2021
Powell promises Fed support until low-income workers recover, Biden administration pauses Trump ban on TikTok, and more
Powell says Fed will keep rates low until low-income workers recover
Federal Reserve Chair Jerome Powell warned on Wednesday that published unemployment figures "have dramatically understated the deterioration in the labor market." America's unemployment rate during the coronavirus pandemic fell from a 14.8 percent peak in April to 6.3 percent in January. But Powell said that "the pandemic has led to the largest 12-month decline in labor force participation since at least 1948." Powell explained that numbers should factor in all the people who have been prevented from looking for work due to pandemic-related factors. Powell said the central bank would keep interest rates near zero and continue its asset purchases to stimulate the recovery until low- and moderate-income workers displaced during the COVID-19 pandemic recover, too.
Biden administration pauses Trump's pressure against TikTok
The Biden administration on Wednesday halted a push started by then-President Donald Trump to ban TikTok and force the sale of the Chinese-owned video-sharing app. Trump had tried to force TikTok's owner, Beijing-based ByteDance, to sell the app's U.S. operations to an American company, citing national security concerns. Software company Oracle teamed up with Walmart to work on a deal to acquire TikTok's U.S. business, but did not reach a final acquisition agreement. Chinese state media in September called Trump's push for a TikTok takeover "daylight robbery." Justice Department lawyer Casen Ross filed a motion in a federal appeals case indicating that the Biden administration might drop Trump's TikTok cases in federal court, saying the Justice Department was conducting "a review of the prohibitions at issue."
Uber reports narrower annual loss as Uber Eats soars, rides fizzle
Uber Technologies on Wednesday reported that its annual loss narrowed last year as cost cuts and a surge in demand for its food-delivery service offset the devastation of its ride-hailing business by the coronavirus pandemic. The San Francisco-based company said its net loss came to $6.76 billion in 2020, down from $8.5 billion the year before. Coronavirus lockdowns hammered ride demand, but people unable to go to restaurants flooded Uber Eats, the company's food-delivery arm, with orders. Still, revenue fell to $11.1 billion, a 14 percent drop compared to the previous year. But Uber helped offset the decline by cutting about a quarter of its staff and shedding non-core businesses, saving $1 billion in expenses.
Stock futures edge higher after Dow's latest record
U.S. stock index futures rose early Thursday following a volatile day of trading Wednesday. Futures for the Dow Jones Industrial Average were up by 0.2 percent several hours before the opening bell ahead of fresh employment data expected to indicate whether the labor market is recovering following the winter coronavirus surge. Futures for the S&P 500 and the Nasdaq gained 0.3 percent and 0.5 percent, respectively. The Dow closed at a record high on Wednesday, winding up the trading day 0.2 percent higher after swinging between gains and losses. It was the ninth day of the year in which the Dow has hit an intraday high. The S&P 500 and the tech-heavy Nasdaq also touched records during the day but closed with modest losses.
Tencent executive held by China in corruption investigation
Chinese authorities have detained an executive at Chinese tech giant Tencent Holdings as part of a high-profile corruption case, The Wall Street Journal reported late Wednesday, citing people familiar with the matter. The executive, Zhang Feng, has been under investigation since early last year on suspicion of sharing personal data from the company's WeChat social media app with former Vice Public Security Minister Sun Lijun, the sources told the Journal. The former security official is under investigation for violating Communist Party rules. Tencent confirmed Zhang was under investigation, saying the case "relates to allegations of personal corruption and has no relation to WeChat." Hong Kong-listed Tencent is China's largest public company, with a market capitalization of $900 billion.