The daily business briefing: March 24, 2021
Fed Chair Jerome Powell says stimulus package won't cause inflation problem, stuck vessel blocks Suez Canal shipping traffic, and more
Fed chair says new stimulus package unlikely to cause inflation problem
Federal Reserve Chairman Jerome Powell said in a Tuesday congressional hearing that he didn't expected the new $1.9 trillion coronavirus relief package to increase inflation enough to create problems. "Our best view is that the effect on inflation will be neither particularly large or persistent," Powell said, adding that the central bank has ways to fight rising prices if it needs to. The Fed has kept its benchmark short-term interest rate near zero and made monthly bond purchases to boost the economy after the devastation caused by lockdowns imposed to fight the pandemic last year. Most Fed policy makers don't think they will raise rates through 2023. They also expect to continue buying $120 billion in Treasury debt monthly.
Container ship wedged sideways blocks Suez Canal shipping traffic
A massive cargo ship got stuck sideways in Egypt's Suez Canal on Tuesday, blocking traffic in one of the world's busiest shipping routes. Nearly every vessel traveling from Asia to Europe, or about 10 percent of global shipping traffic, goes through the man-made, 120-mile waterway dividing continental Africa from the Sinai Peninsula. The MV Ever Given, a Panama-flagged container ship, ran aground on its way to China from Rotterdam in the Netherlands as a sandstorm hit, reducing visibility and buffeting the ship with high winds. George Safwat, a spokesman for the authority overseeing the canal, said the sandstorm caused an "inability to direct the ship." The incident threatened to further burden a shipping industry already hit hard by the coronavirus pandemic.
Elon Musk says Tesla will accept payment in bitcoin
Tesla CEO Elon Musk said Wednesday that the company would now accept bitcoin as payment for its electric vehicles. "You can now buy a Tesla with bitcoin," Musk tweeted. He said the option will be available outside the United States within months. Tesla has been one of a growing number of companies that have embraced the surging cryptocurrency recently. The electric-car maker said last month that it had bought $1.5 billion of bitcoin and would move toward accepting it as payment. After Tesla's move, Uber, Twitter, and several other companies weighed in on bitcoin. Uber Chief Executive Dara Khosrowshahi said the ride-hailing company had dismissed the possibility of investing in bitcoin, but might accept it as payment.
Stock futures edge higher ahead of more Powell testimony
U.S. stock index futures made modest gains early Wednesday ahead of a second day of congressional testimony by Federal Reserve Chair Jerome Powell. Futures for the Dow Jones Industrial Average and the S&P 500 were up by about 0.3 percent several hours before the opening bell. Futures for the tech-heavy Nasdaq gained about 0.8 percent. The three main U.S. indexes fell on Tuesday as investors continued to express concerns that rising COVID-19 cases in some countries could threaten the global economic recovery. Others are worried that many stocks are overvalued. "Gains are going to be much harder to come by for the rest of the year," said Brian O'Reilly, head of market strategy for Mediolanum International Funds.
GameStop shares plunge after news of possible share sale
GameStop shares dropped by 12 percent in after-hours trading on Tuesday after the mostly brick-and-mortar video game retailer said it was considering selling additional equity shares to finance a shift to online sales. GameStop has seen its stock skyrocket recently as bullish investors on Reddit battled with investors who were betting the struggling company's stock would fall. In its first quarterly report since the trading mania, GameStop said its quarterly earnings came in at $1.34 per share on $2.12 billion in revenue, just short of the $1.35 per share and $2.21 billion in revenue predicted on average by six Refinitiv analysts. The company said it lost $215 million in the 12 months ended Jan. 30 due to pandemic shutdowns and its transformation costs.