The daily business briefing: April 6, 2021
Stock futures fall after Dow and S&P 500 hit record highs, Credit Suisse took $4.7 billion hit from hedge fund collapse, and more
Dow, S&P 500 surge to record highs
Strong economic data boosted the Dow Jones Industrial Average and S&P 500 to record highs on Monday. The Dow gained 1.1 percent to close at 33,527. The S&P 500 rose by 1.4 percent, and the tech-heavy Nasdaq jumped by 1.7 percent. The main U.S. stock indexes also rose on Friday after the Labor Department announced that the economy had added 916,000 jobs in March, smashing expectations. The gains also were fueled by optimism about the accelerating pace of coronavirus vaccinations, and easing pandemic-related restrictions on businesses in many states. The 10-year Treasury yield remained below a 14-month high reached last week, easing fears of inflation. U.S. stock index futures fell slightly early Tuesday.
Credit Suisse says hedge-fund collapse cost it $4.7 billion
Credit Suisse announced Tuesday that it had suffered $4.7 billion in losses from the Archegos Capital Management meltdown. The Swiss lender was hit hardest by the collapse of Archegos Capital, a U.S. hedge fund. "The significant loss in our Prime Services business relating to the failure of a U.S.-based hedge fund is unacceptable," CEO Thomas Gottstein said in a trading update. The company also said that Investment Bank CEO Brian Chin and Chief Risk and Compliance Officer Lara Warner would step down, effective immediately. Gottstein will stay on. Christian Meissner will take over the investment bank, Credit Suisse said. Meissner is a Bank of America and Goldman Sachs veteran Credit Suisse hired last year to head a new unit connecting its wealthiest clients to its investment bank.
Manchin: Biden infrastructure bill's corporate tax hike too steep
Sen. Joe Manchin (D-W.Va.), a moderate Democrat now holding a key swing vote in the 50-50 Senate, said he opposed the corporate tax hike President Biden wants to help pay for his $2 trillion infrastructure plan. Biden's proposal calls for raising the corporate tax rate to 28 percent from 21 percent. Manchin said the rate should have "never been below [25 percent]," indicating that he would be comfortable with raising it to that level. Manchin said there were "six or seven other Democrats who feel very strongly about this." Senate Minority Leader Mitch McConnell (R-Ky.) has vowed to fight the plan, a sign that no Republicans will vote for it. That means Democrats will need Manchin and every other member of their caucus on board, which means the bill will face changes before a vote.
Cinema stocks surge after strong Godzilla vs. Kong debut
Movie-theater stocks surged on Monday after Godzilla vs. Kong posted the strongest Hollywood debut for any film released since the coronavirus pandemic shut down cinemas across the country. AMC shares rose by 13 percent on Monday, closing 15 percent higher than they were when the film debuted last Wednesday. Related stocks, including Cinemark, Marcus, and IMAX all rose by 3 percent to 6 percent. London-based Regal Cinemas owner Cineworld rose by 4 percent. Godzilla vs. Kong's strong theater debut was seen as a particularly encouraging sign for cinemas because the film also was available to HBO Max customers for streaming. Studio Warner Bros. owner AT&T gained about 1 percent on Monday.
McConnell warns corporations against acting like 'woke parallel government'
Senate Minority Leader Mitch McConnell (R-Ky.) warned that corporate America would face "serious consequences" if companies continued pushing back against measures adopted by conservative lawmakers like "a woke parallel government." "Our private sector must stop taking cues from the Outrage-Industrial Complex," McConnell said. "Americans do not need or want big business to amplify disinformation or react to every manufactured controversy with frantic left-wing signaling." The comments by McConnell and other Republicans came after Major League Baseball canceled plans to hold its All-Star Game in Georgia after the state enacted a new election law that critics said would make it harder for some people to vote, especially African Americans. Several companies, including Coca-Cola and Delta Airlines, also have condemned the law.