The daily business briefing: May 20, 2021
Bitcoin plunges in cryptocurrency crash, Fed leaders say time to discuss tapering bond-buying is near, and more
Bitcoin drops sharply as selloff accelerates
Bitcoin's price plunged by as much as 30 percent on Wednesday as its selloff picked up speed. The leading cryptocurrency went on a tear earlier in the year, peaking at $64,829 in mid-April as it gained acceptance as an investment and more companies started accepting it as a form of payment. It fell as low as $30,202 on Wednesday before closing at $38,802, a 10 percent drop on the day. "Many people have been tempted to invest purely because it has gone up in value and they have a fear of missing out," said Rick Eling, investment director at wealth management firm Quilter. "Bitcoin is a volatile asset, and as we have seen so often in financial markets, boom is almost always followed by bust."
Minutes suggest Fed leaders could soon discuss slowing bond-buying
Federal Reserve leaders in April discussed the possibility of preparing to reduce monthly bond purchases that keep interest rates down in response to the economy's rapid rebound from the coronavirus pandemic, according to minutes of the meeting released Wednesday. A recent jump in inflation raised concerns that the central bank might dial back its efforts to stimulate the economy so it doesn't overheat. "A number of participants suggested that if the economy continued to make rapid progress toward the committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases," the minutes said. The Fed currently buys $120 billion in bonds monthly.
Colonial Pipeline CEO confirms company paid hackers $4.4 million
Colonial Pipeline paid hackers a $4.4 million ransom to restore its computer network so it could resume East Coast fuel deliveries, Colonial CEO Joseph Blount said in an interview with The Wall Street Journal published Wednesday, acknowledging the payment publicly for the first time. He said the company decided to pay because it didn't know how bad the breach was or how long it would take to get the pipeline back in operation on its own. The cyberattack forced the pipeline to shut down, triggering panic buying and fuel shortages in the Southeast and mid-Atlantic, and sending pump prices rising. Blount said the decision to pay the ransom was "the right thing to do for the country."
Stock futures fall as tech shares continue to struggle
U.S. stock index futures fell early Thursday as technology stocks showed continuing weakness. Futures for the Dow Jones Industrial Average were down by 0.6 percent several hours before the opening bell. Futures tied to the S&P 500 and the tech-heavy Nasdaq fell by 0.5 percent. Shares of tech giants Facebook, Microsoft, Netflix, and Intel were down in pre-market trading. Shares of networking hardware maker Cisco fell by 6 percent in pre-market trading after the company issued current-quarter guidance that fell short of expectations. Bitcoin's sudden drop dragged down several companies with investments or other ties to the cryptocurrency, including Tesla. The Dow is coming off its third straight day of losses as the cryptocurrency crash and the Federal Reserve's talk of tapering its economy-boosting bond-buying put investors on edge.
Zhang stepping down as ByteDance CEO
ByteDance CEO Zhang Yiming is stepping down as leader of the TikTok-owner and handing over the job to his college roommate and longtime colleague Liang Rubo, who has been serving as head of human resources for the Chinese company. Zhang made ByteDance into a social media powerhouse, but he said in the memo that he lacked skills managers need because "I'm not very social, preferring solitary activities like being online, reading, listening to music, and contemplating what may be possible." He said the change would let him focus more on research and innovation. "I'm more interested in analyzing organizational and market principles, and leveraging these theories to further reduce management work, rather than actually managing people," he wrote in the memo.