Tuesday, May 21, 2024

Business Briefs for May 4, 2023

by Associated Press

European Central Bank slows pace of rate hikes but vows more

FRANKFURT, Germany (AP) — The European Central Bank has slowed the pace of its interest rate increases, stepping back like the U.S. Federal Reserve from a string of jumbo hikes aimed at snuffing out inflation. But the ECB also said Thursday that it’s “not pausing” even as its efforts are working by making mortgages and business loans harder to get. The quarter-point hike comes a day after the Fed approved the same increase but hinted that it may be the last for now. The central bank for the 20 countries that use the euro currency started later. ECB President Christine Lagarde says the bank has “more ground to cover, and we are not pausing.”

Regional bank shares sink in sign crisis not yet over

NEW YORK (AP) — Uncertainty continues to pummel the banking industry, despite assurances from financial regulators and bankers such as Jamie Dimon that the worst of the recent crisis is over and the banking system remains strong. Shares of smaller regional lender PacWest Bank plunged nearly 50% Thursday after the company confirmed reports that it was considering “strategic options” that may include the possible sale of the company. Investors fear that PacWest’s fate could mirror that of another California bank, First Republic, which spent weeks looking for a buyer before failing Monday. Regional banks such as Comerica and Zions also saw double-digit declines.

US claims for unemployment aid jump, but remain low

The number of Americans applying for unemployment benefits jumped last week but remain low overall, even as the Federal Reserve has furiously raised interest rates to beat down inflation and cool the labor market. The Labor Department reported Thursday that applications for jobless claims for the week ending April 29 rose to 242,000 from 229,000 the previous week. The weekly claims numbers are considered a proxy for layoffs. The four-week moving average of claims, which flattens some of the week-to-week volatility, rose by 3,500 to 239,250. American workers are enjoying unusual job security despite rising interest rates and economic uncertainty.

Stock market today: Wall Street falls as banks tumble again

NEW YORK (AP) — Stocks are falling as Wall Street’s worries about the U.S. banking system crank even higher. The S&P 500 was 0.7% lower in early Thursday trading as several market-moving forces swirled, from the latest rate increase by the European Central Bank to a report indicating more U.S. workers got laid off last week than expected. PacWest Bancorp tumbled more than 40% as investors look for the next weak link following several large U.S. bank failures. Other smaller and mid-sized banks were also falling. Helping to limit the market’s losses were several companies reporting better profits than expected.

Democrats pressure GOP on debt limit, spending cuts

WASHINGTON (AP) — Senate Democrats are looking to pressure Republicans into resolving the impasse on the debt ceiling. The Democrats are holding a hearing Thursday to examine a debt limit bill recently passed by the Republican majority in the House. They say that bill would force painful cuts in government services if it becomes law. It’s just the latest jousting in Congress over the debt limit, a legal limit on government borrowing that has been raised repeatedly in recent years. Urgency around the issue intensified this week as the Treasury Department announced that the “extraordinary measures” being used to avoid a devastating government default could run out on June 1.

Shopify narrowing its ambition, sells Deliverr, cuts staff

NEW YORK (AP) — Shopify is selling the two biggest pieces of its fulfillment network and abandoning its logistics ambitions. The company also said Thursday it will lay off about 20% of its workforce, the second mass layoff its had in less than a year. The changes are also a remarkable reversal following the Canadian company’s multiyear effort to build its own warehousing and delivery services. But investors welcomed the company’s move to focus more on its retail business, sending shares up 17% in premarket trading.

Fed raises key rate but hints it may pause amid bank turmoil

WASHINGTON (AP) — The Federal Reserve reinforced its fight against high inflation by raising its key interest rate by a quarter-point to the highest level in 16 years. But the Fed also signaled that it may now pause its streak of 10 rate hikes, which have made borrowing for consumers and businesses steadily more expensive. In a statement after its latest policy meeting, the Fed removed a sentence from its previous statement that had said “some additional” rate hikes might be needed. It replaced it with language that said it will weigh a range of factors in “determining the extent” to which future hikes might be needed.

Shell posts $9.6 billion profit even as energy prices slide

LONDON (AP) — Global energy giant Shell says it earned nearly $10 billion in the first quarter, becoming the latest fossil fuel company to post strong financial results despite sliding oil and gas prices. London-based Shell on Thursday reported adjusted earnings of $9.6 billion in the first three months of 2023, up 5.7% from a year ago. The company says it faced headwinds from higher taxes and lower prices for selling oil and natural gas, as energy prices have eased after spiking following Russia’s invasion of Ukraine last year. Shell says those factors have been offset by cutting operating expenses and better trading results.

Volkswagen sees sales slump in China, vows rebound this year

FRANKFURT, Germany (AP) — Volkswagen profits fell 30% in the first three months of the year despite booming business in Europe and North America. That’s because sales fell in China, where the German company is facing increasing competition from homegrown models. VW reported Thursday that after-tax profit fell to 4.7 billion euros from 6.7 billion euros in the first quarter of last year. Sales revenue jumped by 21.5%, to 76.2 billion euros, as the company saw strong demand. But the company sold 14.5% fewer vehicles in China, the world’s largest car market. Chinese competitors such as BYD are rapidly developing new electric and hybrid vehicles at competitive price points and competing with foreign brands.

Ban social media for kids? Fed-up parents in Senate say yes

WASHINGTON (AP) — Legislation introduced by four senators aims to prohibit all children under the age of 13 from using social media and would give parents more control over what teenagers under the age of 18 can access. The two Democrats and two Republicans are parents of young children and teenagers. The senators said in a joint interview with The Associated Press that they’re representative of millions of American parents who are gravely worried that social media companies are largely unchecked in what they can serve up to their children. The bipartisan bill comes as there is increasing desire in Congress to regulate social media companies.

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