Business Highlights: Powell’s message, bank CEOs in Senate
Powell’s stark message: Inflation fight may cause recession
WASHINGTON (AP) — The Federal Reserve delivered its bluntest reckoning Wednesday of what it will take to finally tame painfully high inflation: Slower growth, higher unemployment and potentially a recession. Speaking at a news conference, Chair Jerome Powell acknowledged what many economists have been saying for months: That the Fed’s goal of engineering a “soft landing” — in which it would manage to slow growth enough to curb inflation but not so much as to trigger a recession — looks increasingly unlikely. “The chances of a soft landing,” Powell said, “are likely to diminish” as the Fed steadily raises borrowing costs to slow the worst inflation in four decades.
Wall Street ends lower as global central banks raise rates
NEW YORK (AP) — Stocks closed lower on Wall Street, deepening their losses for the week, as central banks around the world raised interest rates to fight inflation. The S&P 500 fell 0.8% Thursday. The Dow Jones Industrial Average fell about half as much, and the Nasdaq composite lost 1.4%. Central banks in Europe and Asia increased rates a day after the Federal Reserve made another big rate hike and signaled more were on the way. The goal is to cool down economies by making it more expensive to borrow money. The yield on the 2-year Treasury, which tends to follow expectations for Fed action, rose significantly.
Bank of England raises rates but avoids bolder hike like Fed
LONDON (AP) — The Bank of England has raised its key interest rate by another half-percentage point. Despite facing inflation that outpaces other major economies, the Bank of England avoided more aggressive hikes made by the U.S. Federal Reserve and other central banks. The U.K. bank on Thursday raised its benchmark rate to the highest level in 14 years. It’s the seventh straight move to increase borrowing costs as rising food and energy prices fuel a cost-of-living crisis that’s considered the worst in a generation. Despite facing a slumping currency, tight labor market and inflation near its highest in four decades, officials held off on acting more boldly as they predicted a second consecutive drop in economic output this quarter.
Bank CEOs questioned on consumer protections, social issues
NEW YORK (AP) — The CEOs of the nation’s biggest banks returned to Capitol Hill for a second day Thursday, and Senate Democrats strongly urged them to do more to help and protect their customers, while Republicans questioned whether banks should weigh in on hot-button social issues. The bank leaders testified at a time when prices for food and other necessities are the highest in decades. JPMorgan Chase’s Jamie Dimon, Citigroup’s Jane Fraser and five other chief executives repeated the message they gave to a House panel Wednesday: The U.S. consumer is in relatively good shape but faces threats from high inflation and rising interest rates.
Ford shuffles management, seeks new global supply chain head
DETROIT (AP) — Ford is restructuring its vehicle development and supply chain operations, shuffling multiple executives just days after announcing that it would build up to 45,000 vehicles with parts missing due to shortages. The Dearborn, Michigan, automaker gave some executives new roles and said that its chief financial officer will begin reworking supply chain operations until a new global purchasing chief is hired. The moves come at a time of profound change for Ford and the auto industry, which for more than a century have made a living by selling petroleum-powered vehicles. The company has plans for half of its global production to be electric vehicles by 2030, but like its main competitors, Ford will need to keep selling gas-burning vehicles to fund the massive transition.
Facebook violated rights of Palestinian users, report finds
MENLO PARK, Calif. (AP) — Actions by Facebook and its parent Meta during last year’s Gaza war violated the rights of Palestinian users to freedom of expression, freedom of assembly, political participation and non-discrimination. That’s according to a new report commissioned by the social media company. The report confirms long-standing criticisms of Meta’s policies and their uneven enforcement as it relates to the Israeli-Palestinian conflict. Written by the independent consulting firm Business for Social Responsibility, the report found that Meta over-enforced rules when it came to Arabic content and under-enforced content in Hebrew. But the report did not find intentional bias at Meta, either by the company as a whole or among individual employees.
FTC says Bezos, Jassy must testify in probe of Amazon Prime
WASHINGTON (AP) — Federal regulators are ordering Amazon founder Jeff Bezos and CEO Andy Jassy to testify in the government’s investigation of Amazon Prime. The regulators rejected the company’s complaint that the executives are being unfairly harassed in the probe of the popular streaming and shopping service. The Federal Trade Commission issued an order denying Amazon’s request to cancel civil subpoenas sent in June to Bezos, the Seattle-based company’s former CEO, and Jassy. The order also sets a deadline of Jan. 20 for the completion of all testimony by Bezos, Jassy and 15 other senior executives, who also were subpoenaed.
Boeing pays $200 million to settle SEC charges over 737 Max
Boeing will pay $200 million to settle charges that it misled investors about the safety of its 737 Max jets after two of the planes crashed, killing 346 people. The Securities and Exchange Commission announced the settlement Thursday. The SEC charged Boeing and former CEO Dennis Muilenburg with making significant misleading public statements. Neither Boeing nor its former CEO admitted wrongdoing, but they are agreeing to orders that include penalties of $200 million for Boeing and $1 million for Muilenburg. The SEC says Boeing and the former CEO both knew that an automated flight system on the plane posed a safety issue, but they promised the public that the plane was safe.
The S&P 500 dropped 31.94 points, or 0.8%, to 3,757.99. The Dow Jones Industrial Average fell 107.10 points, or 0.4%, to 30,076.68. The Nasdaq slipped 153.39 points, or 1.4%, to 11,066.81. The Russell 2000 index of smaller companies shed 39.85 points, or 2.3%, to 1,722.31.