Business Highlights: Fed’s rate hike, Wall Street’s tumble
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Fed raises key rate by quarter-point despite bank turmoil
WASHINGTON (AP) — The Federal Reserve extended its year-long fight against high inflation by raising its key interest rate a quarter-point despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system. “The U.S. banking system is sound and resilient,” the Fed said in a written statement. At the same time, the Fed warned that the financial upheaval stemming from the collapse of two major banks is “likely to result in tighter credit conditions” and “weigh on economic activity, hiring and inflation.” The Fed also signaled that it’s likely nearing the end of its aggressive series of rate hikes.
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Stocks fall, bond yields tumble after Fed’s latest rate hike
NEW YORK (AP) — Stocks fell sharply after the Federal Reserve said it doesn’t expect to cut rates anytime soon despite Wall Street’s hopes. But it also indicated the end may be near for its economy-crunching hikes to interest rates. The S&P 500 fell 1.6% for its first drop in three days. The Dow Jones Industrial Average lost 530 points. Some of the sharpest drops came again from the banking industry, where investors are worried about the possibility of customers yanking their cash to cause more collapses. Treasury yields sank again to continue their remarkable slide for the month so far.
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TikTok sends influencers to Washington as its troubles grow
WASHINGTON (AP) — TikTok is ramping up a public relations campaign to fend off the possibility of a nationwide ban by the Biden administration. And it’s bringing some unconventional advocates to help: online influencers. Dozens of TikTok creators came to Capitol Hill on Wednesday to lobby in favor of the platform the day before lawmakers are slated to grill the company’s chief executive about concerns over user data falling into the hands of the Chinese government. TikTok’s CEO plans to tell Congress on Thursday that the video-sharing app is committed to user safety, data protection and security, and keeping the platform free from Chinese government influence. Shou Zi Chew is due to answer questions from lawmakers concerned about the social media platform’s effects on its young user base.
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Americans’ faith in banks low after failures: AP-NORC poll
WASHINGTON (AP) — Only 10% of U.S. adults say they have significant confidence in the nation’s banks and financial institutions, a new poll finds. That is down from the 22% who said they had high confidence in banks in 2020. The poll from the Associated Press-NORC Center for Public Affairs Research poll also finds that a majority of Americans say the government is not doing enough to regulate the industry. The underwhelming assessment of America’s banks and bank regulation comes after a series of shocks, including the sudden collapse of Silicon Valley Bank this month, brought back disturbing memories of the 2008-2009 financial crisis.
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Credit card debt is at record high as Fed raises rates again
NEW YORK (AP) — As the Federal Reserve raises interest rates again, credit card debt is already at a record high, and more people are carrying debt month to month. The Fed’s interest rate increases are meant to fight inflation, but they’ve also led to higher annual percentage rates for people with credit card debt, which means they pay more in interest. The Fed announced Wednesday that it would increase rates another quarter of a point, to a range of 4.75% to 5%. And with inflation still high, people are leaning on their credit cards more for everyday purchases.
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Credit Suisse customers feel mix of anger, relief after sale
GENEVA (AP) — Credit Suisse’s customers are feeling a range of emotions after the government orchestrated a takeover of the country’s second-largest bank by rival UBS. Some are angry at top Credit Suisse managers. Others lament over damage to Switzerland’s image as a stable, reliable banking center. Some feel relieved that authorities stepped in to help protect deposits in bid to prevent further upheaval in the global financial system. Others worry about keeping cash invested in a bank that failed to manage its own money adequately. How the $3.25 billion sale will play out is largely unknown, leaving those stuck in the middle — customers and bank workers — uncertain about what comes next.
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GM to stop making the Camaro but a successor may be in works
DETROIT (AP) — The Chevrolet Camaro has for decades been the dream car of many teenage American males. Now it is going out of production. General Motors is the maker of the brawny muscle car and it says it will stop producing the current generation early next year. The future of the car is a bit murky. GM says a new generation may be in the works. Chevrolet Vice President Scott Bell said they’re not announcing a successor but the production halt is not the end of the Camaro’s story. The current sixth-generation Camaro that was introduced in 2016 has done well on the racetrack, but sales have been tailing off in recent years. GM says the last of the 2024 model year Camaros will come off the assembly line in Lansing, Michigan, in January.
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GameStop leads meme stock rally in pandemic trade comeback
NEW YORK (AP) — Meme stocks have soared after one of the most heavily traded off-brand stocks during the pandemic posted a surprise profit for the fourth quarter. For GameStop, it was its first quarterly profit in two years. Rather than a per-share loss of 16 cents as Wall Street had expected, the video game retailer reported a profit of 16 cents per share, or $48.2 million in all. During the pandemic, GameStop was a member of a group of beat-down stocks that drew smaller investors in huge numbers two years ago. Shares of GameStop surged 51% at the opening bell and it pulled other meme stocks along for the ride. It closed Wednesday up 35% but most of the other meme stocks could not hold on to their early gains and finished the day in the red.
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The S&P 500 fell 65.90 points, or 1.6%, to 3,936.97. The Dow Jones Industrial Average dropped 530.49 points, or 1.6%, to 32,030.11. The Nasdaq composite shed 190.15 points, or 1.6%, to 11,669.96. The Russell 2000 index of smaller companies lost 50.38 points, or 2.8%, to 1,727.36.