The Week in Business: The Fed Is Getting Big

at its most In a striking move to contain inflation, the Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point on Wednesday, the central bank’s biggest hike since 1994. While answering questions from reporters after the announcement, Fed chairman Jerome H. Powell said. , said officials were “not trying to induce a recession at this point”. Yet that’s what many fear: If the Fed’s efforts to contain rising prices and reduce demand go too far, the bank could trigger a severe economic slowdown, forcing companies to close and boost unemployment rates again. to rise. And the Fed has shown no signs of a change of course. Wednesday’s gains could be followed by an equally large one next month. Mr. Powell is likely to face tough questions about these and other actions by the Fed when he appears before lawmakers in the House and Senate this week.

The S&P 500 was up slightly on Friday, but that was of little consolation to investors as the S&P had its worst weekly performance since March 2020. Stocks fell into a bear market Monday as investors anxiously anticipated Fed rate hikes and the S&P continued. dragged along. than 20 percent below the most recent peak in January. For the most part, when the Fed announced its decision, investors didn’t seem surprised, and markets remained fairly stable that day. But shares fell sharply on Thursday and remain on shaky ground. And it may have been an even worse week for the cryptocurrency markets as prices continued to collapse and crypto firms cut staff. Bitcoin’s price fell below $20,000 for the first time since late 2020. Coinbase said it was firing 18 percent of its employees on the heels of budget cuts at other crypto firms, including Gemini and BlockFi. Celsius, an experimental crypto bank, announced that it was halting withdrawals “due to extreme market conditions”.

Revlon, a staple in bathroom cabinets since the Great Depression, filed for bankruptcy protection last week, a sign of the changing landscape for cosmetic brands and potential problems for retailers. But the company has been in trouble for some time: At the start of the pandemic, Revlon said it would cut 1,000 positions in hopes of making itself more profitable. Months later, however, it narrowly avoided bankruptcy by striking a deal with its debt holders. But with $3.8 billion in debt, supply chain problems, and plenty of competition from new makeup brands, Revlon eventually succumbed to the pressure.

Real estate agents see trouble on the horizon. Last week, Redfin and Compass announced major staff cuts, with the heads of both companies citing concerns about the economic outlook. Glenn Kelman, Redfin’s CEO, told employees in an email that demand was down 17 percent and about 8 percent of the workforce would disappear. And Compass said it was firing 10 percent of its employees “because of clear signs of slowing economic growth.” In another harbinger of a potential downturn for the housing market, mortgage rates rose to 5.78 percent, rising last week at the fastest pace since 1987.

Last week, Elon Musk did something remarkably standard for someone taking over a company: he met the staff at Twitter. The meeting had, of course, been a long time coming. Mr. Musk was supposed to answer questions from employees after he joined Twitter’s board in April, but those plans changed when he decided to buy the company. During the hour-long Q. and A. session, Mr. Musk laid out his vision for the company, saying that he wanted the platform to grow to “at least a billion” Twitter users and that he expected to be fairly hands-on. to be. He echoed criticism of the number of bot accounts on Twitter, the gist of his recent hand-wringing over the deal, though his takeover of Twitter continues. Experts said his meeting with employees could reassure potential investors if the deal goes through.

As stubbornly high inflation threatens to lead to losses for Democrats in the midterm elections in November, President Biden is considering the possibility of rolling back some of the tariffs former President Donald J. Trump imposed on Chinese goods. Biden had said he intended to rely primarily on the Fed to tame rising prices, but now that the president is coming under pressure from corporate groups and outside economists — as well as a frustrated public — he is considering to take action yourself. Some private estimates within the White House say that lifting the tariffs could lower overall inflation by a quarter of a percentage point. But the move could hurt other aspects of the government’s economic agenda and spark criticism that Mr Biden is making Beijing too easy.

Hundreds of auto accidents in the United States over 10 months involved vehicles using advanced driver assistance technology, a federal agency found. McDonald’s will pay $1.3 billion in fines and back taxes to settle a protracted tax dispute in France. German officials are urging residents to conserve energy as Russia cuts its natural gas flow to Europe.

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