What’s Up? (Jan. 29-Feb. 4)
Rates Go Up, but by Less
The Federal Reserve continued its campaign to lift interest rates to tame rising prices on Wednesday, but this time the announcement of another increase — by a quarter point — was inflected with some optimism. For starters, the move was smaller than the half-point increase that preceded it and much smaller than the streak of three-quarter-point jumps before that. The central bank’s decision was also accompanied by rare good news from Jerome H. Powell, the Fed chair, who said that “the disinflationary process has started.” Of course, there are caveats. Mr. Powell hinted that the Fed still planned to raise rates to just above 5 percent this year and warned that “the job is not fully done” in tamping down inflation. Still, investors sent stocks higher in the hope that the Fed’s rate increases were near an end.
Jobs numbers soared far past analysts’ forecasts on Friday, when the Labor Department reported that employers added 517,000 jobs in January on a seasonally adjusted basis. Those numbers had been falling since July, reaching a low of 260,000 added jobs in December. The downward trend seemed to be evidence that the Fed’s efforts to cool off the economy had reached the labor market, though policymakers were still worried that it remained much too tight. January’s data only intensifies those concerns. Mass layoffs in tech and other industries have also had little effect on the overall strength of the job market. Earlier in the week, the Labor Department reported that job openings had risen to 11 million, a 5.5 percent increase, and layoffs remained at an unusually low level.
Jury Rules for Elon Musk
A jury on Friday found that Elon Musk was not liable for investors’ losses when he tweeted “funding secured” in 2018, suggesting that he had lined up the financing to take Tesla private. Lawyers for the company and Mr. Musk, the chief executive of Tesla and now Twitter, had argued that he was such a successful businessman that he could have easily obtained financing to take Tesla private. Mr. Musk has already paid $40 million in fines to the Securities and Exchange Commission in a settlement over charges of securities fraud related to that tweet.
What’s Next? (Feb. 5-11)
A Test for Disney’s C.E.O.
Robert A. Iger, Disney’s new-old chief executive, faces a major test this week as Disney reports its first quarterly earnings since he returned to the role. The company’s board brought him back to course correct after a disastrous earnings report last quarter, when Disney experienced “peak losses” and fell short of analysts’ expectations for both revenue and earnings per share. Bob Chapek, the chief executive at the time, had hoped to return the company to profitability in the fiscal year that begins this fall, but that challenge now lies in the hands of Mr. Iger. And it will be a challenge. For months, Disney has been hinting at layoffs and other cost-cutting measures that have not come about. Investors are also waiting for the company to reveal a new operating structure. They will be especially eager for answers, and results, if the analysts who are forecasting per-share earnings of about 79 cents, down from $1.06 a year earlier, are correct.
Biden’s Take on the Economy
The economy is likely to be a major subject of President Biden’s State of the Union address on Tuesday, the second of his presidency. As recession fears gather on the horizon, Mr. Biden will want to highlight bright spots in his handling of the economy: He is almost certain to mention the strength of the job market throughout his tenure, which he cheers with each new report from the Labor Department, and the low rate of unemployment. He will probably also point to the recent moderation in inflation, which has strained American households over the last year. His top economic aides, however, are split on how much to discuss new spending proposals, including investments in child care, prekindergarten and paid leave, with some arguing that Mr. Biden should instead focus more on the sweeping infrastructure bill he signed into law.
Meta’s Lucky Break
Meta’s stock surged on Thursday, adding $100 billion in value, a day after the company reported better-than-expected quarterly earnings and said it would buy back billions of dollars of its stock. But Meta’s fourth-quarter report didn’t include any particularly good news. Net income fell 55 percent, revenue fell 4 percent and costs rose 22 percent from a year earlier. But in this challenging environment, flat, and even slightly down, can look promising to investors and signal a change in the company’s fortunes. They were also encouraged to see Meta, known for its lavish perks and amenities, pivot to austerity. Earlier in the week, a federal judge rejected the Federal Trade Commission’s request to block Meta from buying Within, a small virtual reality start-up. The decision is a significant setback for Lina Khan, the F.T.C.’s chair, who pursued the case as part of her mission to crack down on tech consolidation.
Step aside, pandemic puppies. People are buying inflation chickens as prices for eggs soar. A Colorado senator called on Apple and Google to ban TikTok from their app stores. Shell, Exxon and Chevron had another record-breaking earnings season, pulling in billions in profits because of higher prices for nearly all fuels.