Business Highlights: Wall Street’s retreat, Biden’s budget
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Deepening worries about high rates send Wall Street lower
NEW YORK (AP) — Stocks sank broadly on Wall Street, worsening their losses for the week, as markets remain anxious about the prospect of more aggressive action by the Federal Reserve to fight inflation with higher interest rates. The losses came after two days of testimony before Congress by Federal Reserve Chair Jerome Powell, who said the central bank was prepared to continue making big interest rate increases if necessary. Investors fear the inflation-fighting policies may tip the economy into a recession and put many people out of work. The S&P 500 fell 1.8% Thursday. The Dow Jones Industrial Average and the Nasdaq also fell.
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Here’s what Biden’s budget would mean — if it had a chance
WASHINGTON (AP) — President Joe Biden’s new budget proposal aims to increase taxes on the wealthy and steer more money to popular programs such as Medicare. Overall, the spending blueprint released Thursday anticipates an additional $5.5 trillion in revenue over the next 10 years, plus $2.6 trillion in new spending. So that means an estimated $2.9 trillion reduction in the deficit. The proposal has no chance of becoming law now that Republicans are in charge of the House. But the budget plan will serve as a political talking point for a president preparing to run for reelection and trying to draw contrasts with the opposition party. Biden says the GOP should now come out with its alternative so the two sides can talk.
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IRS nominee Daniel Werfel confirmed by Senate vote
WASHINGTON (AP) — The U.S. Senate has confirmed Daniel Werfel to serve as commissioner of the Internal Revenue Service by a vote of 54-to-42. Werfel, who pledged before senators not to expand tax audits on businesses and households making less than $400,000 per year during his confirmation hearing, will serve a five-year term as leader of the federal tax collection agency. Werfel will have to navigate controversy surrounding $80 billion in new funding for the agency, as critics have distorted how the new law would affect the IRS and taxes for the middle class. About $46 billion was allocated for enforcing tax laws and the rest for taxpayer services, operations support and updated business systems.
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American Airlines promises raises for pilots, matching Delta
DALLAS (AP) — American Airlines is promising significant pay raises to pilots to match a recent deal at rival Delta Air Lines. American’s CEO Robert Isom says he’s ready to give pilots raises and higher retirement contributions that would average 40% over four years. Isom says top-pay for a senior pilot would hit $590,000 by the end of the deal. But on Thursday, the Allied Pilots Association said its board decided to survey members on authorizing a strike. A union spokesman says the strike vote has been contemplated for several months as a backup in case the union can’t reach a deal with American.
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GM offers buyouts to most US salaried workers to trim costs
DETROIT (AP) — General Motors is offering buyouts to most of its U.S. salaried workforce and some global executives in an effort to trim costs as it makes the transition to electric vehicles. The Detroit automaker wouldn’t say how many workers it is targeting, but confirmed that the move is aimed at accelerating attrition to meet a previously announced goal of $2 billion in cost cuts by the end of next year. GM has about 58,000 salaried workers in the U.S. The company says the offers also are designed to avoid any possible firings at a later date. Offers will go to white-collar workers with at least five years of service, and global executives with who have been with the company at least two years.
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Average US mortgage rate up for fifth straight week to 6.73%
The average long-term U.S. mortgage rate rose for the fifth straight week to its highest level since breaching 7% in November, just as the spring buying season gets ready to kick off. Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate climbed to 6.73% from 6.65% last week. The average long-term rate hit 7.08% in the fall — a two-decade high — as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy and quash persistent, four-decade high inflation. The big rise in mortgage rates has pushed sales of existing homes down for 12 straight months.
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Business backlash pushing GOP to weaken anti-ESG proposals
TOPEKA, Kan. (AP) — Conservative Republicans who want to thwart socially and environmentally conscious investing are now being pushed to water down their proposals by backlash from powerful business groups and fears that state pension systems could see huge losses. In both Kansas and Indiana bankers associations and state chambers of commerce criticized the strongest versions of anti-ESG legislation before each state’s Republican-controlled legislature as anti-free market. ESG stands for environmental, social and governance. In Kansas, opposition from business groups prompted a Senate committee’s chair to drop the toughest version of the bill before hearings began this week. In Indiana, supporters rewrote a House bill before the chamber passed it.
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Split verdict for ex-Fox execs in soccer rights bribe case
NEW YORK (AP) — A former Fox executive has been convicted of paying tens of millions of dollars in bribes to nab broadcasting rights to the World Cup and other top soccer matches. A second ex-executive was acquitted. A Brooklyn federal jury delivered its verdict Thursday. Hernan Lopez was convicted. Carlos Martinez was acquitted. Prosecutors have said the case bared the corruption of international soccer. Defense lawyers say the former Fox execs were framed by an admitted criminal who was trying to minimize his own punishment. New York-based Fox Corp. wasn’t charged in the case and has denied any involvement in the bribery scandal.
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The S&P 500 tumbled 73.69 points, or 1.8%, to 3,918.32. The Dow Jones Industrial Average shed 543.54 points, or 1.7%, to 32,254.86. The Nasdaq composite fell 237.65 points, or 2.1%, to 11,338.35. The Russell 2000 index of smaller companies lost 52.89 points, or 2.8%, to 1,826.59