STOCK MARKET NEWS: Fed hikes rates, Powell talks inflation, Delta’s rosy outlook, FTX latest
Federal Reserve meeting, Citadel's Ken Griffin sues IRS, FTX fallout continues for crypto and Sam Bankman-Fried. FOX Business is providing real-time updates on the markets, commodities and all the most active stocks on the move.
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The Federal Reserve, as expected, raised interest rates for the seventh time to a 15-year high.
Hedge fund billionaire Ken Griffin is suing the IRS after a new outlet leaked his income tax returns along with those of other billionaires including Twitter’s Elon Musk and Amazon Jeff Bezos.
Griffin's lawsuit mentions several inspector general reports that found previous lapses in the security of taxpayer data at the IRS and alleges the agency "willfully failed to establish appropriate administrative, technical, and physical safeguards to insure the security and confidentiality" of his tax records.
“Mr. Wonderful” is blaming FTX’s collapse on Chinese rival Binance.
Former FTX celebrity spokesman Kevin O'Leary told the Senate Banking Committee the two “were at war with each other, and one put the other out of business intentionally.”
Binance did not immediately respond to FOX Business' request for a reaction to O'Leary's remarks.
All three of the major U.S. averages fell after the Federal Reserve signaled they will continue to tighten heading into 2023 in efforts to battle inflation. Rates may rise to 5.1% higher than initial forecasts which disappointed investors. In commodities, oil rose 2.5% to $82.70 per barrel.
Fed Chair Jerome Powell holds a news conference at the Federal Reserve Building in Washington, Dec. 14, 2022. (Reuters/Evelyn Hockstein)
Fed Chair Jerome Powell says the central bank will not cut interest rates until central bankers feel confident that inflation is coming down in a “sustained way.”
Powell says although the labor market remains strong, the U.S. economy is really missing on the inflation side, leading to higher wage increases than are appropriate for the Fed's 2% inflation goal.
He believes labor and inflation will come more into balance as the economy heals.
“We have to use our tools to support maximum employment and price stability,” Powell said.
He noted the U.S. still suffers from a structural labor shortage, saying the labor market is 3.5 million workers smaller than it should be despite plenty of job openings.
He attributes this to accelerated retirement and COVID deaths.
“We want to get back to a strong expansion where the labor market can remain strong for an extended period of time,” Powell said.
The Federal Reserve’s rate-setting policy committee does not see interest rate cuts in 2023.
“We’ve going into next year with inflation higher than we thought,” Fed Chair Jerome Powell said. He noted that although inflation has been moving down, “we’re starting at a higher level.”
“We’ve been forecasting significant declines in core inflation in the coming year,” Powell said.
The chair said the Fed expects to see inflation in the housing sector by mid-year. The Fed also expects goods inflation to come down as supply chains untangle, however Powell says the bigger question is what prices will look like in the non-housing sector.
“It boils down to how long this process will take,” Powell says.
He expects the Fed to hold interest rates in a restrictive range for quite some time.
“Wages are running well above what would be consistent with 2% inflation,” Powell said.
He says officials will not consider interest rate cuts until the Fed is confident that inflation is moving to 2% in a "sustained way.”
Fed Chair Jerome Powell says the speed of interest rate increases is no longer as important as it was in the past now that interest rates are higher by 4.25% than a year ago and borrowing costs have moved into restrictive territory.
“We think the appropriate thing to do is to move at a slower pace. That will allow us to feel our way,” Powell said.
The chair says the Federal Open Market Committee will make their decision on interest rates at its next meeting in February based on economic conditions at the time, saying he can’t predict what the next increase will be.
“We are taking forceful steps to moderate demand,” Powell said.
On today’s rate increase, Powell said: “Of course, 50 basis points is still a historically large increase and we still have some ways to go.”
“We will stay the course until the job is done,” Powell added.
The Fed next meets on Jan. 31 through Feb 1.
Federal Reserve Chair Jerome Powell says the central bank understands the hardship that high inflation is causing and is fully committed to bring inflation down to our 2% target.
The Federal Reserve raised the target range for the federal funds rate by 50 basis points to 4.25% to 4.5%. The vote by the rate-setting Federal Open Market Committee was unanimous.
The FOMC anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.
Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.
“The US economy has slowed significantly from last year’s rapid pace, Powell said.
The Fed sees gross domestic product growing by 0.5% in 2022 and 2023.The chair noted activity in the housing sector has been slowing significantly due to rising mortgage rates.
Despite this he said persistent inflation remains well anchored.
“We have more work to do,” Powell said.
A federal grand jury in Texas has indicted eight men with conspiracy to commit securities fraud for a long-running, social media-based “pump and dump” scheme.
According to court documents, Edward Constantinescu, aka Constantin, 38, of Montgomery, Tex.; Perry “PJ” Matlock, 38, of The Woodlands, Tex.; John Rybarczyk, 32, of Spring, Tex.; Gary Deel, 28, of Beverly Hills, Calif.; Stefan Hrvatin, 35, of Miami, Fla.; Tom Cooperman, 34, of Beverly Hills, Calif.; Mitchell Hennessey, 23, of Hoboken, N.J.; and, Dan Knight, 23, of Houston, Tex., allegedly engaged in a wide-ranging securities fraud conspiracy in which the defendants used their extensive social media presence on Twitter and Discord to hype interest in particular securities by posting false and misleading information in order to “pump” the prices of those securities, while concealing their intent to later “dump” their shares by selling them at the artificially inflated prices.
From in or around January 2020 to in or around April 2022, the defendants profited at least approximately $114 million from their scheme.
U.S. stocks turned mixed after the Federal Reserve raised interest rates by 50 basis points. the seventh straight increase and the final of 2022.
The Biden administration plans to add more Chinese companies to its blacklist.
The U.S. Commerce Department plans to add China's largest memory chip maker, Yangtze Memory Technologies, to an "Entity List" early next week, according to a report from Bloomberg. Being added to the list makes it difficult for companies to receive items from U.S. suppliers.
Binance says the cryptocurrency exchange has stabilized following more than $1 billion of withdrawals Tuesday.
The platform paused withdrawals of its USDC coin for eight hours Tuesday to complete a token swap.
"Yesterday was not the highest withdrawals we processed, not even top five," tweeted CEO Changpeng "CZ" Zhao. "We have seen this before. Some days we have net withdrawals; some days we have net deposits."
| Symbol | Price | Change | %Change |
|---|---|---|---|
| DAL | $34.37 | 0.98 | 2.95 |
Delta Air Lines says demand for air travel remains robust.
In 2023, Delta expects to deliver strong topline growth and significant operating leverage on a full restoration of its network and continued improvements in premium and loyalty revenue.
The air carrier said its 2023 outlook is for 15% to 20% revenue growth over 2022 and a near doubling of earnings per share to $5 to $6 per share,
The numbers will keep Delta on track for our 2024 earnings target of over $7 per share.
U.S. stock futures are down a day after data from the Bureau of Labor Statistics showed inflation rose less than expected in November.
Dow Jones Industrial Average futures are down roughly 32 points, or 0.09%, while S&P and Nasdaq futures are 0.15% and 0.17% lower, respectively.
Over the last five days, the Dow remains up by 2.12%, the S&P is up by 2.85% and the tech-heavy Nasdaq is up by 3.76%.
Shares of Southwest Airlines are up roughly 1.06%, Delta Airlines is approximately 4.22% higher, while United Airlines is nearly 1.48% in positive territory.
Shares of Meta are up nearly 0.12% pre-market, Apple is lower by roughly 0.24%, while Microsoft climbed approximately 0.13% and Nvidia slipped almost 0.34%.
In commodities, West Texas Intermediate crude futures rose 0.97% to $76.12 a barrel, as gold dropped 0.02% to $1,820.90 an ounce.
The Federal Reserve is set to make its final interest rate hike for the year, prompting mixed world shares.
Abroad, shares in England, France, and Germany all declined while shares in Asia were higher.
At home, U.S. futures were down slightly and oil prices also fell.
The Fed is expected to raise its benchmark rate a half-point Wednesday, the seventh increase of the year. The past four hikes have each been three-quarters of a point.
The hike is the latest effort by the Fed and Chairman Jerome Powell to get inflation under control.
The Bank of England and European Central are expected to release their own decisions on Thursday.
The Associated Press contributed to this report.
Jack Dorsey at Ryerson University in Toronto, Ontario, Canada, on Tuesday, April 2, 2019. Cole Burston/Bloomberg via Getty Images
Jack Dorsey, co-founder and former CEO of Twitter, said he will give $1 million per year to encrypted messaging app Signal to support "open internet development."
Dorsey made the announcement Tuesday in a blog post on Revue, a newsletter service owned by Twitter.
The $1 million per year payment he plans to give to Signal will be made as a grant to the company.
The move by the ex-Twitter boss is the first in a series of grants he intends to give.
Since departing Twitter, Dorsey has said social media should not be "owned by a single company or group of companies."
He also said social media needs to be "resilient to corporate and government influence."
SAN FRANCISCO, CA - NOVEMBER 18: Twitter Headquarters is seen in San Francisco, California, United States on November 18, 2022. (Photo by Tayfun Coskun/Anadolu Agency via Getty Images)
Twitter CEO Elon Musk has disbanded the company's Trust and Safety Council.
Twitter first formed the advisory group, consisting of nearly 100 independent civil, human rights and other organizations, in 2016.
It was founded to address hate speech, child exploitation, suicide, self-harm and other problems on the platform, although its impact on the platform has been contested.
Musk has personally said Twitter, under its former leadership, lacked effective means to stop child trafficking and other illicit activities.
The council was scheduled to meet with Twitter representatives on Monday night but Twitter prefaced the meeting by disbanding the group.
The meeting was then canceled, multiple council members told The Associated Press. The members spoke on the condition of anonymity due to fears of retaliation.
The Associated Press contributed to this report.
Jerome Powell, chairman of the US Federal Reserve, speaks at the Brookings Institution in Washington, DC, US, on Wednesday, Nov. 30, 2022. Valerie Plesch/Bloomberg via Getty Images
The Federal Reserve is set to slow its rapid pace of interest rate increases at its final meeting of the year this week amid early signs that stubbornly high inflation is finally starting to cool.
The U.S. central bank is widely expected to lift the federal funds rate by 50 basis points at the conclusion of its two-day meeting on Wednesday – a slightly smaller increase than the 75-basis-point increases approved at the past four meetings but still large by historical standards.
The move would set the federal funds rate between 4.25% to 4.5%, further restricting economic activity as the borrowing costs for homes, cars and other items march higher. It would mark the highest rate level since 2007.
Fed Chairman Jerome Powell confirmed at the end of November that smaller rate hikes are on the table in December. However, he said policymakers have more work to crush stubbornly high inflation.
"Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation and the length of time it will be necessary to hold policy at a restrictive level," he said during a speech in Washington.
Read more from the report by clicking here: Fed likely to slow interest rate hikes at final meeting of the year
FTX founder Sam Bankman-Fried (C) is led away handcuffed by officers of the Royal Bahamas Police Force in Nassau, Bahamas on December 13, 2022. MARIO DUNCANSON/AFP via Getty Images
FTX founder Sam Bankman-Fried and Alameda Research CEO Caroline Ellison have each retained high-powered criminal defense attorneys specializing in white-collar crimes amid the ongoing law enforcement probes into the collapse of their crypto empire.
Bankman-Fried was arrested in the Bahamas on Monday at the request of U.S. authorities ahead of his likely extradition at a later date. On Tuesday, a federal prosecutor unsealed an indictment revealing Bankman-Fried has been charged with eight crimes.
The charges against him include wire fraud on customers, plus a related conspiracy charge; wire fraud on lenders, plus a conspiracy charge; in addition to conspiracies to commit commodities fraud, securities fraud, money laundering, and violate campaign finance laws.
In total, the charges Bankman-Fried faces carry a total potential sentence of up to 115 years in prison based on federal sentencing guidelines for those crimes. The wire fraud charges – including the conspiracy charges – and the money laundering conspiracy count carry a maximum sentence of 20 years in prison apiece. Each of the commodities and securities fraud charges and the campaign finance conspiracy charge carries a maximum sentence of five years in prison.
The task of preventing Bankman-Fried from spending the rest of his life in prison if found guilty of the crimes he stands accused of falls to Mark Cohen, of Cohen & Gresser law firm.
For more on the story, click here: Sam Bankman-Fried, Caroline Ellison retain high-powered white collar lawyers amid FTX probe
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