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Stock Market News: Target crisis, Meta layoffs, Kohl’s shares spike, debt talks ongoing

Florida Governor Ron DeSantis presidential bid announcement, Target Pride controversy, Kohl’s surprise lifts stock, Meta and Disney layoffs ongoing. FOX Business is providing real-time updates on the markets, commodities and all the most active stocks on the move.


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Wall St ends down as debt-ceiling clouds hover


Wall Street's main indexes ended lower on Wednesday as talks between the White House and Republican representatives on raising the U.S. debt ceiling dragged on without a deal.

The lack of progress on raising the U.S. government's $31.4 trillion debt limit ahead of a June 1 deadline, with several rounds of inconclusive talks, has made investors edgier as the risk of a catastrophic default looms larger.

Democratic President Joe Biden and top congressional Republican Kevin McCarthy's negotiators held what the White House called productive talks.

"Up until yesterday, investors have been very optimistic around the U.S. debt ceiling resolution," said Angelo Kourkafas, senior investment strategist at Edward Jones. "But now as we get closer ... to the June 1st X-date, we are seeing some caution again.”

Posted by Reuters

Change in tone in US debt talks could prompt rating action before default: Moody's

Rating agency Moody's expects the U.S. government will continue to pay its debts on time, but public statements from lawmakers during the debt ceiling negotiations could prompt a change in its assessments of the U.S. credit outlook before a potential default, a senior analyst said.

Investors use credit ratings as one of the metrics to establish the risk profiles of governments and companies. Generally, the lower a borrower's rating, the higher its funding costs. That means a possible U.S. government rating downgrade could affect the pricing of trillions of dollars of Treasury debt securities.

Investors have to contend with that risk ahead of the June 1 deadline indicated by the U.S. Treasury to raise the government's $31.4 debt ceiling, with Democrats and Republicans still deeply divided on how to curb the federal deficit.

Moody's has an "Aaa" rating for the U.S. government with a stable outlook - the highest creditworthiness evaluation Moody's gives to borrowers.

Posted by Reuters


A failure to break the deadlock on raising the U.S. debt ceiling before the deadline could pose a challenge to capital-intensive businesses such as industrial suppliers, a body representing construction and farm equipment makers said.

The U.S. government could fall behind on its bills next month, and even default on its debt, if Congress does not raise a $31.4 trillion cap on government borrowing, a failure that could trigger economic calamity and panic on global financial markets.

A U.S. debt default would also spike borrowing costs, leaving the suppliers of parts and components to manufacturers such as Deere Co and Caterpillar Inc scrambling to fund their operations, the Association of Equipment Manufacturers (AEM) said on Tuesday.

"If we were to see a default or a financial crisis as a result of an impasse, I do not see them (suppliers) being able to weather this storm," said Kip Eideberg, AEM's senior vice president of government and industry relations.

Posted by Reuters

JPMorgan can sue former executive Staley over Epstein ties: US judge


A U.S. judge on Wednesday rejected former JPMorgan Chase & Co executive Jes Staley's bid to dismiss the bank's lawsuit claiming he concealed what he knew about Jeffrey Epstein and should cover its losses if it were found liable for serving the disgraced financier.

The ruling by U.S. District Judge Jed Rakoff in Manhattan means Staley, who is also a former Barclays Plc chief executive, could be on the hook for millions of dollars over his ties to Epstein, a JPMorgan client from 1998 to 2013.

JPMorgan faces two lawsuits over Epstein, and has denied liability. One is a proposed class action by women, led by a former ballet dancer known as Jane Doe 1, who say Epstein sexually abused them. The other is by the U.S. Virgin Islands, where Epstein allegedly abused women on a private island he owned.

Posted by Reuters

Fed's Waller sees a rate 'hike' or a 'skip' in June, but no 'stop'

Federal Reserve Governor Christopher Waller on Wednesday said he is concerned about the lack of progress on inflation, and while skipping an interest rate hike at the U.S. central bank's meeting next month may be possible, an end to the hiking campaign isn't likely.

"I do not support stopping rate hikes unless we get clear evidence that inflation is moving down towards our 2% objective," Waller said in remarks prepared for delivery to a University of California Santa Barbara Economic Forecast Project event. "But whether we should hike or skip at the June meeting will depend on how the data come in over the next three weeks."

Particularly critical, he said, will be two more reads on inflation, as well as data on what is a "very tight" labor market and wages rising too fast to be consistent with stable prices.

Evolving credit conditions since the string of regional bank failures that began in March will also help inform his views, Waller said. "Between now and then, we need to maintain flexibility on the best decision to take in June."

Posted by Reuters

Union Pacific, engineers union reach tentative deal over time off


Union Pacific Corp and the Brotherhood of Locomotive Engineers and Trainmen on Wednesday reached a tentative deal for the U.S. railroad operator's locomotive engineers.

Union Pacific, which employs around 5,600 locomotive engineers represented by BLET, said that the tentative agreement provides locomotive engineers to work for 11 days and take off for four days.

The deal comes about a week after its peer Norfolk Southern also reached an agreement, offering additional five days of paid sick leave per year for its engineers.

"This significant change in scheduling not only will make life better for locomotive engineers and their families, it also should help Union Pacific retain and recruit employees," BLET National President Eddie Hall said in the joint statement.

Posted by Reuters

Abercrombie & Fitch shares surge on surprise profit, sales forecast raise


Abercrombie & Fitch Co on Wednesday posted a surprise quarterly profit and lifted its full-year sales forecast, as the clothing retailer banks on its efforts to fill shelves with in-demand goods, sending its shares up as much as 25%.

The apparel retailer has worked to increase its stock across all its labels and lure affluent Americans to purchase for a variety of items including dresses, cargos and formal pants as people return to social gatherings and office work.

Consumers have been diversifying somewhat out of denims, said CEO Fran Horowitz, adding "this non-denim bottom trend that we're seeing is really terrific.

"The company's eponymous Abercrombie label posted a 14% increase in sales in the quarter, while the Hollister brand, dropped 7%.

Posted by Reuters

Abbott, other baby formula makers face FTC investigation for potential collusion


The U.S. Federal Trade Commission is probing whether Abbott Laboratories and other companies that make baby formula colluded in bidding on state contracts, according to a document posted on the agency's website.

The FTC is looking into whether the companies "engaged in collusion or coordination with any other market participant regarding the bidding," according to the document.

The Wall Street Journal was first to report on the matter.

According to the document, in 2022 the FTC began looking into potential collusion or coordination in bids to provide formula for the U.S. Department of Agriculture's Women, Infants and Children (WIC) program that provides free formula to low-income families.

Posted by Reuters

Meta begins latest round of layoffs


Facebook parent Meta Platforms Inc. started its third round of layoffs Wednesday, according to a source familiar with the matter. 

The fresh round of cuts is part of Meta's previously announced plan in March to cut 10,000 roles this spring.

Some employees, including one in a marketing role at Instagram, who were laid off on Wednesday posted about their situations on LinkedIn. Meta is the parent company of Instagram.

Meta CEO Mark Zuckerberg announced in a March Facebook post that the company would issue three rounds of layoffs over the coming months and close 5,000 open roles as it worked to restructure and become more efficient amid the uncertain economic climate. 

Posted by FOX Business Team

Accenture secures up to $2.6 billion contract to modernize IRS systems


An Accenture Plc unit said on Wednesday it had secured an up to $2.6 billion deal with the Internal Revenue Service (IRS) for modernizing the government tax agency's systems.

Accenture Federal Services said it had been awarded the contract for seven years, adding that it will have to compete for future orders to support the IRS with creating new ways for taxpayers and professionals to interact with the agency.

Earlier this month, the IRS said it would launch a free, government-provided direct tax filing option next year, which could result in the launch of a full-scale IRS filing system on par with private tax prepapers such as TurboTax-parent Intuit Inc.

Intuit on Tuesday forecast current-quarter profit below estimates as it prepares to tackle competition by investing in its products.

Posted by Reuters

Kohl's posts surprise profit as cost cuts pay off, shares jump


Kohl's Corp on Wednesday reported a surprise profit as the department store operator's efforts to reduce excess inventory and slash costs under a newly appointed CEO started paying off, sending its shares up 18%.

The company also maintained its full-year targets even as it posted a bigger-than-expected drop in quarterly comparable store sales. Kohl's is attempting a turnaround under CEO Tom Kingsbury who took the helm in February.

Its efforts to reduce reliance on margin-sapping discounts to cut inventory and focus on in-demand categories including work wear are already showing results.

Last year, Kohl's shares had lost half their value as the company faced shareholder unrest due to disappointing sales and failed negotiations for a sale of its business.

Posted by Reuters

Target shares hit amid Pride controversy

Target Corp.


Target shareholders are feeling the backlash underway at the retailer as controversy swirls over its Pride merchandising plans, first reported by Fox News Digital.

Shares slipped further Wednesday and have dropped over 6% this month, with half of that drop taking place this week alone. Over the same time frame the S&P 500 is down fractionally. 

Target is experiencing a similar trend that Anheuser-Busch experienced following the Bud Light backlash after the brand sent transgender activist Dylan Mulvaney a personalized pack of beer with the influencer's likeness.

The Bud Light parent lost billions in market value as nationwide boycotts of the beer began and sales tanked.

Posted by FOX Business Team

Citigroup to pursue Mexico retail IPO after sale fails


Citigroup Inc will pursue an initial public offering of its Banamex unit comprising consumer, small business and middle-market banking operations in Mexico, the bank said on Wednesday.

Citi had announced plans to offload the unit more than a year ago as part of a strategic overhaul by CEO Jane Fraser to exit 14 consumer banking markets in Asia, Europe, the Middle East and Mexico. It now expects the IPO to be completed in 2025.

"After careful consideration, we concluded the optimal path to maximizing the value of Banamex for our shareholders and advancing our goal to simplify our firm is to pivot from our dual path approach to focus solely on an IPO of the business," Citigroup CEO Jane Fraser said in a statement.

Recent complications on the sale process weighed on the decision, including the Mexican government's demands and other factors, a person with knowledge of the matter said.

Posted by Reuters

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