Monday was not a good day to be walking down Wall Street. The Dow Jones Total Stock Market Index dropped nearly 6%, and the tech-heavy Nasdaq fell almost 8%. Were Wall Street traders soon to be dropping out of windows, 1929-style? “The Market Meltdown Intensifies: Fears of a hard landing are rocking global stocks again as stocks, oil and cryptocurrencies sell off,” read a New York Times headline. “Wall Street bloodbath: Dow, Nasdaq plummet as renewed recession fears trigger global sell-off,” blasted the New York Post. Donald Trump slammed Vice President Kamala Harris as “Kamala Crash” and said she was causing the “Great Depression of 2024.” Theorists speculated that the Federal Reserve’s postponement of a rate cut discussion until September was going to strangle the economy.
But then the market rebounded, as it often does! By the end of Thursday, most of the markets had recovered the bulk of their losses, ending the day down a little over 2% for the week. Not great, but no longer the harbinger of the Great Post-Covid Election-Changing Recession.
So what happened? It’s hard to tell. Election jitters? Profit taking (the cover-all phrase for investors who decided to cash out a bit)? Fears of post-electoral chaos? Interest rate cuts in Japan? Expectations of bad jobs numbers? The Fed’s announcement last week that it might cut rates next month?
Whatever it was, the markets took a bounce on Thursday morning and haven’t looked back. One thing that may have affected it: Fewer people applied for unemployment last month, according to data released Thursday before the markets opened, suggesting the U.S. is not nearing a recession and that the economy might even keep growing.
“This was the data point for the week, so it took on added importance,” Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest in Elmhurst, Illinois, told Reuters. Or maybe it was Tim Walz, the veep’s prospective veep, whose infectious smile seems to have raised the nation’s happiness quotient. Data on that should be out next week. Let’s see how the markets react then!
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Did Google Just Get Clobbered?
On Monday, federal judge Amit Mehta found Google had violated antitrust laws by stifling rivals in Internet search in order to protect its monopoly. Specifically, he looked at the $20 billion a year that Google pays Apple (and a few billion it pays other smartphone makers) to keep Google the first choice search engine on the world’s 1.46 billion iPhones. Google will, of course, appeal the ruling, and Mehta has yet to decide on a remedy, so any resolution could be years away.
But many observers are looking back to the 2000 antitrust ruling that Microsoft had abused the monopoly power of the Windows operating system. Ultimately, Microsoft did not get broken up, but it had to end its restrictive contracts on industry partners and open up some of its tech and code to outsiders to create a more balanced playing field, forcing it to yield control of the Internet. Not that it really hurt Microsoft—a quarter century later it’s America’s second most valuable public company.
Google’s loss, even if parts of the decision are reversed on appeal, could have a similar cascading effect. With 91% of the global search market, Google is the only viable choice for most users. (When’s the last time that you Yahoo’d something?) Until Mehta determines how he will force Google to change its behavior, it’s not clear what the future of the web will look like, but here are some things that tech watchers say could change:
- Google’s search tech could be licensed to tailored browsers, like kid-friendly or privacy-first, or even Temu-free browsers. But they’d only work well if they were powered by the user data that Google collects on most of the 8.2 billion people on Earth.
- Phone makers could be forced to make users select a preferred browser.
- Competition from other browsers gaining access to users could force down the price of search ads.
- Google might be forced to spin off Chrome or search into a separate company.
- Users could gain more control over their data, and Google might be less able to combine your data from multiple areas and resell it to advertisers and marketers. Such protection largely exists already in Europe.
With search accounting for $48.5 billion of Google’s Q2 revenue (out of $84.7 billion in total revenue), there’s a lot at stake. But analysts say it’s hard to see how anyone will ever collect enough data—or hire enough data scientists—to beat Google.
The Usual Suspects
- Elon’s World: Two years ago, Musk told the New York Times that advertisers who threatened to pull their ads from his X platform could “Go f*** yourselves.” This week, Musk and X sued the World Federation of Advertisers, whose members include CVS, Mars and Unilever, alleging they conspired to withhold billions of dollars in a “massive advertising boycott” to force X to maintain brand safety standards. Musk wants to force them to spend ad dollars on X. … Musk also tweeted that “civil war is inevitable” in Britain after riots followed the stabbing deaths of three schoolgirls by a teenager, while the UK’s prime minister blamed social media for fomenting the riots... Meanwhile, Elon’s $40+ billion pay package is in jeopardy again, after a Delaware judge said she’s skeptical that a recent shareholder vote on it was any more valid than the 2018 vote that sparked the controversy. … Elon’s antics have turned off the German drugstore chain Rossmann, which said it will no longer buy Teslas: “Elon Musk makes no secret of his support for Donald Trump. Trump has repeatedly described climate change as a hoax — this attitude is in stark contrast to Tesla’s mission to contribute to environmental protection through the production of electric cars,” said Raoul Rossmann.
- Mr. Iger’s Wild Ride: Disney said Wednesday it’s finally making money from Disney+, and a host of new movies—including Pixar’s Inside Out 2 ($1.6 billion at the box office) and Kingdom of the Planet of the Apes ($400 million)—have made its movie studios a profit center again. Overall revenue grew 4% to $29.2 billion in Q2. Streaming is now turning a profit, with Hulu, Disney+ and ESPN+ all profitable a quarter ahead of expectations. Still, things aren’t looking rosy in the Magic Kingdom. Their pocketbooks empty and their credit cards maxed out, American vacationers just don’t want to fork out $99 per person per day (plus more for hotels, meals, and flights) to visit Disney theme parks. “The lower-income consumer is feeling a bit of stress, and the higher-income consumer is traveling internationally a bit more,” Disney CFO Hugh Johnston said on a conference call with analysts. That’s worried investors. Disney shares were down 6.5% in the past five days.
- Boeing Blues, vol. 27: Boeing says it’s changing the design of the door panel that blew out in January on an Alaska Airlines 737, but the National Transportation Safety Board says the Federal Aviation Administration failed to properly oversee Boeing’s manufacturing and certification processes, as Boeing workers say they were pressured to do jobs they weren’t trained for. Meanwhile, NASA says Boeing’s busted Starliner spacecraft could leave its two astronauts marooned on the International Space Station until next year. Boeing says the Starliner is safe, but NASA’s having none of that, and says it may call an Uber to get them home—a.k.a. a SpaceX capsule.
- Axios Briefing: Famously terse news site Axios says it’s laid off 10 percent of its staff. The news came in a memo from CEO Jim VandeHei worded like an Axios news report, including the trademark “Why it matters” bullet point: “Why it matters: We’re eliminating about 50 positions to get ahead of tectonic shifts in the media, technology, and reader needs/habits.”
Walzonomics: Elon Musk Oughta Like This Guy
As governor of Minnesota, Tim Walz has said he wants one in five cars in the state to be electric by 2030, and for the state to reach net-zero carbon emissions by 2050. His administration has put tighter limits on tailpipe gases, and raised taxes on gasoline, all in a bid to get more EVs on the road. He’s brought home a $200 million grant from the federal government to slash emissions in the food system, and signed laws that make it easier for communities to replace fossil-fuel power plants with renewables.
On taxes, he’s promoted what the Institute on Taxation and Economic Policy calls a “moderately progressive tax system” that adds money to the economy with consumer spending boosted by cutting taxes for lower- and middle-income residents, using rebates and child tax credits. That was partially funded by a 1% surtax on capital gains and investment income over $1 million a year, and higher taxes on local companies’ overseas earnings.
He’s also signed into law bills that guarantee state-funded paid family and medical leave that allows workers to take off up to 12 weeks a year to care for a newborn or a sick relative or recover from their own illness. And he’s helped ensure all Minnesota schoolkids get free lunch and that low-income students get free tuition at state colleges, actions his opponents call liberal overspending but that studies have shown are key factors in preparing a stronger workforce that can earn better wages.
But he hasn’t been immune to pressure. Walz vetoed a bill to protect Uber and Lyft drivers after the companies argued it would cut ridership by a third. And he backed off on a bill to raise required nurse staffing levels at hospitals after Mayo Clinic vowed to move investments out of state if the bill passed.
Peter S. Green is a veteran reporter and editor who has spent more than two decades covering business and finance from Eastern Europe to New York City, and has worked for Bloomberg News, The New York Post, The New York Times and The Messenger. He lives in New York City and is always looking for the next big story.
