Meta’s earnings beat, US GDP slows, Fox and Tucker Carson part ways: Headlines that defined the week

Hedge funds post big losses betting against tech stocks which surprised Wall Street with better-than-expected earnings. Recession signs grow more evident with US GDP growth falling below expectation. Here are financial news that made headlines this week

US GDP growth stalls

US economic growth slowed sharply in the first quarter of 2023 despite strong consumer spending The world’s largest economy grew 1.1% on an annualized basis in the first quarter of the year, falling below economists’ projections of 2.2%, according to preliminary data released by the commerce department on Thursday. The figures marked an abrupt deceleration from the 2.6% growth rate registered in the last quarter of 2022. The GDP slowdown is an indication that the Fed’s fight against rampant inflation is beginning to take effect.

Meta’s revenue returns to growth, shares spike 14% in a single trading day

Meta (META:NASDAQ)delivered a surprise return to growth prompting its shares to spike 14% on Thursday. Meta posted its first sales increase in nearly a year due to its improving advertising business. A slew of negative press, a slowing economy, regulatory pressures, and Apple 2021 ad-tracking changes have weighed on Meta’s revenue.

Hedge funds lose $18bn betting against tech stocks

Hedge funds betting against US technology stocks have been battered by $18bn of losses after Big Tech’s robust earnings fuelled a sharp rebound in the sector. Hedge funds that shorted semiconductor stocks have lost $8bn so far this year, while investors who bet against technology hardware and storage businesses lost $4.6bn. Bets against other parts of the US tech industry amount to more than $5bn.

Fox shares drop as media outlet and Carson part ways

Shares of Fox Corp (FOX:NASDAQ) plummet by as much as 4% on Monday, but recovered during the week after the media outlet and news anchor Tucker Carlson parted ways. The network on Monday said that it had fired the prime-time host, a surprising move that comes after disparaging remarks Carson made about colleagues were disclosed during a legal battle with voting-machine company Dominion Voting Systems. This comes less than a week after Fox Corp agreed to pay $787.5 million to settle the lawsuit with Dominion.

Gap plan 1,800 job cuts

Gap (GAP:NYSE) is shedding its workforce by 1,800. This comes as the embattled fashion retailer rolls out plans for a broad restructuring aimed at making the company more nimble and less bureaucratic. This round of job cuts comes after Gap laid off roughly 500 corporate positions in September. The current layoffs are expected to result in $300 million in annualized savings, the company said Thursday. Last year’s layoffs were part of efforts to save about $250 million annually.

First Republic woes continue to mount

With the stock down 75% for the week and 97% this year, the woes of First Republic Bank (FRC:NYSE) are far from over as bankers and regulators have been stuck in a standoff. Both sides are looking to avoid steep losses and hoping the other will shoulder the risk of handling the troubled firm.

A consortium of 11 banks that deposited $30 billion into First Republic last month to enable the embattled bank to buy time have been reluctant to invest in the firm itself, even if that means they might lose some cash in their accounts.

The stronger banks within the group are waiting for the government to offer aid or put the bank in receivership which could potentially end with a sale of business lines or assets at attractive prices.

But the FDIC on the other hand is avoiding a receivership as the outcome would mean incurring a multibillion-dollar hit to its own deposit insurance fund. The agency is already planning to impose a special assessment on the industry to cover the cost of Silicon Valley Bank and Signature Bank’s failures last month