5 Things to Know Before Markets Open

News of the day for May 2, 2023

Janet Yellen

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Treasury Secretary Janet Yellen warned the U.S. could hit its debt limit sooner than expected, as early as June 1 if Congress doesn't act to raise the debt ceiling. Here’s what investors need to know today.

1. US Could Hit Its Debt Limit in June, a Month Sooner Than Expected

The U.S. government could reach its debt limit as soon as June 1 if it isn’t raised, Treasury Secretary Janet Yellen told Congress, sooner the previously projected date in July. The president has invited congressional leaders from both parties to meet next week to discuss a deal on raising the government’s $31.4 trillion cap on borrowing.

2. HSBC Triples Quarterly Profit, Announces Dividends, Buybacks

Europe’s largest bank HSBC recorded a $12.9 billion pre-tax quarterly profit, up 207% from a year earlier as revenues soared on higher interest rates around the world. HSBC said it also will buy back up to $2 billion in shares and roll out a quarterly dividend of 10 cents a share.

3. Morgan Stanley Cuts Jobs as Dealmaking Dwindles

Morgan Stanley will cut 3,000 jobs in the second quarter, the investment bank’s second round of layoffs in the last six months. Management cited a slowdown in dealmaking and a tough economic environment for the cuts, which will trim nearly 4% from the bank’s staff of 82,000 employees. Morgan Stanley announced an unspecified “modest” jobs cut in December, before it reported a 2% drop in revenues in April, primarily due to a drop in its investment banking division.

4. IBM Considering Hiring Pause to Evaluate AI Replacements

IBM is considering a hiring pause for 7,800 back-office jobs that could be replaced in coming years by artificial intelligence (AI). IBM suggested that AI tools are being evaluated for roles like human relations, and that 30% of non-customer-facing roles could be replaced by AI and automation in five years.

5. BP Posts Stronger-Than-Expected First Quarter Profits

Oil giant BP reported stronger-than-anticipated quarterly profits, though they were off from the exceptionally high levels posted in the 2022 first quarter after high gas prices lifted oil company profits to unusual highs. The British energy company reported a $4.96 billion profit in the first quarter, ahead of the $4.8 billion profit it posted for the 2022 first quarter, but well below last year’s $6.2 billion first quarter.

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  1. Wall Street Journal. “Treasury Chief Janet Yellen Says U.S. Risks Default as Soon as June 1 Without Debt Ceiling Increase.”

  2. CNN. “HSBC says profits triple as it announces share buyback.”

  3. Reuters. “Morgan Stanley to cut 3,000 jobs in second quarter.”

  4. Bloomberg. “IBM to Pause Hiring for Jobs That AI Could Do.”

  5. CNBC. “BP beats first-quarter profit expectations but shares slide 5% on slowing buyback program.”

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