Market Beats | U.S. Six Major Banks Return $1 Billion to Shareholders; Legal AI Firm Raises $300 Million; Federal Reserve May Cut Rates Earlier Than Expected; Microsoft Office Software Price Hike by 43%; Walmart Sells Pre-Owned Luxury Goods

1. Legal AI Firm Raises $300 Million

2. Federal Reserve May Cut Rates Earlier Than Expected

3. U.S. Six Major Banks Return $100 Billion to Shareholders

4. Microsoft Office Software Price Hike by 43%

5. Walmart Sells Pre-Owned Luxury Goods

6. American Express to Pay $230 Million Fine

7. UK’s Largest Asset Manager to Lay Off 200 Employees

1. Legal AI Firm Raises $300 Million

Sources reveal that San Francisco-based AI startup Harvey has raised $300 million in its latest funding round, doubling its valuation to $3 billion. Sequoia Capital will lead the investment.

Harvey has raised over $200 million to date, with a 2024 valuation of $1.5 billion. The company focuses on developing generative AI tools for law firms. Its shareholders include OpenAI Startup Fund, Elad Gil, and Kleiner Perkins.

The legal AI field is highly competitive, with rivals such as EvenUp and Robin AI. Sequoia Capital first invested in Harvey in 2023.

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2. Federal Reserve May Cut Rates Earlier Than Expected

Federal Reserve Governor Christopher Waller stated that Wednesday’s inflation data was very promising, and if inflation continues to ease, the Fed could lower interest rates in the first half of 2025.

Waller added that if inflation remains within the Fed’s expected range in the coming months, rate cuts could happen sooner and be more significant than anticipated, potentially bringing inflation back to 2% faster than expected.

Following Waller’s comments, the yield on 2-year U.S. Treasury bonds dropped to 4.25%, and traders raised expectations of rate cuts by the Fed.

Investors now expect a 50% chance of a rate cut in May.

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3. U.S. Six Major Banks Return $100 Billion to Shareholders

Bloomberg data shows that last year, the six largest U.S. banks returned over $100 billion to shareholders through stock buybacks and dividends, marking the highest level since 2021.

Many bank executives expect even higher returns in 2025. JPMorgan CFO Jeremy Barnum stated that the company has ample excess capital and is likely to return more to shareholders.

Stock buybacks help boost the value of outstanding shares.

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4. Microsoft Office Software Price Hike by 43%

Microsoft announced on its blog that it will increase consumer-level subscription fees for its Office software.

Starting today, the annual fee for the individual Microsoft 365 subscription will rise by 43% to $100, while the family subscription for up to six users will increase by 30% to $130.

The price hike aims to boost revenue from existing customers and reflect the company’s billions of dollars in investments in new services like AI.

Microsoft now has 84 million consumer subscribers.

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5. Walmart Sells Pre-Owned Luxury Goods

Walmart has partnered with second-hand luxury goods company Rebag, and starting this week, Walmart’s website will feature inventory from Rebag-certified third-party sellers, including products from brands like Chanel, Prada, and Fendi.

This collaboration benefits both companies, increasing Walmart’s luxury product offerings while expanding Rebag’s exposure.

In a bid to compete with Amazon, Walmart’s website now offers a wider selection of brands and price points, including refurbished electronics and collectible sneakers.

Over the past 12 months, Walmart’s stock has risen by 70%.

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6. American Express to Pay $230 Million Fine

American Express (Amex) has agreed to pay a $230 million fine to resolve an ongoing investigation into misleading sales practices, according to a statement released today.

In 2021, Amex launched services like the Premium Wire Service, claiming they could save small businesses on taxes and earn credit card points. However, regulators found that some employees provided misleading information when selling these products to small business owners. As a result, Amex canceled the products and fired the employees involved.

Amex stated that it had already set aside funds to cover the fine, so it will not affect the company’s 2024 financial results.

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7. UK’s Largest Asset Manager to Lay Off 200 Employees

Sources reveal that Schroders, the largest asset management company in the UK, plans to cut up to 3% of its workforce, or around 200 jobs, mostly in its technology department.

CEO Richard Wormald, who took office in November 2022, has been restructuring the company to stimulate growth.

As of June 30, Schroders, which has been operating for nearly 220 years, managed $947 billion in assets. However, compared to its peak in 2021, the company’s stock has fallen by 50%, facing criticism for its high fees and slow organic growth. Many investors have shifted from this traditional active fund manager to low-cost ETF funds.

Earlier this month, BlackRock also announced that it would lay off 1% of its workforce, or 20,000 employees.

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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.