Middle East turmoil grows

Pakistan’s military carried out targeted strikes against militant hideouts in Iran on Thursday, responding to an attack by Tehran a day earlier. Even as officials on both sides strove to prevent the situation from spiraling out of control, the tit-for-tat response is the most significant escalation between the two neighbors, which have had their conflicts in the past. The strikes are the latest sign of rising turmoil in the Middle East over the Israel-Hamas war. The US and UK struck Iranian-backed Houthi militants in Yemen for a fifth time in a week after the Houthis attacked another commercial boat Wednesday, and President Joe Biden vowed the strikes would continue. The Houthis have argued their assault on commercial boats in the Red Sea is in response to Israel’s bombing campaign in Gaza. For global shippers though, the back-and-forth has only wrought more chaos, forcing carriers to spend more to go the long way around Africa to deliver goods. Meanwhile Benjamin Netanyahu reiterated Thursday that for him a two-state solution with Palestinians is off the table—something US diplomats have been pushing for since the outbreak of the war. — Margaret Sutherlin

The Senate passed a temporary spending bill to avert a partial US government shutdown this weekend. The House is expected to pass the measure next as Democrats are prepared to supply the votes needed over the objections of some conservative Republicans. The deal keeps the government funded through the beginning of March. Speaker Mike Johnson has been under pressure from far-right Republicans for aligning with Senate Majority Leader Chuck Schumer. Johnson has said he’d keep the budget deal and instead has held up emergency aid for Ukraine and Israel.

A US Justice Department probe found “cascading failures” in law enforcement's handling of the 2022 massacre at a Uvalde, Texas elementary school. Responding law enforcement waited too long to confront the gunman according to the 600-page report, which further underscored findings from other state reports. The mass shooting at Robb Elementary School left 19 children and two staff members dead.

Some welcome news for homebuyers: mortgage rates in the US fell to the lowest level in almost eight months. The average for a 30-year, fixed loan was 6.6%, the lowest since May and down from 6.66% last week. The reversal offers some reassurance for would-be buyers looking for a way into a deal as the housing market gets ready to enter its busiest season. But shoppers are likely to encounter high prices and bidding wars, thanks to a persistent shortage of listings across the country.

Fund managers are going all-in on Big Tech stocks—so much so that it’s sparking warnings that the Nasdaq 100 is looking ever more vulnerable to investor pullbacks. One estimate shows hedge funds are holding the highest level of net-long Nasdaq 100 futures in nearly 7 years and the strength in tech shares like Apple and Taiwan Semiconductor pushed the Nasdaq 100 up as much as 1.4% Thursday. Here’s your markets wrap.

Just days after ending its 701-day snow drought, New York City is preparing for more snow. The Big Apple could get 2 to 4 inches and Washington as much as 2 inches of snow in the early hours Friday, threatening to snarl commuters and traffic. Amtrak was forced to cancel some Acela trains due to extreme temperatures Thursday too. Dangerous cold and ice storms have gripped the US for days, killing at least 14 people in Tennessee and 3 in Oregon.

In a breakthrough ruling, climate activists won a court case in Norway against the state over development plans at a handful of oil and gas fields under the sea off the Nordic country’s coast. Greenpeace Norway and Young Friends of the Earth argued that development plans, approved by the ministry of energy in 2021 and 2023, are invalid. On Thursday, the Oslo District Court concluded that the impact of combustion emissions must be considered by law.

After a phenomenally lucrative run for more than a decade and a half as the face of Cîroc vodka, Sean “Diddy” Combs sued its owner—and his longtime business partner—for being racist in May. He accused Diageo, the world’s largest liquor company, of failing to devote sufficient resources to DeLeón, a tequila they’d purchased together in 2013 amid their Cîroc success. As proof, he pointed to DeLeón’s desultory performance compared with that of Casamigos, a tequila Diageo had acquired four years later from actor George Clooney and his partners in a deal worth as much as $1 billion. The reason, Combs argued, was simple: He was Black, and Clooney was White. But after months in court, Sean Combs withdrew his racially charged lawsuit against Diageo. A closer look inside that battle reveals the failed attempt of a fading hip-hop mogul—who’s been buffeted by charges of sexual assault—to salvage a crumbling business empire.

Haribo is now the world’s largest brand in the $70 billion “sugar confectionery” category—aka candy. The German-based company recently opened its very first US factory in Pleasant Prairie, Wisconsin to fill demand for all those gummi bears and churns out approximately 60 million Goldbears a day. Businessweek got an inside look.

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