Business Highlights: Recession fears, flat retail sales
BofA CEO: Struggling Americans feel they are in a recession
NEW YORK (AP) — The CEO of Bank of America said the recent debate over whether the U.S. economy is technically in a recession or not is missing the point. What matters is that current economic conditions are negatively impacting those who are most vulnerable. Brian Moynihan told The Associated Press that higher gas prices and rising rents are of particular concern when he looks at the health of the U.S. consumer. While gas prices have come down a bit recently, rents are still going up. But overall, the BofA CEO said he believes the American consumer is in good shape and able to withstand the economic turbulence.
Fed saw evidence of a slowing economy at its last meeting
WASHINGTON (AP) — Federal Reserve officials saw signs that the U.S. economy was weakening at their last meeting but still called inflation “unacceptably high” before raising their benchmark interest rate by a sizable three-quarters of a point in their drive to slow spiking prices. In minutes from their July 26-27 meeting, released Wednesday, the policymakers said they expected the U.S. economy to expand in the second half of 2022. But many of them suggested that growth would weaken as higher rates take hold. The officials noted that the housing market, consumer spending, business investment and factory production had already decelerated after having expanded robustly in 2021.
US retail sales were flat in July as inflation takes a toll
WASHINGTON (AP) — The pace of sales at U.S. retailers was unchanged last month as persistently high inflation and rising interest rates forced many households to spend more cautiously. Retail purchases were flat in July after having risen 0.8% in June, the Commerce Department reported. America’s consumers, whose spending accounts for nearly 70% of economic activity, have remained mostly resilient even with inflation near a four-decade high, economic uncertainties rising and mortgage and other borrowing rates surging. Still, their overall spending has weakened, and it has shifted increasingly toward necessities like groceries and away from discretionary items like home goods, casual clothes and electronics.
Judge: Pharmacies owe 2 Ohio counties $650M in opioids suit
CLEVELAND (AP) — A federal judge in Cleveland has awarded $650 million in damages to two Ohio counties that sued pharmacy chains CVS, Walgreens and Walmart saying their opioid distribution policies created a public nuisance. U.S. District Judge Dan Polster released the award amounts in a ruling issued Wednesday. A jury returned in November ruled in favor of Lake and Trumbull counties outside Cleveland after a six-week trial. Polster then conducted a hearing to determine how much the counties should receive. The damage awards are meant to help the counties abate a continuing opioid crisis. Their counties’ attorneys said it would take $3.3 billion total for the counties to abate the crisis.
Return of the meme stock: Bed Bath & Beyond shares skyrocket
NEW YORK (AP) — After a quiet first half of 2022, the meme stock is back. Beyond and back, in fact. Shares in Bed Bath & Beyond jumped another 12% Wednesday afternoon on huge trading volume. The mall-based home goods retailer’s stock has quadrupled in a little more than two weeks. For a while on Wednesday, it was on pace to close a fourth straight day with a gain of more than 20%. The inexplicable recent rise — a hallmark of so-called meme stocks — comes as Bed Bath & Beyond continues to lose money on plummeting sales as it struggles to navigate the post-pandemic retail landscape.
Target takes a hit after heavy discounts to clear inventory
NEW YORK (AP) — Target has reported solid sales for the fiscal second quarter but its profits plunged nearly 90% because it slashed prices to clear unwanted inventories of clothing, home goods and other discretionary items. The weaker-than-expected profit came two months after Target warned it was canceling orders from suppliers and aggressively discounting due to a pronounced spending shift by Americans that left the Minneapolis retailer with bloated inventory. Retailers were blindsided by consumers’ lightening-speed switch from pandemic spending on things like TVs and appliances, in favor of dinners out or travel. Inflation has only intensified that shift.
Musk tweet joking about buying Manchester United causes stir
LONDON (AP) — Elon Musk has caused a stir by tweeting that he was buying the English soccer team Manchester United. But several hours later on Wednesday, he said it was a joke. It comes as the billionaire Tesla CEO faces a legal battle in the U.S. after backing out of a deal to buy Twitter for $44 billion. With his billions and seemingly unlimited potential to buy the best soccer players in the world, Musk would have been a welcome prospect for many Man United fans who want to see the club back at the top of the game. Many fans oppose the current owners.
Yellen tells IRS to develop modernization plan in 6 months
WASHINGTON (AP) — Treasury Secretary Janet Yellen has directed the IRS to develop a plan within six months outlining how the tax agency will modernize its technology, customer service and hiring. With Democrats’ big climate, tax and health care bill now law, the tax agency is set to receive nearly $80 billion over 10 years. Yellen’s memo outlines the importance of modernizing IRS computer systems and making sure the agency has an adequate workforce. She says the IRS must “end the two-tiered tax system, where most Americans pay what they owe, but those at the top of the distribution often do not.” Her memo Tuesday to IRS Commissioner Chuck Rettig was obtained by The Associated Press.
The S&P 500 fell 31.16 points, or 0.7%, to 4,274.04. The Dow Jones Industrial Average fell 171.69 points, or 0.5%, to 33,980.32. The Nasdaq fell 164.43 points, or 1.3%, to 12,938.12. The Russell 2000 index of smaller companies fell 33.22 points, or 1.6%, to 1,987.31.