Business Highlights: Expected rate hike, producer price rise
Biggest rate hike in years expected as Fed tackles inflation
WASHINGTON (AP) — The Federal Reserve is expected to announce its largest interest rate hike since 1994 — a bigger increase than it had previously signaled and a sign that the central bank is struggling to restrain stubbornly high inflation. The central bank is considered likely to raise its benchmark short-term rate by three-quarters of a percentage point, far larger than the typical quarter-point increase. It will also likely forecast additional large rate hikes through the end of the year. A flurry of large Fed rate hikes will heighten borrowing costs for consumers and businesses, likely leading to an economic slowdown and raising the risk of a recession.
Stocks dip deeper into bear market ahead of big Fed news
NEW YORK (AP) — Wall Street is closing mostly lower on Tuesday, a day after tumbling into a bear market on worries that high inflation will push central banks to clamp the brakes too hard on the economy. The S&P 500 slipped 0.4% after another day of unsteady trading. Investors are bracing to see how big of an interest rate hike the Federal Reserve will make on Wednesday. Gains by several big technology companies including Oracle helped send the Nasdaq composite index up 0.2%. The Dow Jones Industrial Average fell 0.5%. Treasury yields climbed again, reaching their highest levels in more than a decade.
Biden focuses on workers as high inflation remains a risk
PHILADELPHIA (AP) — President Joe Biden has told the largest federation of labor unions that he’s rebuilding the U.S. economy around workers. He’s drawing a contrast with Republicans who have increasingly attracted blue-collar votes. Biden says, “We should encourage unions.” His speech Tuesday at the AFL-CIO convention in Philadelphia was an attempt to reset the debate on the economy. His approval ratings have slid as consumer prices and the cost of gasoline have surged. That’s overshadowed strong job gains and a healthy unemployment rate. Biden says the GOP is focused on cutting taxes for companies and the wealthy. Republicans argue that their 2017 tax overhaul helped growth by reducing corporate tax rates, making U.S. companies more competitive.
US producer prices soar 10.8% in May as energy costs spike
WASHINGTON (AP) — U.S. producer prices surged 10.8% in May from a year earlier, underscoring the ongoing threat to the economy from a bout of inflation that shows no sign of slowing. Tuesday’s report from the Labor Department showed that the producer price index — which measures inflation before it reaches consumers — rose at slightly slower pace last month than in April, when it jumped 10.9% from a year earlier, and is down from an 11.5% yearly gain in March. The figures indicate that rising prices will continue to erode Americans’ paychecks and play havoc with household budgets in the coming months.
Researcher says airline bookings dip as fares keep rising
SAN JOSE, Calif. (AP) — Airfares are rising as we head into summer, and that could be leading to a slight slowdown in ticket sales. Research firm Adobe Digital Insights said Tuesday that fares in May rose 6% over April, and 30% over May 2019. That’s the fourth straight month in which fares are above pre-pandemic levels. The research firm says airline bookings in May for flights inside the U.S. were down 2.3% in May, compared with April. But the value of those sales is still rising because of higher prices. Adobe’s lead analyst, Vivek Pandya, says the numbers show that some consumers can handle the higher fares, but others are thinking twice.
Data likely shows Teslas on Autopilot crash more than rivals
DETROIT (AP) — The government plans soon to release data on collisions involving vehicles with autonomous or partially automated driving system that will likely single out Teslas for a disproportionately high number of such crashes. In coming days, the National Highway Traffic Safety Administration plans to issue the figures, which it’s been gathering for nearly a year. Last week, the agency said in a separate report that it had documented more than 200 crashes involving Teslas that were using one of the company’s partially automated systems. The number of such Tesla crashes was revealed as part of a NHTSA investigation of Teslas on Autopilot that had crashed into emergency and other vehicles stopped along roadways. A message was left seeking comment from Tesla.
Caterpillar moving its headquarters to Texas from Illinois
DEERFIELD, Ill. (AP) — Construction equipment manufacturer Caterpillar says it’s packing up its headquarters from its longtime home state of Illinois and heading to Texas. Caterpillar Inc. said Tuesday that it’s transferring its global base to Irving, Texas, from the Chicago suburb of Deerfield, Illinois. The company had been based in Peoria, Illinois, for over 90 years before announcing a move to Deerfield in 2017. Caterpillar already has an office in Irving and has had a presence in Texas since the 1960s. It says it will begin transitioning its headquarters to Irving this year. It’s the latest major corporation to ditch the Chicago area after Boeing Co. said last month that it was moving its headquarters to the Washington, D.C., area.
Cooling housing market prompts layoffs at Redfin
SEATTLE (AP) — Redfin, the Seattle-based real estate brokerage, says it will lay off 8% of its employees as the housing market cools off. The Seattle Times reports CEO Glenn Kelman announced the layoffs Tuesday. He said demand in May was 17% below expectations and there’s not enough work for agents and support staff. The cuts at the online listing site and real estate brokerage could affect more than 450 people. Redfin has about 5,800 employees, not including those who work for RentPath, which Redfin acquired last year. Redfin’s share price has dropped from about $39 at the start of the year to $8.55 this week. The company lost about $110 million last year, up from $18.5 million the year before, according to SEC filings.
The S&P 500 fell 14.15 points, or 0.4%, to 3,735.48. The Dow Jones Industrial Average lost 151.91 points, or 0.5%, to 30,364.83. The Nasdaq rose 19.12 points, or 0.2%, to 10,828.35. The Russell 2000 index of smaller companies dropped 6.77 points, or 0.4%, to 1,707.83.