Business Highlights: Fed’s fight, Wall Street slump
Powell: Fed’s inflation fight could bring ‘pain,’ job losses
JACKSON HOLE, Wyoming (AP) — Federal Reserve Chair Jerome Powell delivered a stark message Friday: The Fed is determined to fight inflation with more sharp interest rate hikes, which will likely cause pain for Americans in the form of a weaker economy and job losses. “These are the unfortunate costs of reducing inflation,” Powell said in a high-profile speech at the Fed’s annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.” Investors had been hoping for a signal from Powell that the Fed might soon moderate its rate increases later this year if inflation were to show further signs of easing. But the Fed chair indicated that that time may not be near.
Dow drops 1,008 after Fed’s Powell says rates will stay high
NEW YORK (AP) — Stocks closed sharply lower after the head of the Federal Reserve dashed Wall Street’s hopes that it may soon ease up on high interest rates in its effort to tame inflation. The S&P 500 lost 3.4% Friday, its biggest drop in two months, after Jerome Powell said the Fed will likely need to keep interest rates high enough to slow the economy for some time in order to beat back the high inflation sweeping the country. Tech stocks led the way lower, pulling the Nasdaq composite down even more. Higher rates help corral inflation, but they also hurt asset prices.
Hints of cooling prices, but Fed vows firm inflation stance
WASHINGTON (AP) — Inflation eased last month as energy prices tumbled, raising hopes that the surging costs of everything from gasoline to food may have peaked. According to a Commerce Department report Friday that is closely watched by the Federal Reserve, consumer prices rose 6.3% in July from a year earlier after posting an annual increase of 6.8% in June, the biggest jump since 1982. Energy prices made the difference in July: They dropped last month after surging in June. Yet on Friday at the Federal Reserve’s annual economic symposium in Jackson Hole, Chair Jerome Powell delivered a stark message: The Fed will likely impose more large interest rate hikes in coming months and is resolutely focused on taming inflation.
Britain to see 80% spike in energy bills as crisis deepens
LONDON (AP) — British residents will see an 80% increase in their annual household energy bills. The U.K.’s energy regulator announced Friday that costs will go from 1,971 pounds a year to 3,549 pounds in October. It follows a record 54% annual spike in April. The costs are roiling the British economy, which has the highest inflation rate among the Group of Seven wealthiest democracies and seen disruptive strikes for months as workers push for pay to keep pace with the increasingly expensive cost of living. Charities, public health leaders and even energy firms warn of catastrophic effects on poorer people already struggling to afford essentials.
US, China reach deal in dispute over Chinese company audits
WASHINGTON (AP) — The U.S. and China have reached a preliminary agreement allowing U.S. regulators to inspect the audits of China-based companies whose stocks are traded on U.S. exchanges. In a long-festering dispute, U.S. regulators have threatened to boot a number of Chinese companies off U.S. exchanges if China doesn’t permit the inspections. The deal was announced Friday. If it does work out, the agreement means U.S. investors could maintain access to shares of important Chinese companies while at the same time being protected by the integrity of the companies’ audits.
Moderna sues Pfizer, BioNTech over COVID-19 vaccine patents
COVID-19 vaccine maker Moderna is suing its main competitors Pfizer and the German drugmaker BioNTech. It’s accusing the rivals of copying Moderna’s technology in order to make their own vaccine. Moderna said Friday that Pfizer and BioNTech’s vaccine Comirnaty infringes on patents Moderna filed several years ago protecting the technology behind its preventive shot, Spikevax. The company filed patent infringement lawsuits in both U.S. federal court and a German court. A Pfizer spokeswoman says the drugmaker will vigorously defend itself against any allegations in the case.
CNN management intent on changing perception of the network
NEW YORK (AP) — The first steps toward change at CNN have been slow and incremental — at least until the network cancelled its long-running media criticism show ‘Reliable Sources’ and cut loose its host, Brian Stelter. CNN’s new leadership is trying to recover a brand perception that it is an unbiased news source, one that was clearly damaged during Donald Trump’s presidency. Under its new chairman, Chris Licht, CNN is trying to do away with ‘food fight’ panels of experts fighting over extreme opinions. He’s also reached out to Republican leaders to encourage GOP politicians to appear for more interviews on the network.
Michigan Chipotle store’s workers unionize, a 1st for chain
LANSING, Mich. (AP) — A union says workers at a Chipotle store in Michigan have voted to unionize, becoming the first of the Mexican fast-food chain’s 3,000 locations to do so. The International Brotherhood of Teamsters says workers at a Chipotle store in Lansing, Michigan, “voted overwhelmingly” Thursday to form a union with the Teamsters. The union says the workers “are forming a union to improve their work schedules, increase wages, and gain the respect from management that they’ve rightfully earned.” Chipotle, based in Newport Beach, California, said Friday that it is “disappointed” the store’s employees “chose to have a third party speak on their behalf.” The Lansing store’s vote to unionize comes amid a broader unionization push across the country.
The S&P 500 tumbled 141.46 points, or 3.4%, to 4,057.66. The Dow Jones Industrial Average shed 1,008.38 points, or 3%, to 32,283.40. The Nasdaq lost 497.56 points, or 3.9%, to 12,141.71. The Russell 2000 index of smaller companies fell 64.81 points, or 3.3%, to 1,899.83.