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☆ August Jobs Report U.S. Job Growth Expected to Cool
▼ + stars: | 2023-09-01 | by ( Lydia Depillis | Joe Rennison | ) www.nytimes.com time to read: +2 min

Forecasters believe that trend continued in August, estimating that the Labor Department’s monthly report on Friday will show the addition of 170,000 jobs. That would be a decrease from the 218,000-job average over the previous three months, and closer to the number needed to employ the approximately 140,000 people who enter the labor force each month. But analysts say the Federal Reserve’s push to cool rapid inflation by ratcheting up borrowing costs — and the impact on hiring — has a ways to go. Immigrants work at higher rates than the American-born population, in which labor force participation is declining as people age into retirement. Already, Americans are feeling the difference: In the Conference Board’s reading of consumer sentiment for August, the share of workers saying jobs were “hard to get” increased sharply, while the share saying jobs were “plentiful” fell.

Persons: —, ’ ”, Stephen Juneau, Bank of America Merrill Lynch, “ There’s, we’ve Organizations: Labor, Bank of America Locations: American, ”

When Jerome H. Powell spoke at the Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyo., last year, inflation had recently topped 9 percent and the Fed was raising rates at a breakneck pace to wrestle down price increases. Mr. Powell used the platform to offer a stern warning that central bankers would keep at it until the job was done. Higher rates have cooled the housing market and, together with healing supply chains and cheaper gas prices, lowered inflation notably — to 3.2 percent in July. Instead of warning that the central bank is prepared to push the economy into a recession if that is necessary to calm rapid inflation, Fed officials today are increasingly suggesting that they might pull off what once seemed unlikely: cooling the economy without tanking it. But many economists and investors think that he may be able to strike a slightly less aggressive tone than he did last year.

Persons: Jerome H, Powell Organizations: Federal Reserve Bank of Locations: Federal Reserve Bank of Kansas, Jackson

☆ Wall St. Weighs the Effect of Weaker China and Stronger U.S.
▼ + stars: | 2023-08-15 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

The world’s two largest economies — China and the United States — are moving in sharply different directions. Investors are wary of China’s weakening growth, deflation and precarious real estate market, but they have largely shrugged off these concerns so far. Investors are, however, flinching at signs that the U.S. economy is unexpectedly strong, which could prompt a stronger response by the Federal Reserve as it tries to rein in inflation. The S&P 500 stumbled on Tuesday, falling about 1 percent, extending the decline recorded this month to more than 3 percent. The move on Tuesday came amid several signs of weakness in China.

Organizations: United, Investors, Federal Reserve Locations: China, United States, U.S

The downgrade of the United States’ debt by a major ratings firm is a damning indictment of the country’s fractious politics and a blot on its financial record that is unlikely to be quickly erased. But many investors and analysts say it won’t affect the government’s ability to keep borrowing money. On Tuesday, Fitch Ratings lowered the credit rating of the United States one notch to AA+ from a pristine AAA. The firm, citing a “deterioration in governance” along with America’s mounting debt load, suggested that it could be a long time before that decision was reversed. The United States came within days of defaulting on its debt this spring as Republican lawmakers refused to lift the cap unless President Biden made concessions on spending.

Persons: ”, Richard Francis, “, Biden Organizations: United, Fitch, AAA, P, Treasury Department Locations: United States, Americas

☆ Wall St. Pessimists Are Getting Used to Being Wrong
▼ + stars: | 2023-07-28 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Beaten as they might be by the stock market’s rally, worriers on Wall Street still question how long it can last. After starting the year with dour warnings about the economy, many investors and analysts have changed their minds. Marquee earnings from some large tech companies, like Meta and Alphabet, helped drive stock prices higher. Consumer-facing companies like Coca-Cola and Unilever that are dependent on households continuing to spend also posted bumper financial results. The benchmark sits roughly 5 percent away from the record it reached in January 2022.

Persons: Jerome H, Powell Organizations: Consumer, Cola, Unilever, Federal Reserve

☆ Markets Trade Cautiously Ahead of Pivotal Fed Meeting
▼ + stars: | 2023-07-26 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: 1 min

Stock markets slipped on Wednesday morning, as cautious investors parsed mixed earnings reports and prepared for the Federal Reserve to resume raising interest rates. The S&P 500 fell 0.2 percent ahead of the Fed’s announcement. The index has gained nearly 20 percent since the start of the year, but the rally has slowed this month from its earlier breakneck pace. The Dow Jones industrial average, a collection of 30 stocks that are intended to track the broader economy, was on course for a 13th consecutive day of gains, posting a small gain in early trading Wednesday. Stock markets often exhibit caution ahead of major events like Fed meetings, waiting until there is clarity over the central bank’s next move.

Organizations: Federal Reserve, Dow, Stock

“Most of us have been wrong on the timing of things going bad, and right now there is really not much of a problem. That means it can be years before a company needs to refinance those bonds at higher interest rates. The longer inflation remains elevated, the longer interest rates will also stay high, meaning that an increasing number of companies could be forced to shoulder higher borrowing costs. Their latest economic projections suggested that interest rates could be hovering near 4.6 percent at the end of 2024. That would be lower than where they are now, but still a big change after years of near-zero interest rates.

Persons: “, ”, John McClain Organizations: Brandywine Global Investment Management

As Russia resumes its blockade of ships carrying food from Ukraine, its military bombarded Odesa and an adjoining port late Tuesday and early Wednesday — specifically targeting the ability to export grain, Ukrainian officials said. Hours later, Russia’s Ministry of Defense issued a warning to ship operators and other nations suggesting that any attempt to bypass the blockade might be seen as an act of war. As of midnight, “all ships en route to Ukrainian ports in the Black Sea will be considered as potential carriers of military cargo,” it said in a statement. “Accordingly, the flag countries of such vessels will be considered involved in the Ukrainian conflict on the side of the Kyiv regime.” The ministry added that even parts of the Black Sea in international waters “have been declared temporarily dangerous for navigation.”Ukrainian officials accused Russia of using food as leverage in the war, in an attempt to extend Ukraine’s pain to the rest of the globe.

Organizations: Russia’s Ministry of Defense Locations: Russia, Ukraine, Odesa, Kyiv

Carvana, the troubled used-car retailer, on Wednesday announced that it had reached a debt restructuring agreement with most of its bondholders in an effort to lower interest payments over at least the next two years and put its business on more solid financial footing. But Carvana took on a lot of debt, made a big acquisition and was unprepared for falling used car prices and rising interest rates. Carvana said its restructuring agreement covered more than $5 billion of senior, unsecured bonds and included the participation of Apollo Global Management, its largest bondholder. The interest on that new debt will be paid in kind for the next two years, meaning the principal Carvana owes will increase but the company won’t have to make about $430 million in interest payments in cash. The new debt will also come due later than the old notes.

Persons: Carvana Organizations: Wednesday, Apollo Global Management

As companies prepare to open their books to investors over the coming weeks, in the quarterly ritual known as earnings season, market watchers are balancing relatively weak estimates for past profits with brighter forecasts for future performance. Stock prices tend to follow expectations of earnings to come rather than react to details about the past, and markets have risen in step with investors’ improved outlook for the economy. The S&P 500 index has gained more than 20 percent since October. But much of that decline is concentrated in a few sectors, like energy, that recorded outsize profits last year, making for difficult comparisons to this year. And corporate executives also have a habit of lowering investors’ expectations ahead of earnings announcements, so that they can beat projections.

Persons: ”, Binky Chadha Organizations: Companies, Deutsche Bank

☆ Wall Street’s Recession Warning Is Flashing. Some Wonder if it’s Wrong.
▼ + stars: | 2023-07-12 | by ( Joe Rennison | More About Joe Rennison | ) www.nytimes.com time to read: +1 min

Some investors believe that a recession warning that has been flashing on Wall Street for the past several months is wrong and that the Federal Reserve will be able to tame inflation and still escape a deep downturn. The signal — called the yield curve — began suggesting last year that the economy was headed for a slump. Typically, investors expect to be paid more interest for lending for longer periods of time, creating an upward sloping curve. The inversion suggests that investors expect interest rates over time will fall from their current high level. And that usually only happens when the economy needs propping up and the Fed decides to help by lowering interest rates.

Organizations: Federal Reserve, Fed

PinnedInflation data released on Wednesday showed a pronounced cooling and offered some of the most hopeful news since the Federal Reserve began trying to tame rapid price increases 16 months ago. Officials have signaled in recent weeks that they are likely to raise interest rates at their July 25-26 meeting. For one thing, the cost of housing as measured by the Consumer Price Index — which relies on rent prices — is coming down sharply. The Fed officially targets 2 percent inflation on average over time, though it defines that goal using a separate inflation measure, the Personal Consumption Expenditures index. Interest rates increases work partly by slowing the job market and cooling wage increases, so the Fed’s fight against inflation and the strength of the labor market are closely tied.

Persons: ”, Laura Rosner, Warburton, it’s, . Rosner, Airfares, “, Beth Weaver, Loretta Mester, ” Julia Pollak Organizations: Federal Reserve, Federal, Consumer, Buick GMC, Fed, Federal Reserve Bank of Cleveland, ZipRecruiter Locations: Erie, Pa

PinnedInflation data released on Wednesday showed a pronounced cooling and offered some of the most hopeful news since the Federal Reserve began trying to tame rapid price increases 16 months ago. But Federal Reserve officials are still trying to assess whether the cool down is likely to be quick and complete. Officials have signaled in recent weeks that they are likely to raise interest rates at their July 25-26 meeting. For one thing, the cost of housing as measured by the Consumer Price Index — which relies on rent prices — is coming down sharply. Interest rates increases work partly by slowing the job market and cooling wage increases, so the Fed’s fight against inflation and the strength of the labor market are closely tied.

Friday’s fresh labor market data probably offered little to dissuade them from raising interest rates at their meeting later this month. The June data is the last payrolls report officials will receive before the central bank’s July 25-26 meeting. It underscored many of the labor market themes that have been present for months: While job growth is gradually slowing, wage growth remains abnormally quick and the unemployment rate is very low at 3.6 percent. Investors widely expect the Fed to raise rates at their July meeting, and Friday’s data only reinforced that prediction. But several policymakers have been clear that even as the pace moderates, they still expect to raise interest rates further.

Persons: ” Lorie K, Logan, ” Organizations: Fed, Federal Reserve Bank of Dallas, ” Fed

☆ Wall St. Foresees a Rosy 6 Months. Corporate America Isn’t So Sure.
▼ + stars: | 2023-06-30 | by ( Joe Rennison | J. Edward Moreno | ) www.nytimes.com time to read: +1 min

Stubbornly high inflation, a debt ceiling brawl, a brief banking crisis and the prospect of even higher interest rates: The past six months brought much to unsettle even the most optimistic investor. Investors have welcomed data showing that the economy remains on more solid footing than was expected at the start of the year. Inflation is easing, albeit more slowly than forecast, and policymakers have signaled that they expect interest rates will soon reach their peak. The more time that has passed without investors’ worst fears being realized, the more optimistic they have become. “We anticipated more damage,” said Kristina Hooper, chief global market strategist at the fund manager Invesco.

Persons: “, ”, Kristina Hooper, Invesco Organizations: Federal Reserve

☆ The End of LIBOR Is (Finally) Here
▼ + stars: | 2023-06-30 | by ( Joe Rennison | ) www.nytimes.com time to read: +2 min

The arduous, decade-long process to end the financial system’s reliance on a tarnished interest-rate benchmark, which once underpinned trillions of dollars in contracts across the globe, is almost over. From next week, the rate, known as the London Interbank Offered Rate, or LIBOR for short, will cease to be published. LIBOR is a collective term for dozens of rates, denominated in different currencies, intended to reflect how much it costs banks to borrow from one another. In the end, roughly $10 billion in fines were meted out across the financial industry over accusations of LIBOR rigging, which led to efforts to move away from the tainted benchmark. “There are still issues, but it’s remarkable that LIBOR will go out with more of a whimper than a bang.

Persons: LIBOR, ”, Mark Cabana Organizations: London, Barclays, Bank of America Locations: LIBOR, British

☆ Stock Market Rally on Pause as Investors Take Cue from the Fed
▼ + stars: | 2023-06-23 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

This week, stock investors also paused for reflection, putting the recent rally on hold until the outlook becomes clearer. The S&P 500 is headed for its first weekly decline since early May, which would end the index’s longest streak of gains since 2021. Even after a slump on Friday, this week’s fall is set to shave off just 1 percent from those gains. Stocks of smaller companies more exposed to the risk of a slump in the U.S. economy fell further. Jerome H. Powell, the Fed chair, said during congressional testimony on Thursday that “the data will tell us what to do” on future rate increases.

Persons: Russell, Jerome H, Powell Organizations: Federal Reserve, Wall, Fed Locations: U.S

☆ Market Rally Intensifies Debate Over What Will Come Next
▼ + stars: | 2023-06-16 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

Stock markets are on a tear, and investors face a tricky question: Will this rally last? The S&P 500 index is on track for its fifth consecutive week of gains, its longest winning streak since the fall of 2021. Many investors feared that the Fed’s series of interest rate increases would push the country into a more severe downturn. But the S&P 500 is roughly 17 percent higher than a year ago, almost 24 percent above its low in October, and just 8 percent away from a record. Others warn that the recent rise could be a bear market rally — a short-lived stretch of optimism within a longer-running trend downward.

Persons: It’s Organizations: Federal Reserve

☆ Federal Reserve Meeting Fed Leaves Rates Unchanged: Live Updates
▼ + stars: | 2023-06-14 | by ( Jeanna Smialek | Joe Rennison | ) www.nytimes.com time to read: +7 min

Credit card rates are closely linked to the Federal Reserve’s actions, which means consumers have seen those rates rise over the past year. After raising interest rates 10 times over the past 15 months, the Federal Reserve is expected to take a break on Wednesday and hold rates steady. The Federal Reserve has already raised its benchmark rate, the federal funds rate, to a range of 5 to 5.25 percent to rein in inflation, which is showing signs of slowing. Used-car rates were even higher: The average loan carried a 11 percent rate in May, up from 8.2 percent a year earlier. Home-equity lines of credit and adjustable-rate mortgages — which each carry variable interest rates — generally rise within two billing cycles after a change in the Fed’s rates.

Persons: ”, Anna N’Jie, Bankrate.com, Matt Schulz, Jonathan Smoke, Edmunds.com, that’s, —, Freddie Mac, Ken Tumin, DepositAccounts.com Organizations: Federal Reserve, Fed, Re, LendingTree, Cox Automotive, Treasury, Savings Vehicles Savers, Consumers, DepositAccounts.com Locations: San Francisco .

☆ Fed Expected to Pause Rate Increases: Live Updates
▼ + stars: | 2023-06-14 | by ( Jeanna Smialek | Joe Rennison | ) www.nytimes.com time to read: +7 min

The Federal Reserve has already raised its benchmark rate, the federal funds rate, to a range of 5 to 5.25 percent to rein in inflation, which is showing signs of slowing. The average credit card rate was 20.44 percent as of June 3, according to Bankrate.com, up from around 16 percent in March last year, when the Fed began its series of rate increases. The average rate on new car loans was 7.1 percent in May, according to Edmunds.com, up from 5.1 percent last year. Used-car rates were even higher: The average loan carried a 11 percent rate in May, up from 8.2 percent a year earlier. The average rate for an identical loan was 5.23 percent the same week in 2022.

The fresh data offer the latest evidence that the Fed’s push to control rapid price increases is beginning to work. Investors have been betting that Fed officials will leave rates unchanged at their meeting this week, breaking their long streak of increases. Even so, many investors continue to expect that Fed officials will restart rate increases in July. That “core” price index rose 5.3 percent in May compared with a year earlier. And price increases for goods excluding motor vehicles remained positive, instead of subtracting from inflation as some economists have been expecting.

Persons: “, ” Laura Rosner, Warburton, Airfares, Ms, Rosner, Jerome H, Powell Organizations: Federal Reserve, Fed, Mortgage, Association

☆ Stocks Climb on Inflation Data, Moving Further Into a Bull Market
▼ + stars: | 2023-06-13 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

Stocks on Wall Street pushed further into bull market territory in early trading on Tuesday, climbing after new data showed inflation continues to slow. The Consumer Price Index for May was initially read by investors as moderate enough to ensure the Federal Reserve will hold off on another interest rate increase this week. The S&P 500 has climbed more than 20 percent from that 2022 low, a gain that by many definitions breaches the threshold for a bull market, a marker of a new phase of exuberance in the markets. Slowing inflation is seen by investors and economists as limiting the need for the Federal Reserve to keep increasing interest rates, which have raised borrowing costs for consumers and companies and weighed on the broader stock market. Some policymakers had already suggested the Fed might not raise rates again this month, and after the latest inflation data, the likelihood of an increase was close to wiped out.

Organizations: Index, Reserve, Federal Reserve

☆ A $1 Trillion Borrowing Binge Looms After Debt Limit Standoff
▼ + stars: | 2023-06-07 | by ( Alan Rappeport | Joe Rennison | ) www.nytimes.com time to read: +1 min

The United States narrowly avoided a default when President Biden signed legislation on Saturday that allowed the Treasury Department, which was perilously close to running out of cash, permission to borrow more money to pay the nation’s bills. Now, the Treasury is starting to build up its reserves and the coming borrowing binge could present complications that rattle the economy. The government is expected to borrow around $1 trillion by the end of September, according to estimates by multiple banks. That steady state of borrowing is set to pull cash from banks and other lenders into Treasury securities, draining money from the financial system and amplifying the pressure on already stressed regional lenders. To lure investors to lend such huge amounts to the government, the Treasury faces rising interest costs.

Persons: Biden Organizations: United, Treasury Department, Treasury, Federal Reserve Locations: United States

☆ Is the Bear Market Over? It Depends.
▼ + stars: | 2023-06-05 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

The S&P 500 fell into a bear market — which is defined as a decline of 20 percent or more from an index’s high — in June of that year, and continued to slide until hitting a low in October. The terms “bull” and “bear" are shorthand for excitement or fear among investors about the prospects for public companies. But while investors tend to agree on how to mark the start of a bear market, there’s less consensus on how to define the start of a bull market, especially when the concerns that initially dragged stocks lower still linger. One rule of thumb is that a new bull market is confirmed when an index sets a new high after rising from a bear-market low. By that measure, the S&P 500 is still more than 10 percent short.

Persons: Dow Organizations: Dow Jones Indices

☆ Companies Push Prices Higher, Protecting Profits but Adding to Inflation
▼ + stars: | 2023-05-30 | by ( Talmon Joseph Smith | Joe Rennison | ) www.nytimes.com time to read: +1 min

PepsiCo is not alone in continuing to raise prices. “Everybody knew that the war in Ukraine was inflationary, that grain prices were going up, blah, blah, blah. The Producer Price Index, which measures the prices businesses pay for goods and services before they are sold to consumers, reached a high of 11.7 percent last spring. That rate has plunged to 2.3 percent for the 12 months through April. The price of carbonated drinks rose nearly 12 percent in April, over the previous 12 months.

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