Daily Market Report | 08/28/2023
US FINANCIAL MARKET
Stocks Start Data-Packed Week on a Positive Note: Markets Wrap – Bloomberg, 8/28/2023
- Stocks advanced, while bond yields retreated at the start of a week jam-packed with economic data that will help shape the outlook for Federal Reserve policy.
- The S&P 500 rose 0.7%. The Nasdaq 100 rose 0.7%. The Dow Jones Industrial Average rose 0.8%.
- 3M rallied as Bloomberg News reported the company has tentatively agreed to pay more than $5.5 billion to resolve lawsuits claiming it sold defective combat earplugs.
- Megacaps were mixed, with Google’s parent Alphabet gaining and Nvidia pushing lower.
- US-listed Chinese stocks climbed after the Asian nation’s authorities took steps to bring investors back to the market.
- August’s risk-off mood showed some signs of abating, but the US equity benchmark is still poised for its worst month this year after a higher-for-longer rates narrative took hold.
- Fed Chair Jerome Powell stuck to the script in his Jackson Hole speech Friday, saying officials are “prepared to raise rates further if appropriate,” while stressing the central bank would “proceed carefully,” guided by economic data.
- For investors, that means reports like the monthly jobs data on Friday will be crucial.
- Employment growth in the US probably cooled and wage increases moderated in August, suggesting a further tempering of inflation risks that reduces the urgency for another rate hike.
- Other labor-market figures are seen showing fewer job openings than a month earlier, indicating supply and demand are coming into better balance.
- Fed officials will also get a fresh read on their preferred inflation gauge — the personal consumption expenditures price index minus food and energy.
- Hawaiian Electric Industries surged after the utility it owns said its power lines had been de-energized hours before a wildfire that killed at least 115 people in Maui earlier this month.
- The Stoxx Europe 600 rose 1%.
- The Bloomberg Dollar Spot Index was little changed.
- The yield on 10-year Treasuries declined two basis points to 4.22%.
- West Texas Intermediate crude rose 0.9% to $80.53 a barrel.
- Gold futures rose 0.3% to $1,946.60 an ounce.
- Shawn Fain, president of the United Auto Workers union since March, has declared “war” on the Detroit Three automakers, with contract demands that even he calls “audacious,” including proposals for a 46% raise, a return to traditional pensions and a 32-hour work week.
- Now the 54-year-old who began work as an electrician at a Chrysler casting plant in 1994, is threatening to take his 150,000 UAW members out on strike.
- If he doesn’t have contracts with General Motors, Ford Motor and Stellantis, maker of Jeep and Chrysler models, by the Sept. 14 deadline, the UAW could strike all three simultaneously — something it has never done.
- “The deadline is the deadline,” Fain said an interview earlier this month at the UAW’s Solidarity House headquarters along the Detroit River.
- “We have a horrible history in this union of setting expectations low and settling lower,” Fain said. “Those days are over.”
3M Nears Roughly $5.5 Billion Earplugs Settlement – Wall Street Journal, 8/28/2023
- 3M and plaintiffs attorneys are nearing a settlement that would resolve hundreds of thousands of claims by veterans that earplugs made by the company and a subsidiary failed to protect them from hearing loss.
- Under the terms being discussed, 3M would pay about $5.5 billion, people close to the discussions said.
- Negotiations are continuing, they said, and the final amount hasn’t been established yet.
- The 3M board hasn’t yet voted on a proposal to settle the case, the people said.
- The earplug litigation has become the largest mass tort in U.S. history, with more than 300,000 claims.
- Veterans allege that 3M and Aearo Technologies, a company 3M acquired in 2008, produced faulty earplugs that failed to protect their hearing from noise damage when issued to them by the U.S. military.
- 3M is contesting the cases, and has said the earplugs work correctly when used with proper training.
American Airlines Fined $4.1 Million for Long Delays on Tarmac – Bloomberg, 8/28/2023
- American Airlines Group was ordered to pay a $4.1 million fine, the largest such penalty to date, for allowing aircraft to sit on the ground for three hours or more without giving passengers a chance to exit.
- The US Transportation Department on Monday said the action was part of an increase in enforcement starting last year after Secretary Pete Buttigieg began denouncing carriers for causing lengthy delays and canceling flights.
- “This is the latest action in our continued drive to enforce the rights of airline passengers,” Buttigieg said in a statement.
- “Whether the issue is extreme tarmac delays or problems getting refunds, DOT will continue to protect consumers and hold airlines accountable.”
Hawaii Utility Soars After Saying Lines Were Out Before Blaze – Bloomberg, 8/28/2023
- Hawaiian Electric Industries soared after the utility it owns said its power lines had been de-energized hours before a wildfire that killed at least 115 people in Maui earlier this month.
- While a fire on the morning of Aug. 8 was apparently caused by power lines falling in high winds, the second, deadly blaze that swept through the town of Lahaina in the afternoon started more than six hours after Hawaiian Electric’s power lines in the area had been turned off, the utility said Monday in a statement.
- Hawaiian Electric said it’s “surprised and disappointed” it’s being sued by Maui County and that it has yet to be shown that the utility bears responsibility for the deadly blaze.
- The utility believes Maui County’s complaint “is factually and legally irresponsible,” Hawaiian Electric Chief Executive Officer Shelee Kimura said in the statement.
US ECONOMY & POLITICS
- Tropical Storm Idalia is set to intensify into a hurricane on Monday on its way toward Florida, which is bracing for its first major storm of the Atlantic hurricane season.
- The storm is expected to make landfall Wednesday on Florida’s Gulf Coast as a dangerous major hurricane, according to the National Hurricane Center.
- Idalia, which strengthened into a tropical storm Sunday, could become at least a major Category 3 hurricane before it reaches Florida.
- The storm Monday morning was swirling northward in the Gulf of Mexico toward western Cuba, forecasters said.
- Florida Gov. Ron DeSantis declared a state of emergency for more than two dozen counties in the path of the storm.
- Idalia was expected to cut through Florida’s west coast and parts of the Panhandle before reaching southern Georgia and the eastern Carolinas later in the week, forecasters said.
EUROPE & WORLD
BYD’s Growth Slows as China’s Auto Price War Takes its Toll – Bloomberg, 8/28/2023
- BYD reported its weakest revenue growth in more than a year in a potential sign of the damage discounting has done in China, the world’s biggest auto market.
- Revenue rose just 67% to around 140 billion yuan ($17.8 billion) in the three months ended June, according to Bloomberg calculations based on first-half earnings published Monday.
- Fueled by rebounding sales in China, BYD last month reported preliminary first-half net income of 10.5 billion yuan to 11.7 billion yuan.
Poland, Baltics Tell Belarus to Expel Russian Mercenaries – Bloomberg, 8/28/2023
- Poland and the Baltic nations called on Belarusian President Alexander Lukashenko to expel Russian mercenaries from his country and agreed on a plan to potentially shut the border in response to escalating tension.
- In the event of an armed incident or an organized influx of migrants across the frontier, Poland and the Baltic states — Lithuania, Latvia and Estonia — will coordinate on shutting the border with Belarus, the four nations agreed in Warsaw on Monday.
- They warned of the threat posed by Wagner mercenaries even after the death this month of the group’s leader, Yevgeny Prigozhin.
- “We’re expecting potential incidents — also of a military nature — carried out with the members of that group,” Polish Interior Minister Mariusz Kaminski told reporters.
- “We are determined to undertake joint action” at the frontier, he said, adding that the mechanisms also count for the states’ direct borders with Russia.
Biden’s Commerce Secretary Raimondo Says Trade Can Stabilize US-China Ties – Bloomberg, 8/28/2023
- One of the key architects of US measures to deny China advanced technology came to Beijing with an optimistic message: Trade can serve as the foundation for better ties between the world’s biggest economies.
- US Commerce Secretary Gina Raimondo said Monday that the majority of US-China trade has nothing to do with national security, and that it’s possible to promote and protect exports at the same time.
- “The plan and the hope is that our commercial relationship, if done right, can stabilize the political relationship,” she said at an event showcasing American health and beauty businesses. “And this is one small example of that.”
- Raimondo’s message is more evidence of a shift in tone within the Biden administration, which has recently tried to emphasize the narrow scope of export controls and investment restrictions that the Chinese government has decried as a new containment strategy.
- “It is profoundly important that we have a stable economic relationship, which is to the benefit of both of our countries and in fact what the world expects of us,” Raimondo said.
Ukraine says it liberates strategic southeastern settlement – Reuters, 8/28/2023
- Ukraine said on Monday its troops had liberated the southeastern settlement of Robotyne and were trying to push further south in their counteroffensive against Russian forces.
- The Ukrainian military said last week that its forces had raised the national flag in the strategic settlement, but were still carrying out mopping-up operations.
- Ukrainian forces believe they have broken through the most difficult line of Russian defences in the south and that they will now start advancing more quickly, a commander who led troops into Robotyne told Reuters last week.
- “Robotyne has been liberated,” Deputy Defence Minister Hanna Maliar was quoted as saying by the military.
- The settlement is 10 km (six miles) south of the frontline town of Orikhiv in the Zaporizhzhia region on an important road towards Tokmak, a Russian-occupied road and rail hub.
U.K. Flights Disrupted by Air-Traffic-Control Glitch – Wall Street Journal, 8/28/2023
- The U.K. restricted the number of flights into its airspace Monday after a technical issue disrupted its air-traffic-control system, delaying flights across the country and parts of Europe during a busy British holiday weekend.
- The U.K.’s National Air Traffic Services said it had reduced the number of flights for safety reasons until its engineers could find and fix the issue.
- It didn’t give further details about how long the restrictions might last.
- The issue stems from a failure in the U.K.’s flight-data-processing system, Eurocontrol, Europe’s air-traffic-control agency, said Monday.
- No improvements to the number of flights entering U.K. airspace are foreseen for “the near future,” it said.
Factmonster – TODAY in HISTORY
- Henry Hudson discovered Delaware Bay. – 1609
- Richard Wagner’s opera, Lohengrin, premiered at Weimar, Germany. – 1850
- The first commercial to be broadcast on radio aired on station WEAF in New York City. The ten minute advertisement for the Queensboro Realty Company cost $100. – 1922
- Emmett Till, a black teenager from Chicago, was abducted and by white men after he supposedly whistled at a white woman in Mississippi. The case was reopened in 2005. – 1955
- Martin Luther King, Jr. gave his famous “I Have a Dream” speech at the Lincoln Memorial to civil rights demonstrators. – 1963
- Anti-Vietnam war protesters and police clashed in the streets of Chicago while the Democratic National Convention nominated Hubert H. Humphrey for president. – 1968
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