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Daily Market Report | August 30, 2021

US FINANCIAL MARKET

Stocks Rise After S&P 500, Nasdaq Hit Records – Wall Street Journal, 8/30/2021

  • The S&P 500 pushed further into record territory Monday after ending last week at an all-time high.
  • The broad U.S. stock index rose 0.3%, while the tech-heavy Nasdaq Composite advanced 0.6%.
  • The Dow Jones Industrial Average, meanwhile, ticked down 0.2%.
  • Investor optimism was bolstered Friday by comments from Federal Reserve Chairman Jerome Powell, in which he explained why he is still confident that this year’s inflation surge would prove temporary.
  • Disrupted supply chains, temporary shortages and a rebound in travel have pushed inflation to its highest readings in decades.
  • In bond markets, the yield on the benchmark 10-year U.S. Treasury note ticked down to 1.305% on Monday from 1.311% on Friday. Yields fall as prices rise.
  • Overseas, the Stoxx Europe 600 index dropped 0.1%. U.K. markets were closed for the summer bank holiday.
  • In Asia, major indexes closed higher. China’s Shanghai Composite added 0.2%, South Korea’s Kospi rose 0.3%, and Japan’s Nikkei 225 and Hong Kong’s Hang Seng each gained 0.5%.

T-Mobile CEO Apologizes for Data-Security Breach – Wall Street Journal, 8/30/2021

  • The chief executive of T-Mobile apologized to customers for a security breach that has exposed personal data from more than 50 million people and said the wireless company was working to strengthen its cyber defenses.
  • The Bellevue, Wash., company on Friday said it struck long-term partnerships with cybersecurity firm Mandiant and consulting firm KPMG LLG after the hack of its systems that exposed millions of Social Security numbers, birth dates and other data.
  • John Binns, a 21-year-old American who moved to Turkey a few years ago, told The Wall Street Journal he was behind the security breach. He said the company’s lax security eased his path into a cache of T-Mobile records.
  • “Their security is awful,” Mr. Binns told the Journal.
  • The breach is the third major customer-data leak that T-Mobile has disclosed in the past two years.
  • The company is the second-largest U.S. mobile carrier with roughly 90 million cellphones connecting to its networks.

United Jets With Engines in Denver Incident May Not Fly Until Next Year – Wall Street Journal, 8/30/2021

  • Dozens of United Airlines jets like the one that lost an engine cover over Colorado in February aren’t expected to fly until early next year, as federal regulators weigh additional safeguards, people briefed on the matter said.
  • U.S. air-safety regulators are considering an additional type of engine-blade inspection and a proposed Boeing modification aimed at preventing engine covers from ripping off should an engine fan blade break during flight, these people said.
  • The United 777 incident in February occurred shortly after takeoff from Denver. Investigators determined a fan blade in one of the plane’s two engines fractured, leading the engine’s cover to rip off midair and rain down parts on the ground below.

GM’s Chevy Bolt Recall Casts Shadow Over EV Push – Wall Street Journal, 8/30/2021

  • GM this month expanded the Bolt safety recall for the second time, calling back the roughly 142,000 models built since it went on sale five years ago. The Detroit auto maker also paused production of all new Bolts.
  • The safety action on its lone U.S. electric car will cost GM an estimated $1.8 billion, or around $12,700 per car, among its costliest recalls.
  • GM has confirmed 10 fires linked to the problem and is aware of some complaints of smoke inhalation but no deaths. It is advising owners to avoid fully charging their cars and warning them to not charge them in their garages.
  • The cost of replacing a battery pack can range from around $5,000 for smaller, less-expensive cars to more than $30,000 for those used in high-performance models, said James Davies, chief executive of analytics company We Predict.

McDonald’s, others consider closing indoor seating amid Delta surge in U.S. – Reuters, 8/30/2021

  • Some U.S. fast-food restaurants are closing indoor seating areas or limiting hours of operation because of the spread of the Delta variant of COVID-19, according to franchisees.
  • McDonald’s had temporarily closed indoor dining at nearly all U.S. locations in early 2020, but it reopened 70% by last month.
  • The global burger chain said on July 28 that it was on track to open nearly 100% by Labor Day – barring any COVID-19 resurgence.
  • But last week, McDonald’s instructed its franchisees on steps they should take to re-close their dining rooms in areas where the Delta variant is rapidly spreading, according to internal company materials seen by Reuters.
  • In Wednesday’s conference call, McDonald’s executives recommended franchisees consider closing indoor seating in counties where COVID cases exceed 250 per 100,000 people on a rolling three-week average.

US ECONOMY & POLITICS

U.S. pending home sales decline in July – Reuters, 8/30/2021

  • Contracts to purchase previously owned U.S. homes declined for the second consecutive month in July in step with limited supply that’s been unable to keep up with demand from potential homebuyers.
  • The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.8% after dropping a revised 2.0% in June.
  • Economists polled by Reuters had forecast pending home sales would increase 0.4%.
  • Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

Fed Faces New Challenge Spelling Out Employment Goals – Wall Street Journal, 8/30/2021

  • Federal Reserve officials are talking more about how to define a fuzzy concept—maximum employment—that will heavily influence their thinking around how much longer to keep interest rates near zero.
  • Assessing maximum employment, often described as the unemployment rate consistent with stable inflation, will be a delicate task for the Fed because officials concluded, in retrospect, that they overestimated it during the previous expansion and possibly raised interest rates too soon.
  • Their deliberations figure to be more difficult now because of how the Covid-19 pandemic has upended normal economic activity—for example, by making it harder to determine how many people who left the labor force last year will return.

Hurricane Ida Leaves More Than 1 Million Without Power in Louisiana – Wall Street Journal, 8/30/2021

  • Louisianians began to assess the damage from Hurricane Ida Monday morning as power remained out for more than 1 million customers and officials urged residents to stay indoors for their own safety.
  • The powerful storm, which made landfall in southeastern Louisiana Sunday on the 16th anniversary of Hurricane Katrina as a Category 4 hurricane, was downgraded to a tropical storm by Monday with sustained winds of about 45 miles an hour as it continued to move north.
  • All of New Orleans lost power Sunday night, and more than 1 million residents statewide remained without power Monday morning, according to data from poweroutage.us.
  • The Ascension Parish Sheriff’s Office confirmed the first death from the storm Sunday after deputies responded Sunday night to reports of a person injured from a fallen tree and arrived to find the victim deceased.

U.S. Targets Suspected Suicide Bombers With Drone Strike in Kabul – Wall Street Journal, 8/30/2021

  • The U.S. said it launched a drone strike targeting suspected suicide bombers near the Kabul airport Sunday as America’s 20-year war in Afghanistan wound down to its final hours.
  • The drone took aim at a vehicle carrying suspected suicide bombers, the Pentagon said. The U.S. believed it successfully struck the vehicle, but couldn’t say how many bombers were hit.
  • A senior Afghan health official, who also worked with the U.S.-backed government, said the Sunday strike killed five civilians and hit a house.

Afghan Militants Fire Rockets at Kabul Airport as U.S. Nears Withdrawal – Wall Street Journal, 8/30/2021

  • Afghan militants fired rockets at Kabul’s airport as the U.S. rushed to complete its evacuation mission in Afghanistan before Tuesday’s deadline to leave the country, with U.S. counter-rocket defenses deployed to intercept them.
  • President Biden, briefed on the rocket attack, “has reconfirmed his order that commanders redouble their efforts to prioritize doing whatever is necessary to protect our forces on the ground,” the White House said. Flight operations at the U.S.-controlled airport continued uninterrupted, it added.
  • The U.S. military is expected to perform its last evacuations of civilians from the country on Monday, its last full day in Afghanistan, before remaining service members leave on Tuesday and hand full control of the airport to the Taliban.

EUROPE & WORLD

German inflation hits fresh 13-year high in August- Reuters, 8/30/2021

  • Germany’s annual consumer price inflation accelerated to a fresh 13-year high in August, data showed on Monday, underlining growing price pressures as Europe’s largest economy recovers from the pandemic and companies struggle with supply shortages.
  • Consumer prices, harmonised to make them comparable with inflation data from other European Union countries (HICP), rose 3.4% compared with 3.1% in July, preliminary figures from the Federal Statistics Office showed.
  • The national inflation rate (CPI) even soared to 3.9% in August, hitting its highest since December 1993 when the economy boomed following German reunification.
  • In Spain, EU-harmonised consumer prices rose 3.3% year-on-year in August from 2.9% in July, separate data from the National Statistics Institute (INE) showed.

Euro zone Aug economic sentiment eases but selling price expectations at record high – Reuters, 8/30/2021

  • Euro zone economic sentiment has eased more than expected in August from a record high in July, hit by a sharp drop in optimism in France and the Netherlands, while selling price expectations in industry peaked, signalling inflationary pressure.
  • The European Commission’s economic sentiment index, released on Monday, eased to 117.5 in August from an all-time high of 119.0 in July.
  • Optimism deteriorated in all major sectors — in industry to 13.7 from 14.5, in services to 16.8 from 18.9 and among consumers to -5.3 from -4.4.
  • Still, selling price expectations in industry, heralding likely future inflationary pressures, hit a record in August.
  • Also among consumers, inflation expectations rose to 31.1 in August from 30.0 in July, though they were still well below the all-time high of 38.7 from 2001.
  • Overall, France recorded the sharpest drop in economic sentiment of 4.5 points, followed by the Netherlands. Italy and Spain were also weaker. Sentiment in the biggest euro zone economy, Germany, eased only slightly by 0.3 points.

Covid-19 Surge in Malaysia Threatens to Prolong Global Chip Shortage – Wall Street Journal, 8/30/2021

  • A surge of Covid-19 cases in Malaysia, a little-known but critical link in the semiconductor supply chain, has opened a new front in the battle to fix manufacturing woes that have rippled across industries during a global shortage of computing chips.
  • Disruptions in Malaysia threaten to prolong uncertainty over chip supply well into next year, dashing hopes of relief in the second half of 2021.
  • The supply crunch in Malaysia, caused primarily by staff shortages linked to virus-control measures combined with a sharp surge in global demand, poses a new problem for the auto industry.
  • About 7% of the global supply of semiconductors goes through the country at some point, according to the U.S.-based Semiconductor Industry Association. The U.S. imports more chips directly from Malaysia than from any other country in the world, the group said.

China Limits Videogames to Three Hours a Week for Young People – Wall Street Journal, 8/30/2021

  • China has a new rule for the country’s hundreds of millions of young gamers: No videogames during the school week, and one hour a day on Fridays, weekends and public holidays.
  • China on Monday issued strict new measures aimed at curbing what authorities describe as youth videogame addiction, which they blame for a host of societal ills, including distracting young people from school and family responsibilities.
  • The new regulation, announced by the National Press and Publication Administration, will ban minors from playing videogames entirely between Monday and Thursday.
  • On the other three days of the week, and on public holidays, they will be only permitted to play between 8 p.m. and 9 p.m.

China Curbs Steel Output, but Familiar Economic Pressures Test Its Mettle – Wall Street Journal, 8/30/2021

  • A two-month fall in China’s steel output, ordered by economic officials, handed Beijing a global showcase for advancing climate goals and controlling commodity markets. A brewing economic slowdown is testing the government’s will to sustain the cuts.
  • China’s production of crude steel, half the world’s annual total, fell in July by the widest year-on-year margin since the 2008 global financial crisis. Early indicators suggest it might slip again this month.
  • Culled by state inspections and other official curbs at mills nationwide, the usually prodigious flow that is often the subject of global trade and environmental tensions has fallen by 12.5 million metric tons—about twice Britain’s annual total—in July from May’s record high.
  • The steel cuts have driven global iron-ore prices down 40% since mid-July, delivering China twin triumphs: a show of policy leadership ahead of a major climate summit in Glasgow in November, and a demonstration that it can tamp down rising global commodity prices.

Factmonster – TODAY in HISTORY

  • The Second Battle of Bull Run took place during the Civil War. (1862)
  • The two-year siege of Leningrad during World War II began. (1941)
  • A hot line between the Kremlin and the White House went into operation to reduce the chances of an accidental war. (1963)
  • Cleopatra VII, Queen of Egypt, committed suicide. (1967)

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