Business

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks fell on Friday in a broad selloff led by megacaps as U.S. bond yields rose, with the S&P 500 posting losses for the week after four straight weeks of gains.

The benchmark 10-year U.S. Treasury yield climbed to an almost one-month high near 3%. Megacaps Amazon.com, Apple and Microsoft all fell, putting pressure on the S&P 500.

Investors have been weighing how aggressive the Federal Reserve may need to be as it raises interest rates to battle inflation.

Richmond Federal Reserve President Thomas Barkin said on Friday that U.S. central bank officials have “a lot of time still” before they need to decide how large an interest rate increase to approve at their Sept. 20-21 policy meeting.

“The rise in rates around the globe and tough talk from central bankers are being used as an excuse to push stocks lower in very light volume on an August Friday session,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

According to preliminary data, the S&P 500 lost 55.14 points, or 1.29%, to end at 4,228.37 points, while the Nasdaq Composite lost 258.35 points, or 1.99%, to 12,707.00. The Dow Jones Industrial Average fell 294.77 points, or 0.86%, to 33,704.50.

Friday’s monthly options expiration should also make way for greater near-term stock market moves as options positions expire, said Brent Kochuba, founder of options-focused financial insights company SpotGamma.

The U.S. central bank needs to keep raising borrowing costs to tame decades-high inflation, a string of U.S. central bank officials said on Thursday, even as they debated how fast and how high to lift them.

The Fed has raised its benchmark overnight interest rate by 225 basis points since March to fight inflation at a four decade-high.

Focus next week may be on Fed Chair Jerome Powell’s speech on the economic outlook at the annual global central bankers’ conference in Jackson Hole, Wyoming.

Meme stock Bed Bath & Beyond Inc plunged as billionaire investor Ryan Cohen exited the struggling home goods retailer by selling his stake.

Bank shares also fell after recent gains.

(Reporting by Caroline Valetkevitch, additional reporting by Saqib Iqbal Ahmed in New York, Editing by Shounak Dasgupta, Arun Koyyur and Deepa Babington)

source

CHARLOTTE, N.C. (AP) — Government health insurance provider Centene Corp. said Thursday it no longer plans to create an East Coast campus in Charlotte, North Carolina, a project first announced in 2020 and already under construction.

The St. Louis-based managed care company said it was pulling back because of the number of its employees who now prefer working from home or in a hybrid situation, a company spokesperson told The Charlotte Observer.

The project had initially been expected to create more than 3,200 jobs by 2032. When announced, Gov. Roy Cooper had described the planned expansion as the state’s largest single jobs announcement by number in nearly two decades.

The city of Charlotte and Mecklenburg County no longer plan to follow through on incentives that had been promised in conjunction with the project, spokespeople told the newspaper.

The news of Centene’s plans was first reported by the Charlotte Business Journal.

source

By Wayne Cole

SYDNEY (Reuters) – Asian shares were left in limbo on Friday while the U.S. dollar made all the running as recession clouds gathered over Europe and highlighted the relative outperformance of the U.S. economy.

Added concerns about the health of China’s economy saw MSCI’s broadest index of Asia-Pacific shares outside Japan ease 0.3%, to be down 1.1% on the week.

Chinese blue chips were flat, while South Korea lost 0.5%. Japan’s Nikkei fared better with a 0.3% gain due in part to a renewed slide in the yen.

S&P 500 futures eased 0.1% and were little changed on the week having repeatedly failed to clear the 200-day moving average, while Nasdaq futures slipped 0.2%.

EUROSTOXX 50 futures dipped 0.1%, while FTSE futures edged up 0.2%.

The threat of higher borrowing costs hung over markets as no less than four U.S. Federal Reserve officials signalled there was more work to do on interest rates, with the only difference being on how fast and high to go.

Markets are leaning toward a half-point hike in September and a one-in-three chance of 75 basis points (bp). Rates are seen peaking at least 3.5%, though some Fed members are arguing for 4% or more.

“There are no signs that the labour market or inflation data are slowing sufficiently for the Fed to declare victory on inflation,” said Brian Martin, head of G3 economics at ANZ.

“We see upside risks to the Fed’s inflation projections, and we expect these and the dot plot to be revised up in September,” he added. “We have revised up our year-end fed funds rate forecast by 25bp to 4.0% and now expect three 50bp hikes over the remainder of 2022.”

All of which underlines the importance of Fed Chair Jerome Powell’s Aug. 26 speech at Jackson Hole, usually a seminal event on the central bank calendar.

The bond market is clearly on the hawkish side with two-year yields 34 basis points below the 10-year yield and flashing recession warnings.

DOLLAR IN DEMAND

The “R” alarm is also ringing across Europe where natural gas prices hit record highs on Thursday adding to an inflation pulse that is sure to drive more painful policy tightening, exacerbating the risk of recession.

With European Union core inflation three percentage points above the European Central Bank’s 2% target, markets are wagering on another half-point rate hike in September.

The gloomy economic outlook has seen the euro drop almost 1.7% so far this week to $1.0078 and back toward its July nadir at $0.9950.

The dollar has also gained 2.0% on the yen this week to reach 136.28, the highest since late July. Against a basket of currencies it was up 1.8% for the week 107.60.

Sterling was another casualty, losing 1.8% for the week to $1.1917. Investors fear inflation in Britain at a stratospheric 10.1% will lead the Bank of England (BoE) to keep hiking and actually force a recession.

The cost-of-living crisis saw British consumer sentiment plunge to its lowest on record in August showed a monthly survey from data provider Gfk.

“Strength in the wage and price data have raised the bar for inaction and we now think the BoE will need to see clearer signs of a hard landing in order to pause,” said analysts at JPMorgan who raised their rate forecasts by 75 basis points to 3%.

“We look for a two quarter recession starting in 4Q that results in a cumulative 0.8% drop in GDP.”

The rise in the dollar has been a headwind for gold which has shed 2.4% on the week so far to $1,758 an ounce. [GOL/]

Oil prices were a little steadier on Friday, but still down on the week with Brent having touched its lowest since February at one point on concerns about demand. [O/R]

Brent was up a slim 2 cents at $96.61, while U.S. crude rose 5 cents to $90.55 per barrel.

(Reporting by Wayne Cole; Editing by Christopher Cushing)

source

By David Shepardson

WASHINGTON (Reuters) -General Motors Co and LG Energy Solution are considering a site in Indiana for a fourth U.S. battery cell manufacturing plant, a spokeswoman for the companies’ joint venture said on Thursday.

Ultium Cells LLC “is developing a competitive business case for a potential large investment that could be located in New Carlisle, Indiana,” she said, adding that Ultium had submitted a tax abatement application that it hopes will be approved later this month.

Production at Ultium’s first U.S battery cell plant in Warren, Ohio is set to begin later this month. The companies announced the $2.3 billion plant in 2019.

The fourth plant is expected to be similar to the three others and have an investment of more than $2 billion, a source briefed on the matter told Reuters, but it is not clear when it might open.

In January, GM and LG announced a $2.6 billion investment to build a new battery cell plant in Lansing, Michigan set to open in late 2024. GM also said then it would spend $4 billion to overhaul and expand an assembly plant near Detroit to build electric pickup trucks and be supplied by the Lansing battery plant.

GM and LG Energy are also building a $2.3 billion plant in Spring Hill, Tennessee set to be completed by the end of 2023.

Last month, the U.S. Energy Department said it would loan Ultium $2.5 billion to help finance construction of battery cell manufacturing plants in Ohio, Tennessee, and Michigan.

Last month, GM said it struck multi-year agreements with LG Chem Ltd and Livent Corp to secure key raw materials used in manufacturing batteries for electric vehicles. GM said it was on course to reach its goal of producing 1 million EVs annually in North America by the end of 2025.

In May, Chrysler-parent Stellantis NV and Samsung SDI said they will invest more than $2.5 billion to build a new joint venture battery plant in Kokomo, Indiana.

Legislation signed Tuesday by President Joe Biden imposes new sourcing rules on battery components and critical minerals that take effect Jan. 1 for electric vehicles to be eligible for $7,500 in tax credits.

Biden wants half of all U.S. vehicle production by 2030 to be electric or plug-in electric.

(Reporting by David Shepardson; Editing by Sandra Maler and Stephen Coates)

source

By David Milliken

LONDON (Reuters) – British households are feeling “a sense of exasperation” about the surging cost of living which has pushed consumer sentiment to its lowest since at least 1974, according to the country’s longest-running survey of household finances.

The GfK consumer sentiment index sank to a record-low -44 in August from July’s reading of -41, which was already the lowest since the survey began. Economists polled by Reuters had forecast a drop to -42.

Households’ assessment of their personal finances and the general economic situation declined, both looking back at the past 12 months and for the year ahead.

“All measures fell, reflecting acute concerns as the cost of living soars. A sense of exasperation about the UK’s economy is the biggest driver of these findings,” said Joe Staton, GfK’s client strategy director.

British consumer sentiment has declined steadily over the past year as inflation has risen sharply, climbing above 10% last month for the first time since 1982.

To date, the knock-on impact on consumer-facing businesses has been less dramatic, but the Bank of England expects further price rises will tip the economy into recession later this year.

Food prices have risen at their fastest rate since 2008, while regulated household energy bills have doubled. Industry analysts say they look set to double again to more than 4,000 pounds ($4,816.80) a year by January.

“Making ends meet has become a nightmare and the crisis of confidence will only worsen with the darkening days of autumn and the colder months of winter,” Staton said.

Separate figures from Lloyds Bank showed nine out of 14 business sectors contracted in July, up from four in June and the most since January 2021 when there was a COVID-19 lockdown.

Transport, tourism and recreation recorded the biggest falls in activity reflecting the impact of rail strikes and reduced consumer spending, Lloyds said.

($1 = 0.8304 pounds)

(Reporting by David Milliken; Editing by William Schomberg)

source

By Mrinalika Roy

(Reuters) -Bluebird bio slumped nearly 15% on Thursday as investors fretted over sales potential of its newly approved ultra-rare blood disorder gene therapy that is the most expensive treatment to date at $2.8 million.

The one-time treatment, Zynteglo, was approved by the U.S. Food and Drug Administration on Wednesday for patients with beta-thalassemia requiring regular blood transfusions. There are about only 1,500 of them in the United States.

Analysts do not see the drug becoming a major revenue driver for the company, despite that price tag, as the addressable patient population is tiny and not many may be willing to undergo the treatment.

“Don’t expect blockbuster sales from Zynteglo,” Oppenheimer Company analyst Mark Breidenbach said.

Of the total addressable patient pool, bluebird said there are only 850 eligible patients, with about one-third excited for the gene therapy, while the remaining either unsure or may never opt for it, Chief Operating Officer Tom Klima said.

Founded in 2010, bluebird has been riddled with challenges in the past few months; it pulled Zynteglo from Europe in a dispute over pricing and cut 30% of its workforce. In March, the company also flagged “going concern” doubts.

Wedbush analyst David Nierengarten said the drug is unlikely to generate major revenue in the United States and expects no more than 40 to 50 patients opting for it annually.

The silver lining for bluebird is the priority review voucher it received from the FDA upon approval, which it expects will help it generate $100 million to $110 million.

Such vouchers make their holders eligible to have one of their drugs reviewed in six months, compared to the standard 10 months.

“They’ll get more revenue in the first year from the priority review voucher than they will from selling Zynteglo,” Nierengarten said.

(Reporting by Mrinalika Roy in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)

source

By Kevin Buckland

TOKYO (Reuters) – The U.S. dollar climbed to a fresh one-month high against a basket of major peers on Friday as Federal Reserve policymakers continued to talk up the need for further interest rate hikes ahead of their key Jackson Hole symposium next week.

The dollar index rose 0.121% to 107.620, after earlier touching 107.68, its highest since July 18. The gauge is on track for a 1.89% rally this week, which would be its best weekly performance since June 12.

The greenback rose to 136.38 yen for the first time since July 28, while the euro dipped to $1.00735, the weakest since July 15. Sterling sank to $1.1905, its weakest since July 21.

St. Louis Fed President James Bullard said he is leaning toward supporting a third straight 75-basis-point interest rate hike in September, while San Francisco Fed colleague Mary Daly said hiking rates by 50 or 75 basis points next month would be “reasonable.”

Kansas City Fed President Esther George said she and her colleagues will not stop tightening policy until they are “completely convinced” that overheated inflation is coming down.

The dollar is “smartly higher” with central bank officials “all making clear the Fed still has work to do raising rates,” even as they differed on by how much, Ray Attrill, the head of currency strategy at National Australia Bank in Sydney, wrote in a client note.

“It’s hard to pin European currency weakness on specific news, albeit the case for more weakness on relative (global) economic grounds has been blindingly obvious for weeks.”

The euro is on course to decline 1.71% since last Friday, which would be its worst week since July 8. Sterling is set for a 1.80% drop, its biggest weekly tumble since May 6.

European currencies failed to get a lift from renewed inflation fears putting pressure regional central banks to keep tightening policy, instead worrying about risks of recession.

European Central Bank board member Isabel Schnabel fueled inflation worries overnight by saying consumer prices could still accelerate in the short term. British price growth hit double digits on Wednesday.

Meanwhile, despite the Fed chorus on the need for higher rates, the odds of another supersized 75 basis point hike next month have receded to 40% in money markets.

However, consumer price inflation and jobs data for August, due before the Fed’s September meeting, will likely affect the scale of tightening.

Fed Chair Jerome Powell will have a chance to update the market on his views at the annual Jackson Hole symposium on Aug. 25-27.

Elsewhere, the Australian dollar fell 0.26% versus the greenback at $0.690, and touched $0.6898 for the first time since Aug. 5. The New Zealand dollar lost 0.40% to $0.6240, after dipping to $0.6229, also the lowest since Aug. 5.

In cryptocurrencies, bitcoin fell 2.28% to $22,880.00. Ethereum was down 3.09% to $1,819.44.

(Reporting by Kevin Buckland; Editing by Sam Holmes)

source

By David Shepardson and Hyunjoo Jin

WASHINGTON (Reuters) -U.S. auto safety regulators on Thursday asked Tesla Inc to answer questions about its in-car camera intended to monitor driver awareness as part of a probe into 830,000 Tesla vehicles that employ the carmaker’s advanced driver assistance system called Autopilot.

The National Highway Traffic Safety Administration (NHTSA) is assessing the performance of Autopilot after earlier identifying a dozen crashes in which Tesla vehicles struck stopped emergency vehicles.

In June, it upgraded its probe to an engineering analysis – a required step before it could potentially demand a recall.

NHTSA’s nine-page letter demands Tesla answer questions by Oct. 12 about “the role that the Cabin Camera plays in the enforcement of driver engagement/attentiveness.”

According to Tesla, the cabin camera – a camera located above the rear view mirror – can determine driver inattentiveness and provide audible alerts to remind the driver to keep their eyes on the road when Autopilot is engaged.

NHTSA said it was seeking information on the cabin camera’s “impact on driver engagement alert types and timing” as well as “recoverable data elements pointing to its influence.”

The agency said it wanted an explanation for “design decisions” on driver engagement enforcement, “including the evidence that justifies the period of time that the driver is permitted to have their hands off the steering wheel before receiving a warning.”

The regulator is reviewing whether Tesla vehicles adequately ensure drivers are paying attention. The agency said in June evidence suggested drivers in most crashes under review had complied with Tesla’s alert strategy, raising questions about its effectiveness.

Tesla, which has disbanded its press office, did not respond to a request for comment.

Consumer Reports said when it evaluated Tesla’s driver attention monitoring camera in late 2021 “we found that it wasn’t adequate to ensure that the driver was fully paying attention when the driver was using Autopilot and Full Self Driving (FSD) features.”

The magazine said it “could block the in-cabin camera, and the car wouldn’t issue a warning, slow down the car, or shut off the systems.”

In June, Consumer Reports said the company had installed an over-the-air update that issued a warning when the camera is covered while FSD is engaged, but not with Autopilot.

Autopilot is intended to enable cars to steer, accelerate and brake automatically within their lane, while FSD enables vehicles to obey traffic signals and make lane changes.

In addition to the defect probe, NHTSA has opened 38 special investigations since 2016 of crashes involving Tesla vehicles and where Autopilot or other advanced systems were suspected of being used. A total of 19 deaths have been reported in those Tesla-related investigations.

Separately, California’s state transportation has accused Tesla of falsely advertising the features as providing autonomous vehicle control.

Tesla said in notices filed with the state that were released Thursday that it is seeking a hearing on the complaints and intends to present a defense.

California’s Department of Motor Vehicles is seeking remedies that could include suspending Tesla’s license to sell vehicles in the state and requiring the company provide restitution to drivers.

(Reporting by David Shepardson and Hyunjoo Jin; Editing by Rosalba O’Brien)

source

NEW YORK (AP) — Creem, which billed itself as “America’s only rock ‘n’ roll magazine” during two decades of existence that ended in 1989, is being revived next month.

The return is a remarkable story of persistence by J.J. Kramer, who was bequeathed the magazine at age 4 upon the death of his father, founder Barry Kramer. It will reappear during far different times, with a marketing plan that the late writer Lester Bangs or makers of the fake “Boy Howdy” beer could hardly conceive of.

The first new issue, a glossy quarterly, is due out in September and only available to people who spend $79 for a subscription.

Founded in Detroit, Creem was the impish, slightly rude younger brother of Rolling Stone. The name was an intentional misspelling of the rock band Cream, one of the first editor’s favorites.

Though known best for Motown soul, Detroit was also a rock ‘n’ roll hotbed with artists like MC5, Iggy Pop, Alice Cooper, Mitch Ryder and Bob Seger. Hard rocking bands, and then the onslaught of punk, provided the magazine’s backbone in its 1970s heyday.

Creem was an incubator of writing talent like Dave Marsh, Robert Christgau, Lisa Robinson, Cameron Crowe and Greil Marcus.

Rock stars weren’t put on a pedestal in Creem, and its reviews could be nasty — along with sexist and profane. Bangs was the toughest, and his feud with Lou Reed was legendary. Creem poked fun at a stuffy Dewar’s scotch profiles ad campaign by picturing artists holding beer cans emblazoned with a “Boy Howdy” logo drawn by cartoonist Robert Crumb.

In a 2019 documentary about the magazine, former R.E.M. singer Michael Stipe recalled first seeing Creem while in high school detention, realizing that he’d found the perfect gang of misfits.

“Buying Creem was a little bit like buying Playboy,” actor Jeff Daniels said in the documentary. “You didn’t want your parents seeing either one of them.”

Kramer’s death from a drug overdose in 1981 marked the beginning of the end. His son was named in the magazine’s masthead as a preschool “chairman of the board.” Barry Kramer’s widow, Connie, as publisher and acting on her son’s behalf because he was a minor, sold the bankrupt publication in 1985. Creem ceased publishing four years later.

With all the bravado of a 9-year-old, J.J. Kramer remembers telling his mother he would get it back some day.

“I’ve really spent most of my adult life trying to get to this point,” he told The Associated Press in advance of the revival. “It’s something I felt like I had to do. There’s a magnet that draws me to Creem. It’s almost like it was predetermined in a way that I couldn’t fight it.”

Kramer regained control of Creem, although it took several years. It helps that he’s an intellectual property attorney.

Now he’s chairman, again, and has put together a plan for the revival along with John Martin, a former Vice publisher who is CEO of Creem Entertainment. The idea is to make Creem the centerpiece of a media company that includes podcasts, merchandise and branded entertainment.

“Why is there not a Creemfest?” Martin asked. “That’s something that sounds like it should exist and it will exist.”

Yet it’s not the 1970s anymore. Rock ‘n’ roll is no longer as influential in culture as it once was; popular music is dominated by rap and pop. The music press is as diffuse as music itself. The well-made rock ‘n’ roll glossies on the market, like Mojo or Uncut, are British-based.

Kramer and Martin believe there’s still room for a publication that pulls rock ‘n’ roll fans together, from people who like HAIM to fans of Metallica. The world also needs people who can write about the genre with attitude, Martin said.

“When was the last time you laughed when you read about music?” Martin said.

While Bangs, who died in 1982, is no longer around, there are many new voices important to the current scene, some working on forums like Substack, he said.

The first issue’s mix of articles speaks to Creem’s intended breadth. For nostalgists, there’s an excerpt of a never-published book on the Who, a reevaluation of a 1972 rock album put out by the Osmonds and a revival of the “Stars’ Cars” feature with Slash and his wheels. There are stories on newer artists of various popularity levels like Mac DeMarco and Amyl and the Sniffers and personalities from rap and R&B like Lil Aaron and KeiyaA.

Samir Husni, founder and director of the Magazine Media Center, said he’s already paid for a subscription and is impressed by the new business plan. Plenty of people remember Creem fondly and would be curious about a reboot, he said.

“They are looking for customers who count, instead of counting customers,” Husni said.

That said, magazine revivals are more likely to fail then succeed, he said. A brand may have value, but not if people think time has passed it by. Husni said Creem may have to rethink its plans not to offer the magazine on newsstands or in bookstores.

The revival has been draining physically, emotionally and mentally, Kramer said. There were a number of times he could have — maybe should have — walked away, he said.

But he and Martin said they are convinced there is a market for the reimagined Creem, and they have the right plan to reach it.

“We’re not a cover band,” Kramer said. “We are pulling this magazine and brand forward.”

source

By Mehr Bedi and Ananya Mariam Rajesh

(Reuters) – Tapestry Inc and Estee Lauder Cos Inc forecast full-year earnings below estimates on Thursday, underscoring the hit global luxury goods companies are taking from China’s COVID-19 lockdowns.

Major Chinese cities have imposed strict restrictions this year under Beijing’s zero-COVID policy, leaving companies that have substantial exposure to the country with piles of unsold goods as cautious consumers stay away from crowded shopping districts.

Tapestry and Estee Lauder join Gucci-owner Kering SA, Ray-Ban maker EssilorLuxottica as well as Ralph Lauren Corp in flagging a sales hit in China, a key growth market for high-end fashion companies.

Estee, which makes MAC lipstick and La Mer skincare products, gets over a third of its revenue from China, while Coach handbag maker Tapestry generates about 20% of its sales from the region, according to analysts.

Tapestry, which also owns Kate Spade and Stuart Weitzman, said it was beginning to see a recovery in demand in China, with sales expected to fall 15% in the first quarter, compared with a 32% drop in the fourth quarter.

“The weakness in China has only really come about because of the lockdown. Once that region is out of those lockdowns, we see green shoots of the consumer coming back there,” Jane & Hali Associates analyst Jessica Ramirez said.

Tapestry forecast fiscal 2023 earnings between $3.80 and $3.90 per share, lower than analysts’ estimates of $3.91, according to Refinitiv IBES data. Estee said it expected adjusted profit per share to increase between 5% and 7%, below Wall Street’s view of a 10.5% gain.

Still, both companies beat fourth-quarter profit estimates as affluent American shoppers splurge on high fashion as they resume socializing.

“We took an incremental price increase in January because of inflation and still saw incredibly strong demand,” Estee finance chief Tracey Travis told Reuters.

(Reporting by Ananya Mariam Rajesh and Mehr Bedi in Bengaluru; Writing by Uday Sampath Kumar; Editing by Shinjini Ganguli, Maju Samuel and Anil D’Silva)

source