Business Highlights: Wall Street Downturn, Inflation Report

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Markets tremble in the face of disappointed inflation hopes; The Dow falls around 1,250

NEW YORK — The stock market has fallen the most since June 2020 after Wall Street humbly acknowledged inflation is not slowing as much as hoped. The Dow lost more than 1,250 points and the S&P 500 fell 4.3%. A hotter-than-expected inflation report on Tuesday has traders braced that the Federal Reserve will eventually hike interest rates even higher than expected, with all the risks that that entails for the economy. Bond prices also fell, sending yields sharply higher after the government reported inflation slowed less than economists had forecast last month. The decline hasn’t entirely erased the market’s gains over the past four days.

US inflation still stubbornly high despite slowing in August

WASHINGTON – Lower gas costs slowed US inflation for the second straight month in August, but most other prices across the economy continued to rise – evidence that inflation remains a heavy burden on American households. Consumer prices rose 8.3% yoy and 0.1% from July. But the rise in “core” prices, which exclude volatile food and energy costs, was of particular concern. It beat expectations and fueled fears that the US Federal Reserve could hike rates more aggressively and increase the risk of a recession. Buoyed by high rents, medical supplies and new cars, core prices rose 6.3% for the year ended August and 0.6% for July-August, the government said on Tuesday.

Whistleblower: China, India had agents working for Twitter

WASHINGTON — Twitter’s former security chief told Congress Tuesday that “at least one agent” for Chinese intelligence was on Twitter’s payroll — and that the company knowingly allowed India to include agents on the company’s payroll. These were some of the disturbing revelations from Peiter “Mudge” Zatko, a respected cybersecurity expert and Twitter whistleblower, who appeared before the Senate Judiciary Committee to lay out his allegations against the company. Zatko, who was fired earlier this year, said Twitter’s leadership “misleads the public, lawmakers, regulators and even its own board of directors.”

A Piece of Queen: New souvenirs mark the death of the monarch

LONDON – Just days after Queen Elizabeth II’s death, unofficial souvenirs were launched in royal gift shops in London and online marketplaces such as Amazon and Etsy. A shop near Buckingham Palace says it has been urging its suppliers to work overnight to finish memorabilia by Saturday, just two days after the death of Britain’s longest-serving monarch. Now people have the opportunity to buy fridge magnets, flags, mugs and t-shirts with the Queen’s likeness and the dates of her 70-year reign. Some shops say items depicting the new monarch, King Charles III, are on the way. It will take longer for official merchandise to arrive at approved merchants who have stopped selling royal souvenirs out of respect for the mourning period.

Despite the sobering report, Biden is promoting an inflation-reducing law

WASHINGTON – President Joe Biden has gathered a crowd at the White House to celebrate the passage of the Inflation Reduction Act last month. But a new government report on Tuesday showed how difficult it could be to bring inflation back to pre-pandemic levels. Despite its name, the law’s impact on inflation is expected to be modest at best. Although gasoline costs have fallen since June, home and food prices remain particularly high, suggesting there will be more Federal Reserve rate hikes and more economic pain to bring prices down. ___

Starbucks wants to transform stores to speed up service and boost morale

SEATTLE — Starbucks plans to spend $450 million over the next year to make its North American operations more efficient and less complex. The company also said it plans to open 2,000 net new stores in the US by 2025. The focus will be on meeting the growing demand for drive-thru and delivery. Starbucks recently had its best week of sales in its 51-year history as it unveiled its latest fall beverages. But it says shops need better equipment to make drinks faster. Among the things driving the rebuild is an ongoing union organizing effort, which Starbucks opposes. More than 230 US stores have voted to join a union since late last year.

Bill Gates: Technological innovation would help solve hunger

NEW YORK – Bill Gates says the global hunger crisis is so immense that food aid cannot fully solve the problem. The Bill and Melinda Gates Foundation released a report Tuesday documenting major setbacks in shared global development goals, including food insecurity. In an interview with The Associated Press, Gates argues that innovations in farming technology, particularly what he calls “magic” seeds, are needed to reverse the crisis. The seeds are engineered to adapt to climate change and resist agricultural pests. Some scientists say trust in the seeds is at odds with global efforts to protect the environment, as they generally require fossil fuel-based fertilizers and pesticides to grow.

UN: Food exports from Ukraine increase, fertilizers from Russia decrease

UNITED NATIONS – The United Nations says food exports from Ukraine and Russia have increased since a July 22 grain deal, but much-needed fertilizer exports from Russia are still falling despite the deal. Insurance, financing and shipping remain issues. UN Trade Chief Rebeca Grynspan said Tuesday Russia reported a 12% increase in food exports from June to July. But she said while there had been “significant progress,” the United Nations was concerned about fertilizer exports needed for the October-November planting season in the northern hemisphere. She warned of a “catastrophic crisis” if fertilizer remains unaffordable for many.

Union and GE agree on salary increases at Massachusetts plant

LYNN, Mass. – The largest union representing workers at General Electric Co. says it has reached a tentative agreement with the company to speed up wage increases for workers at an aerospace plant in Massachusetts. Under the agreement, workers at GE’s Lynn facility would be entitled to raises earlier and could reach the top wage rate after six years, instead of up to 10 under the old system. GE has already rolled out an accelerated pay rise plan at plants in New Hampshire and Vermont. IUE-CWA Local 201, the union that negotiated the deal, called it a “massive win” for workers.

___ The S&P 500 fell 177.72 points, or 4.3%, to 3,932.69. The Dow Jones Industrial Average lost 1,276.37 points, or 3.9%, to 31,104.97. The Nasdaq lost 632.84 points, or 5.2%, to 11,633.57. The Russell 2000 index of smaller companies fell 74.51 points, or 3.9%, to 1,831.57.

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