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The S&P 500 and Nasdaq ended higher on Wednesday after data showing a moderate increase in consumer prices in August cemented expectations that the Federal Reserve will leave interest rates unchanged in September.
Megacap growth stocks Tesla, Meta Platforms, Microsoft and Amazon.com gained over 1% each. Apple dipped 1.2%, down for a second day after unveiling new iPhones on Tuesday while leaving prices unchanged.
Data showed consumer prices increased by the most in 14 months in August as gasoline prices surged, but the annual rise in underlying inflation was the smallest in nearly two years. Stickiness in services inflation has kept alive prospects of a November hike. Interest rate traders now see a 97% chance of the Fed holding rates in September, and a 61% likelihood of a pause in November, according to the CME FedWatch Tool.
Volume on U.S. exchanges was in line with recent weeks, with 9.9 billion shares traded, compared to an average of 9.9 billion shares over the previous 20 sessions.
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Financial Markets and Business News
US inflation rises in August as petrol prices jump
Rising energy costs pushed US inflation above forecasts in August, threatening to complicate the Federal Reserve’s battle to keep prices under control.
Consumer prices rose by 3.7 percent year on year, according to figures released by the Bureau of Labor Statistics on Wednesday, up from 3.2 per cent in July and beating consensus forecasts of 3.6 per cent. On a monthly basis, prices increased 0.6 per cent.
Underlying price pressures were also marginally stronger than expected over the month, but continued to decline year on year. More than half of the monthly increase in price pressures was driven by a recent jump in petrol prices. Saudi Arabia and Russia are renewing efforts to push the price of oil towards $100 a barrel and Brent crude is already at a 10-month high at about $92.50.
Citigroup CEO sets sweeping management changes, job cuts
Citigroup will strip out a layer of management and cut jobs in a sweeping reorganization that will give CEO Jane Fraser more direct control as she seeks to simplify the Wall Street giant and boost its stock.
The heads of the bank's five divisions will report directly to the CEO, and the bank will also cut regional leadership roles outside North America. Job cuts are expected, but the number and financial impact are still unclear.
Shares rose 1.7% after Chief Financial Officer Mark Mason said he was keeping the company's expense guidance unchanged for the year.
SoftBank's Arm valued at $54.5 bln in year's biggest IPO
Chip designer Arm Holdings Plc secured a $54.5 billion valuation in its U.S. IPO on Wednesday, seven years after its owner SoftBank Group Corp took the company private for $32 billion.
The IPO represents a climb-down from the $64 billion valuation at which SoftBank last month acquired the 25% stake it did not already own in the company from the $100 billion Vision Fund it manages.
Arm priced its IPO at $51 per share, at the top of its indicated range, raising $4.87 billion for SoftBank based on 95.5 million shares sold, the company said on Wednesday.
Arm's shares are scheduled to start trading in New York on Thursday.
Goldman Sachs fires several executives in transaction banking
Goldman Sachs fired several executives in its transaction banking unit after they violated the firm's communications policy, according to a memo.
The company did not name the individuals in the memo. Philip Berlinski, the bank's treasurer, will take over day-to-day management of transaction banking alongside Akila Raman and Luc Teboul. Berlinski is also leading Goldman's financial technology and consumer business on an interim basis.
UAW prepares to strike at Detroit Three automakers, rejects new offers
The United Auto Workers on Wednesday outlined plans for a series of strikes targeting individual U.S. auto plants in what would be its first-ever simultaneous strike against the Detroit Three automakers if agreements are not reached by late Thursday.
The Detroit Three automakers had offered 146,000 U.S. autoworkers pay raises of as much as 20% over four and a half years but called the hikes inadequate even as automakers protested the union had yet to formally respond to their latest more generous offers.
Coordinated strikes would mark the first-ever simultaneous labor stoppage at all three Detroit automakers and one of the largest U.S. industrial labor actions in recent years.
Drone Startup Shield AI Valued at $2.5 Billion in New Funding Round
Shield AI, a startup that makes autonomous drone technology for military applications, is raising $150 million from investors, according to people familiar with the discussions.
The deal values the San Diego-based company at $2.5 billion, said the people, who asked not to be identified discussing private information.
Shield AI makes software calledHivemind, which is a kind of self-driving pilot for aircraft that doesn’t require communications or GPS, and can be used in situations where enemy forces could otherwise interfere with navigation. The company has previously won US military contracts.
Adobe Will Charge Less Than OpenAI for Image Generation Tool
Adobe Inc. unveiled pricing for its new generative artificial intelligence imaging tool, Firefly, which will cost less than OpenAI’s competitor service.
Subscribers to Adobe’s creative software will have an allocated number of image generations included in their plans. To produce more images without delay, they will have to pay about 5 cents per creation.
That’s cheaper than OpenAI’s image-generating system Dall-E, which gained viral success late last year, and charges about 13 cents per credit on the web. It’s more expensive than Stability AI, which costs about a cent per generation.
Riddle
Question: Find a word related to the first clue, then change one letter to give a word related to the second clue.
1. Neighbourhood
2. Voice
What are the two words?
Any other business
Elon Musk, Mark Zuckerberg, Bill Gates and other tech leaders in closed Senate session about AI
Senate Majority Leader Chuck Schumer, D-N.Y., hosted the panel of tech executives, labor and civil rights leaders as part of the Senate’s inaugural “AI Insight Forum.” Sens. Mike Rounds, R-S.D., Martin Heinrich, D-N.M., and Todd Young, R-Ind., helped organize the event and have worked with Schumer on other sessions educating lawmakers on AI.
The panel, attended by more than 60 senators, according to Schumer, took place behind closed doors. Schumer said the closed forum allowed for an open discussion among the attendees, without the normal time and format restrictions of a public hearing.
New Covid boosters could reach Americans as soon as Thursday..
The Centers for Disease Control and Prevention cleared single-strain shots from Pfizer and Moderna for all Americans six months and up on Tuesday, following approvals from the Food and Drug Administration on Monday. Those mRNA vaccines are designed to target a relatively new omicron subvariant called XBB.1.5.
The CDC on Tuesday recommended that all Americans ages 6 months and older get the new shots. The agency’s website outlines more specific guidelinesfor staying up to date on Covid vaccines, which differ depending on age group and risk level.
The updated shots will soon be available to eligible people at pharmacies, health clinics and community centers, among other vaccine distribution sites. Those locations will stop offering last year’s bivalent boosters, which are no longer authorized for use in the U.S.
US-Iran Prisoner Swap Set to Happen as Soon as Early Next Week
The US and Iran are set to exchange prisoners as early as Monday under an agreement that’s seen as a first step toward fresh talks to reimpose limits on the country’s nuclear program, according to people familiar with the matter.
The people, who asked not to be identified discussing private deliberations, said the exact date of the swap isn’t yet set but it’s likely to be on Sept. 18, a day before world leaders convene in New York for the annual meeting of the United Nations General Assembly.
EU lawmakers approve binding green fuel targets for aviation
The approved proposal aims to increase both demand for and supply of sustainable aviation fuels (SAF), which have net-zero CO2 emissions or lower CO2 emissions than fossil fuel kerosene.
Fuel suppliers must ensure that 2% of fuel made available at EU airports is SAF in 2025, rising to 6% in 2030, 20% in 2035 and gradually to 70% in 2050.
From 2030, 1.2% of fuels must also be synthetic fuels, rising to 35% in 2050.
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