Business briefing

The daily business briefing: May 26, 2022

Fed minutes point to more interest rate hikes, Wendy's shares jump on merger talk, and more

1

Fed minutes point to more rate hikes to tame inflation  

Federal Reserve officials said in their policy meeting earlier this month that they might have to raise interest rates to "restrictive" levels, high enough to weaken the economy, to accomplish their goal of bringing inflation down from a four-decade high, according to minutes of the meeting released Wednesday. Policymakers said they could "assess the effects" of rapid rate hikes after several months, and slow the pace of the increases, depending on the state of the economy. During the May 3-4 meeting, the Fed raised its benchmark short-term interest rate by a half-point, instead of the usual quarter-point shift. Most of the central bank's leaders said further half-point hikes "would likely be appropriate" at June and July meetings.

2

Wendy's shares surge on news of possible sale, merger

Wendy's shares jumped 11 percent on Wednesday, a day after the burger chain's chairman, Nelson Peltz, said in a filing with the Securities and Exchange Commission that the company's board would consider a possible sale or merger. Peltz's management fund, Trian Partners, initiated the search for a potential deal. "Our board is committed to continuing to act in the best interests of the company and its stockholders," Wendy's said in a statement. "Consistent with its fiduciary duties, the board will carefully review any proposal submitted by Trian Partners." Trian is Wendy's largest shareholder, owning more than 19 percent of its shares. The stock is down 23 percent in the last 12 months.

3

CBO warns inflation will remain high through 2022

High inflation could ease but will likely remain uncomfortably high for the rest of 2022, the Congressional Budget Office said Wednesday. The nonpartisan agency forecasts that the consumer price index will rise 6.1 percent for the entire year, down from the current four-decade high of 8.3 percent. The CBO said the rate would slow to 3.1 percent in 2023, still above the 2.3 percent long-term baseline, and wouldn't fall to targeted levels until 2024. "People's desire to consume more goods than businesses can produce is leading to a rise in prices," said Adam Ozimek, chief economist at the Economic Innovation Group.

4

Big-city populations shrink further in pandemic migration

Big-city populations continued to fall last year as Americans, many newly free to work remotely, moved to smaller towns where they could afford bigger homes, according to census figures released Thursday. In nine cities with more than one million residents, populations fell by 1.7 percent. New York City, the nation's largest, lost 3.5 percent of its population. Los Angeles and Chicago, the nation's No. 2 and No. 3 cities, lost 1 percent and 1.6 percent, respectively. In the large city category, only Phoenix and San Antonio gained residents. Midsize cities with 500,000 to one million people lost a smaller percentage of their populations, 0.7 percent. Growth was flat in cities with 250,000 to 500,000 people, while those with 100,000 to 250,000 grew 0.1 percent.

5

Dow, S&P futures edge higher after Wednesday's gains

Futures tied to the Dow Jones Industrial Average and the S&P 500 rose slightly early Thursday after Wednesday's gains. Dow and S&P 500 futures were up 0.2 percent and 0.1 percent at 6:45 a.m. ET. Nasdaq futures were down 0.2 percent. The Dow and the S&P 500 rose 0.6 percent and 1 percent, respectively, on Wednesday. The tech-heavy Nasdaq jumped 1.5 percent. Investors will be watching a flurry of earnings reports from tech companies and fresh economic data on Thursday. Shares of chipmaker Nvidia fell 5.6 percent in pre-market trading after it released weaker-than-expected guidance for the second quarter. Software maker Snowflake fell 14 percent after it delivered a disappointing forecast.

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