The daily business briefing: August 2, 2022

1. U.S. manufacturing expansion slows, but less than expected

U.S. manufacturing activity expanded at its slowest pace in two years in July due to declining orders and growing inventories, although the slowdown was not quite as bad as expected. The Institute for Supply Management's gauge of factory activity fell to 52.8 from 53 a month earlier, according to data released Monday. Any reading above 50 indicates expansion. Economists surveyed by Bloomberg had projected a reading of 52. The institute's measure of production also dropped to its lowest point in more than two years, and new orders contracted for the second month. Timothy Fiore, chair of ISM's Manufacturing Business Survey Committee, said that contraction and excess inventory in the supply chain are causing members of the panel to express "concern about a softening in the economy."

Bloomberg

2. BP earnings triple thanks to soaring fuel prices

British energy giant BP reported Tuesday that its second-quarter earnings tripled as oil and gas prices skyrocketed after Russia invaded Ukraine. The company said profit, excluding one-time items and other fluctuating inventory value, rose to $8.45 billion from $2.80 billion in the second quarter of 2021. The earnings allowed BP to return money to shareholders by boosting its dividend by 10 percent, with expected 4 percent annual dividend increases through 2025. BP also said it would buy back $3.5 billion worth of shares. The British government has announced a 25 percent windfall profit tax on energy company earnings from domestic operations as the country struggles with 9.4 percent inflation, a 40-year high.

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The Associated Press

3. Grain futures rise after ship leaves Ukraine port

Wheat and corn prices fell Monday after a ship carrying grain was allowed to leave Ukraine for the first time since Russia's invasion. The shipment marked the first test of a deal July 22 brokered by the United Nations and Turkey to release grain trapped in Ukraine by a Russian blockade. The agreement was reached last month in a bid to ease global food shortages. Wheat futures traded in Chicago dropped 1.8 percent, The Wall Street Journal reported. Corn futures fell 2 percent. The Associated Press reports that the cargo ship Razoni is carrying more than 26,000 tons of corn to Lebanon. At that rate, it would take over 800 trips to clear out the 22 million tons of grain and other agricultural products that have accumulated in Black Sea ports since late February.

The Wall Street Journal The Associated Press

4. DOJ, Penguin Random House make opening arguments in antitrust trial

The Justice Department and Penguin Random House made their opening arguments Monday in a federal antitrust trial as the federal government tries to block the biggest U.S. publisher from buying rival Simon & Schuster. The $2.2 billion merger between the No. 1 and No. 4 book publishers in the country would reduce the industry's Big Five to four. Bestselling author Stephen King is expected to testify as the government's star witness. Justice Department lawyers said the acquisition was "presumptively wrong" because it would hurt authors by reducing what they are paid, and give readers fewer titles to choose from. Penguin Random House said the new company would be able to produce books more efficiently and "enhance" competition.

The Associated Press

5. Stock futures fall ahead of Pelosi's planned stop in Taiwan

U.S. stock futures and global markets fell early Tuesday as House Speaker Nancy Pelosi's expected visit to Taiwan fueled concerns about rising tensions between China, which views Taiwan as a rebel province, and the United States. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.6 percent and 0.8 percent at 6:30 a.m. ET. Nasdaq futures were down 1.1 percent. The three main U.S. indexes fell slightly on Monday, as August trading started after their best month in two years. The Dow and the S&P 500 fell 0.1 percent and 0.3 percent, respectively. The tech-heavy Nasdaq dropped 0.2 percent.

The Wall Street Journal CNBC