The daily business briefing: August 11, 2022
Inflation eased in July from 40-year high, a judge rules Walgreens contributed to San Francisco's opioid crisis, and more
Inflation eases from 40-year high
The Consumer Price Index rose 8.5 percent in July compared to a year earlier, cooling slightly from June's 9.1 percent inflation rate, a 40-year high. The slowdown was slightly bigger than economists had expected, thanks to a significant drop in gasoline prices. With volatile food and fuel prices excluded, core prices rose 5.9 percent in July compared to the same month a year earlier, matching June's rate. Compared to the previous month, core inflation climbed 0.3 percent, down from the 0.7 percent monthly figure in June. Inflation remains unusually high, and analysts said the slowdown was not sharp enough to indicate that the Federal Reserve's aggressive interest rate hikes have contained rising prices.
Gas prices fall below $4 a gallon for 1st time in months
The average U.S. price of a gallon of gas has dipped below $4 a gallon for the first time in five months, AAA reported Thursday. Gas prices rose to a nominal record high of $5.01 a gallon in mid-June, but have been steadily dropping since then, to Thursday's $3.99 a gallon. "It's sort of like a very simple roller coaster ride because we went up, and now we're coming down," AAA spokesperson Andrew Gross told USA Today. "When things kind of go up really fast, they also tend to kind of fall really fast." Gross credited falling oil prices, lower demand, and President Biden's withdrawals from the strategic petroleum reserve, which served as "a pretty good little Band-Aid."
Judge rules Walgreens contributed to San Francisco opioid crisis
A federal judge ruled Wednesday that Walgreens "substantially contributed" to San Francisco's opioid epidemic by failing to prevent misuse of the highly addictive painkillers. Walgreens handled nearly 1 in 5 oxycodone and hydrocodone pills distributed nationwide at the height of the opioid crisis. It was the only drug company sued by San Francisco that didn't settle. The case went to trial in April. "Walgreens has regulatory obligations to take reasonable steps to prevent the drugs from being diverted and harming the public," U.S. District Judge Charles Breyer wrote in the ruling. "The evidence at trial established that Walgreens breached these obligations." A later trial will determine how much Walgreens will have to pay the city. A Walgreens spokesperson said the company would appeal.
Stocks surge after inflation slows
U.S. stocks rallied Wednesday after federal data indicated that inflation fell in July to an 8.5 percent annual rate from a 40-year high of 9.1 percent in June. The tech-heavy Nasdaq jumped 2.9 percent, climbing back into bull territory and ending the index's longest bear market since the 2008 financial crisis. The Dow Jones Industrial Average and the S&P 500 rose 1.6 percent and 2.1 percent, respectively, as investors bet softening inflation could prompt the Federal Reserve to slow the aggressive interest rate hikes it has been imposing to fight rising prices. Futures tied to the Dow were up 0.4 percent at 6:30 a.m. ET on Thursday. S&P 500 and Nasdaq futures were up 0.3 percent and 0.2 percent, respectively.
Disney+ adds more subscribers than expected
Disney reported Wednesday that its Disney+ video streaming service added 14.4 million subscribers in the second quarter, smashing expectations. Disney also announced that it is hiking prices of its streaming services, which include Disney+, Hulu, and ESPN+. The news came as part of a blockbuster quarterly earnings report. Disney said strong demand at its theme parks, long considered indicators of consumer confidence, helped lift its operating profit by 50 percent to $3.6 billion on revenue of $21.5 billion. Both figures came in slightly higher than analysts expected, according to FactSet. Disney parks operated under coronavirus restrictions a year ago, but are mostly back to full capacity now.