1. Biden signs Democrats' sweeping health and climate law
President Biden on Tuesday signed the Inflation Reduction Act, a landmark climate change and health care bill representing the "final piece" of his trimmed-down domestic agenda. The law, which passed with no Republican support, includes about $375 billion to fight climate change, the biggest investment the federal government has ever made to address what Biden has described as a key priority for his administration. The legislation will also extend expanded health insurance subsidies offered since the start of the coronavirus pandemic, and cap out-of-pocket prescription drug costs at $2,000 per year for Medicare recipients. The law will fund itself and raise money for deficit reduction through new taxes on large companies and tougher tax enforcement by the Internal Revenue Service on wealthy taxpayers.
2. Walmart shares jump as price cuts boost sales
Walmart shares rose 5 percent on Tuesday after the retail giant reported better-than-expected quarterly earnings. Walmart said it expects a smaller drop in profits this year than previously predicted thanks to a positive response from customers to price cuts on clothing, electronics, and other non-essential goods. The company said it now expects earnings per share for the year to fall 8 percent to 10 percent, instead of the 10 percent to 12 percent decline it forecast on July 25. Walmart reported quarterly earnings per share of $1.77, down 1 cent from a year earlier but better than the $1.62 percent analysts surveyed by Refinitiv had forecast. Walmart is the nation's largest retailer, so analysts watch its earnings for signs of overall economic strength.
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3. Tencent reports first-ever revenue decline
Chinese tech giant Tencent Holdings on Wednesday reported its first-ever quarterly revenue drop. The WeChat operator laid off nearly 5 percent of its workers, its first staffing decline since 2014, as its revenue fell by a sharper-than-expected 3 percent, to $19.8 billion, as China's economy slumped amid a resurgence of COVID-19-triggered lockdowns in major cities. Beijing also imposed stricter regulations around gaming. Tencent missed both revenue and profit forecasts. The deepening economic downturn in the world's No. 2 economy has hit a broad range of businesses, including cloud computing and gaming.
4. Arizona, Nevada, Mexico face emergency water cuts
The federal government announced Tuesday that it is declaring a Tier 2 water shortage on the Colorado River starting in January, which will impose further reductions in use of the river by Arizona, Nevada, and Mexico. Arizona will face the deepest cuts, about 21 percent of its annual allotment. California will not yet get hit with the mandatory cuts under the first-ever Tier 2 shortage. The West's historic drought and water overuse is drying up the Colorado River and draining Lake Mead and Lake Powell, the nation's largest reservoirs. Lake Mead's water level is expected to fall below the Tier 2 cutoff of 1,050 feet above sea level by early 2023. The Colorado River provides drinking water to 40 million people, irrigates farms, and powers electric grids.
5. Stock futures slip after Tuesday's boost from Walmart, Home Depot
U.S. stock futures fell slightly early Wednesday after better-than-expected earnings from Walmart and Home Depot helped lift the 30-stock Dow Jones Industrial Average to its fifth straight day of gains on Tuesday. Futures tied to the Dow were down 0.5 percent at 6:30 a.m. ET. S&P and Nasdaq futures were down 0.7 percent and 0.8 percent, respectively. Target reported before the bell Wednesday that its earnings fell nearly 90 percent from a year ago, confirming its warning that steep markdowns on unwanted merchandise would hurt profits. But the big-box retailer said it was poised to rebound. The Dow jumped 0.7 percent on Tuesday, with Walmart and Home Depot its biggest gainers. The S&P 500 rose 0.2 percent, while the tech-heavy Nasdaq fell 0.2 percent.
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