The daily business briefing: August 18, 2022
Fed minutes show officials are committed but cautious on raising rates, CVS, Walgreens, and Walmart ordered to pay $650 million over Ohio opioid sales, and more
Minutes show Fed officials committed but cautious on rate hikes
Federal Reserve officials agreed at their July meeting they will have to continue raising interest rates to cool the economy enough to bring down inflation, according to minutes of the meeting released Wednesday. Fed leaders raised their benchmark short-term interest rate by 0.75 at the meeting, following a similar hike in June. The increases were the central bank's largest since 1994. Several Fed policy makers have said since the July meeting that they would be in favor of lifting rates at least a half-point in September. The minutes indicate that officials were concerned about the risk of failing to raise rates enough to contain inflation, and also of raising them too much and hurting the economy.
CVS, Walgreens, Walmart ordered to pay Ohio counties $650 million over opioids
A federal judge in Cleveland on Wednesday said CVS, Walgreens, and Walmart should pay two Ohio counties $650 million in damages for the the pharmacy chains' roles in the opioid crisis. U.S. District Judge Dan Polster said the award should be used to address problems caused by the companies' distribution of opioids that harmed customers and created a public nuisance in Lake and Trumbull counties, outside Cleveland. Attorneys representing the counties had estimated the total damage they suffered at $3 billion. Lake County will get $306 million over 15 years; Trumbull County will receive $344 million. Polster told the companies to pay nearly $87 million right away. CVS, Walmart, and Walgreens said they will appeal.
Retail sales flat as falling fuel prices hit gas stations
U.S. retail sales unexpectedly remained flat in July as falling fuel prices cut into receipts at gas stations, the Commerce Department reported Wednesday. Total receipts excluding autos increased 0.4 percent, beating expectations of a 0.1 percent increase from analysts surveyed by Dow Jones. Falling gas prices gave consumers more to spend on non-essential goods like furniture and appliances. The solid position of retailers, along with strong wage gains and savings, boosted expectations that the Federal Reserve will be able to keep raising interest rates to fight inflation without triggering a recession. "The combination of the strong labor market and sturdy consumer spending looks to keep the economy out of recession territory," said Kathy Bostjancic, chief U.S. economist at Oxford Economics in New York.
U.S., Taiwan to hold talks on trade, investment
The U.S. Trade Representative's office announced Wednesday that it will start formal trade negotiations with Taiwan this fall. The goal will be a bilateral trade and investment initiative to strengthen ties and cooperation on technology, agriculture, and other issues in response to "distortive practices of state-owned enterprises and nonmarket policies and practices," the USTR 's office said, a thinly veiled reference to policies in mainland China. The announcement came amid escalating tensions between China and the United States after back-to-back trips to Taiwan by House Speaker Nancy Pelosi (D-Calif.) and a five-member congressional delegation. The visits were intended to show U.S. support for Taiwan, a self-governing island China claims as part of its territory. China responded with military drills around the island.
Stock futures edge up after Dow snaps 5-day winning streak
U.S. stock futures inched higher early Thursday after Wednesday's losses, which snapped a five-day winning streak for the Dow Jones Industrial Average. Futures tied to the Dow, the S&P 500, and the Nasdaq were up 0.1 percent at 6:30 a.m. ET. The Dow and the S&P 500 fell 0.5 percent and 0.7 percent, respectively, on Wednesday after the release of minutes from the Federal Reserve's July meeting. Fed leaders expressed commitment to tightening monetary policy to fight inflation, but said they were open to adjusting the pace of interest rate hikes depending on how the economy and markets respond. Some investors are betting the Fed will slow the hikes since inflation cooled slightly in July from a 40-year high.