The daily business briefing: October 20, 2023

1. Powell says cooling inflation still too high

Federal Reserve Chair Jerome Powell said Thursday that inflation had cooled significantly this year but remained unacceptably high and won't come down to the central bank's 2% target until the economy and job market slow. "We certainly have a very resilient economy on our hands," Powell said at the Economic Club of New York. Instead of slipping into a recession, as many economists predicted, "growth is now running for this year above its longer-run trend," he added. But he said the Fed still might not have to raise interest rates again this year because spiking long-term bond rates are increasing borrowing costs just as a Fed rate hike would, and that could cool growth. The Associated Press

2. Union Pacific profit falls as freight traffic slips

Union Pacific reported Thursday that its quarterly profit fell 19% to $1.5 billion as freight rail volumes declined. Still, the company's struggles weren't quite as bad as analysts expected. Earnings fell to $2.51 per share from $3.05 in the same period a year ago, but analysts polled by FactSet had expected a drop to $2.41 a share. Overall quarterly revenue came in at $5.94 billion, down 10% from $6.57 billion a year ago and close to FactSet's $5.96 billion consensus forecast. Carloads of forest products fell 13%, possibly due to a weakening housing market. The Nebraska-based freight railroad is considered a bellwether of the industrial economy's health. The Wall Street Journal

3. FCC moves to restore net neutrality

The Federal Communications Commission voted Thursday to advance a proposal to restore open-internet rules the Trump administration repealed, The New York Times reported. The Democrat-led commission voted 3-2 along party lines to consider the proposal to restore the rules, known as net neutrality. A final vote won't come until 2024. If approved, the change would let the agency regulate high-speed internet like a utility, requiring broadband providers to give customers access to any site without blocking or slowing connection speeds. "Now is the time for our rules of the road for internet service providers to reflect the reality that internet access is a necessity for daily life," FCC Chair Jessica Rosenworcel said. The New York Times

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4. Stocks struggle as Treasury yields top 5%

U.S. stock futures slipped early Friday after 10-year Treasury yields rose above 5% for the first time since 2007. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down about 0.3% at 7 a.m. ET. Nasdaq futures were down 0.4%. The benchmark Treasury yield touched 5.001% at 5 p.m. Thursday before slipping just below the 5% threshold again. The Dow, S&P 500 and Nasdaq dropped on Thursday. Concerns about the potential for the Israel-Hamas war to spread was also weighing on equities, Treasuries and oil, Bloomberg said, adding that oil prices rose above $90 per barrel due to fears more countries in the region could get involved in the conflict and disrupt oil deliveries. CNBC, Bloomberg

5. Home sales dragged down by prices, mortgage rates

Existing home sales fell 2% in September to the lowest level since the 2010 foreclosure crisis as rising interest rates and housing prices make homes unaffordable for an increasing number of potential buyers. Mortgage rates increased to more than 7% in August following months of rate hikes by the Federal Reserve in its campaign to bring down inflation. Historically low inventory pushed up prices that had already inflated during the pandemic. The median existing home price reached a September record of $394,300, up 2.8% from a year earlier and the third straight month of increases. Sales were down 15.4% compared to September 2022, and 21% for the 2023 so far. CNN, The Associated Press