Business Highlights: Fed keeps rates unchanged; homeowners face rising insurance rates
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Fed keeps rates unchanged but signals likelihood of another hike this year to fight inflation
WASHINGTON (AP) — The Federal Reserve left its key interest rate unchanged for the second time in its past three meetings, a sign that it’s moderating its fight against inflation as price pressures have eased. But Fed officials also signaled that they expect to raise rates once more this year. Consumer inflation has dropped from a year-over-year peak of 9.1% in June 2022 to 3.7%. Yet it’s still well above the Fed’s 2% target, and its policymakers made clear that they aren’t close to declaring victory over the worst bout of inflation in 40 years. The Fed’s latest decision left its benchmark rate at about 5.4%, the result of 11 rate hikes it unleashed beginning in March 2022.
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Stock market today: Wall Street falls after the Federal Reserve warns rates may stay higher in 2024
NEW YORK (AP) — U.S. stocks slumped after the Federal Reserve said it may not cut interest rates next year by as much as it earlier thought, regardless of how much Wall Street wants it. The S&P 500 fell 0.9% Wednesday. The Dow Jones Industrial Average lost 76 points, and the Nasdaq composite sank 1.5%. Treasury yields climbed after the Fed left its main rate steady and indicated one more hike may be coming this year. High rates drag on all kinds of investments, and they tend to hit high-growth stocks particularly hard. Big Tech companies were the heaviest weights on the market.
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Jeep maker Stellantis makes a new contract offer as auto workers prepare to expand their strike
DETROIT (AP) — Detroit carmakers are announcing more layoffs that they blame on fallout from the United Auto Workers strike. General Motors said Wednesday it idled a plant in Kansas with 2,000 workers because they don’t have auto parts to work with. The plant that makes those parts is on strike. And Stellantis, the maker of Jeep and Chrysler, says it expects to lay off more than 300 workers in Ohio and Indiana. The layoff are adding to tension just two days before the UAW is expected to call for expanding its strike, which right now is limited to three vehicle-assembly plants.
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Homeowners face rising insurance rates as climate change makes wildfires, storms more common
NEW YORK (AP) — A growing number of Americans are finding it difficult to afford insurance on their homes, a problem only expected to worsen because insurers and lawmakers have underestimated the impact of climate change, a new report says. A report from the non-profit First Street Foundation released Wednesday says states such as California, Florida and Louisiana, which are prone to wildfires and damaging storms and flooding, are likely to see the most dramatic increases in premiums. But the fire that destroyed the Hawaiian community of Lahaina, as well as the historic flooding in Vermont and Maine, are recent examples of events that could drive up insurance costs for homeowners in other states.
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A small venture capital player becomes a symbol in the fight over corporate diversity policies
NEW YORK (AP) — A venture capital firm that has backed buzzy new companies has become symbolic of the fight over corporate diversity policies. Fearless Fund has become a target of a lawsuit over a grant program for Black women. But it is a tiny player in the approximately $200 billion global venture capital market. The Atlanta-based firm has invested nearly $27 million in some than 40 businesses led by women of color since launching in 2019, and awarded another $3.7 million in grants. Collectively, those businesses employ about 540 people, up from 250 at the time of investment. Fearless Fund co-founder Arian Simone said it’s all a drop in the bucket compared to systemic changes needed to close the racial and gender gap in venture capital funding.
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UK’s new online safety law adds to crackdown on Big Tech companies
LONDON (AP) — British lawmakers have approved an ambitious but controversial new internet safety law with wide-ranging powers to crack down on digital and social media companies like TikTok, Google and Facebook and Instagram parent Meta. The government says the online safety bill passed this week will make Britain the safest place in the world to be online. But digital rights groups say it threatens online privacy and freedom of speech. The new law requires social media platforms to take down illegal content, protect kids online and criminalizes some activity like cyberflashing. It adds to efforts in Europe and elsewhere to clamp down on the freewheeling tech industry dominated by U.S. companies.(backslash)
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FDA says it needs more research before deciding to approve nasal spray to treat dangerous allergies
The U.S. Food and Drug Administration declined to approve a nasal spray to treat severe allergic reactions, calling for more research on what would have been the first alternative to injections using devices such as an EpiPen. The agency told ARS Pharmaceuticals Inc. of San Diego that the company would have to conduct another study comparing repeat doses of epinephrine using the needle-free device, called neffy, compared to injections. Between 33 million and 45 million Americans suffer from life-threatening allergies.
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UK inflation fell unexpectedly in August. That makes it unclear what the Bank of England will do
LONDON (AP) — Inflation in Britain fell unexpectedly in August to its lowest level since the start of Russia’s invasion of Ukraine. The Office for National Statistics said Wednesday that inflation was 6.7% in the year to August, down from 6.8% in July. The decline took inflation to its lowest level since February 2022, when Russia’s war led to soaring energy and food prices. The ONS credited the fall to lower hotel and airfare costs and a moderation in food price rises. That helped offset an increase in energy costs. The decline in inflation have reined in expectations of another interest rate increase from the Bank of England on Thursday.
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Biden’s Democratic allies intensify pressure for asylum-seekers to get work permits
ALBANY, N.Y. (AP) — As migration to the United States from Venezuela and other countries soars, Democratic elected officials are pressing the Biden administration to quickly grant work permits for asylum-seekers while their cases wind through immigration courts. In New York City, tens of thousands of migrants have arrived over the past year. Mayor Eric Adams has increasingly sounded alarms and Gov. Kathy Hochul is floating the idea of state-issued work permits. Asylum-seekers must wait at least six months before they can get a work permit. That cannot be changed without Congress, but some Democrats say there are other steps that President Joe Biden could take.
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The S&P 500 fell 41.75 points, or 0.9%, to 4,402.20. The Dow Jones Industrial Average slipped 76.85 points, or 0.2%, to 34,440.88. The Nasdaq composite dropped 209.06 points, or 1.5%, to 13,469.13. The Russell 2000 index of smaller companies lost 16.42 points, or 0.9% to 1,810.10.