Update on the latest in business:

FINANCIAL MARKETS

Stocks tumble after inflation worsens, raising rate fears

NEW YORK (AP) — Stocks fell sharply following Wall Street’s cold realization that inflation got worse last month, not better, as investors had been hoping.

The S&P 500 was 2.7% lower in midday trading. In the bond market, yields jumped and indicated investors’ concerns are building about the economy’s strength.

Wall Street took Friday’s worse-than-expected reading on inflation to mean the Fed’s...

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FINANCIAL MARKETS

Stocks tumble after inflation worsens, raising rate fears

NEW YORK (AP) — Stocks fell sharply following Wall Street’s cold realization that inflation got worse last month, not better, as investors had been hoping.

The S&P 500 was 2.7% lower in midday trading. In the bond market, yields jumped and indicated investors’ concerns are building about the economy’s strength.

Wall Street took Friday’s worse-than-expected reading on inflation to mean the Fed’s foot will remain firmly on the brakes for the economy. That dashes hopes that it may ease up later this year.

A reading on consumer sentiment also came in weaker than expected, the latest discouraging data on the economy.

CONSUMER PRICES

US inflation hit a new 40-year high last month of 8.6%

WASHINGTON (AP) — The costs of gas, food and other necessities jumped in May, raising inflation to a new four-decade high and giving American households no respite from rising costs.

Consumer prices surged 8.6% last month from 12 months earlier, faster than April’s year-over-year surge of 8.3%. On a month-to-month basis, prices jumped 1% from April to May, a steep rise from the 0.3% increase from March to April.

Much higher gas prices were to blame for most of that increase.

America’s rampant inflation is imposing severe pressures on families, forcing them to pay much more for food, gas and rent and reducing their ability to afford discretionary items, from haircuts to electronics.

AMERICAS-SUMMIT-MIGRATION

Biden, leaders reach migration pact despite attendance flap

LOS ANGELES (AP) — President Joe Biden and other Western Hemisphere leaders are set to announce what is being billed as a roadmap for countries to host large numbers of migrants and refugees.

“The Los Angeles Declaration” may be the biggest achievement of the Summit of the Americas, which was undercut by differences over Biden’s invitation list. Leaders of Mexico and Central American countries sent top diplomats instead after the U.S. excluded Cuba, Nicaragua and Venezuela.

A set of principles to be announced today includes legal pathways to enter countries, aid to communities most affected by migration, humane border management and coordinated emergency responses.

BREXIT

UK to introduce bill next week to breach Brexit deal with EU

LONDON (AP) — Britain will introduce a bill next week to override parts of the Brexit trade treaty it signed with the European Union before it quit the bloc in 2020.

The move will be a major escalation in a festering U.K-EU dispute over trade rules for Northern Ireland. A spokesman for Prime Minister Boris Johnson says the bill will be introduced in Parliament on Monday.

If approved, it will scrap parts of the trade treaty by removing checks on goods entering Northern Ireland from the rest of the U.K.

The EU has threatened to retaliate. That raises the specter of a trade war between the two major economic partners.

For its part, the U.K. says the Brexit rules are hurting peace in Northern Ireland.

USSIA-UKRAINE-WAR-RUSSIA ECONOMY

Russia’s central bank cuts interest rates to prewar level

UNDATED (AP) — Russia’s central bank has cut interest rates back to their prewar levels.

The bank said Friday that inflation and economic activity are developing better than expected despite sweeping Western sanctions imposed in response to the war in Ukraine.

The bank lowered its key rate by 1.5 percentage points, to 9.5%. The rate had been as high as 20% in the wake of the Feb. 24 invasion of Ukraine and the resulting sanctions that restrict dealings with Russian banks, individuals and companies.

Economists say that over time the sanctions will corrode growth and productivity, but the central bank has managed to stabilize Russia’s currency and financial system through drastic measures.

CHINA-UNITED STATES-MILITARY

China complains over US arms sales to Taiwan

SINGAPORE (AP) — China’s defense minister has complained to his American counterpart about the latest U.S. arms package for Taiwan and warned of a possible conflict over the self—governing island that China claims as its own territory.

Chinese state media say Defense Minister Gen. Wei Fenghe told U.S. Defense Secretary Lloyd Austin in a meeting in Singapore that the sale “seriously undermined China’s sovereignty and security interests.” He added that the Chinese government and military will “resolutely smash any Taiwan independence plot and resolutely safeguard the reunification of the motherland.”

Despite their lack of formal diplomatic ties, Washington is Taiwan’s strongest backer and source of defensive arms. On Wednesday, the U.S. announced the sale of parts for Taiwanese naval ships.

INFRASTRUCTURE-DAMS

Aging dams could soon benefit from $7B federal loan program

UNDATED (AP) — The federal government is taking the first step to set up a program that could offer more than $7 billion of loans to repair aging dams across the country.

The U.S. Army Corps of Engineers published a proposed rule Friday for the program, which could be open for applications in 2023.

The Corps’ Water Infrastructure Financing Program was authorized under a 2014 law. But it hadn’t been set up because it lacked funding. A series of laws adopted over the past 18 months finally provided that funding.

The safety of the nation’s 92,000 dams has come under increased scrutiny in recent years after some high-profile failures forced evacuations.

US-VIRUS-OUTBREAK-BIDEN

US lifts COVID-19 test requirement for international travel

WASHINGTON (AP) — The Biden administration is lifting its requirement that international air travelers to the U.S. take a COVID-19 test within a day before boarding their flights, easing one of the last remaining government mandates meant to contain the spread of the coronavirus.

A senior administration official says the mandate expires Sunday. The official says the Centers for Disease Control and Prevention has determined the mandate is no longer necessary. The official says the CDC will reevaluate the need for the testing requirement every 90 days and it could be reinstated if a troubling new variant emerges.

Airline and tourism groups had been pressing the administration to eliminate the testing requirement.

SMALL BUSINESS-SUMMER HOPES

Small businesses are facing ‘summer of uncertainty’

NEW YORK (AP) — Small businesses that depend on outdoor crowds and free-spending tourists aren’t sure what to expect this summer.

Consumers likely have a lot of pent-up demand after more than two years of the pandemic. The U.S. Travel Association predicts travel spending will be slightly above pre-pandemic levels.

But consumers are also facing some significant financial headwinds. Inflation is making day-to-day living more expensive, which could leave less money for discretionary spending. Gas prices are up more than 60% from a year ago and hotel rooms and airfare are pricier as well, putting pressure on travel budgets. And COVID-19 remains a looming presence.

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