Business Highlights: Nvidia posts strong quarterly earnings; the Fed faces tough call on rates
___
Nvidia’s rising star gets even brighter with another stellar quarter propelled by sales of AI chips
SAN FRANCISCO (AP) — Computer chip maker Nvidia has rocketed into the constellation of Big Tech’s brightest stars while riding the artificial intelligence craze that’s fueling red-hot demand for its technology. The latest evidence of Nvidia’s ascendance emerged with Wednesday’s release of the company’s quarterly earnings report. The results covering the May to July period exceeded Nvidia’s projections for astronomical sales growth propelled by the company’s specialized chips needed to power different forms of artificial intelligence such as Open AI’s popular ChatGPT chatbot. Nvidia’s revenue doubled from a year ago to $13.51 billion and the company projected sales are bound even higher. The company’s shares surged 9% in extended trading.
___
Surprisingly durable US economy poses key question: Are we facing higher-for-longer interest rates?
WASHINGTON (AP) — A year ago, Chair Jerome Powell warned that to fight high inflation, the Federal Reserve would continue to sharply raise interest rates, bringing “some pain” in the form of job losses and weaker economic growth. Since Powell spoke at the conference of central bankers in Jackson Hole, Wyoming, the Fed has raised its key rate to its highest level in 22 years. Yet so far, not much pain has arrived. As Powell and other central bankers return to Jackson Hole, the economy’s resilience has raised the prospect that the Fed will need to keep its key rate higher for longer than had been expected to slow growth and tame inflation.
___
Stock market today: Wall Street rallies as pressure from the bond market eases
NEW YORK (AP) — Wall Street rallied for its best day since June as pressure on stocks from the bond market relaxed a bit. The S&P 500 rose 1.1% Wednesday, trimming its loss for August. The Dow added 184 points, and the Nasdaq composite climbed 1.6%. Treasury yields eased in the bond market after a report suggested the surprisingly resilient U.S. economy is cooling. Big Tech stocks and others that benefit from easier interest rates led the market. Nvidia climbed 3.2% ahead of its highly anticipated profit report, which proved to be even better than expected. It’s one of Wall Street’s most influential stocks and rose in afterhours trading.
___
Foot Locker lowers full-year outlook again, pauses dividend as 2Q sales fall on cautious consumers
NEW YORK (AP) — Foot Locker is cutting its full-year outlook again and pausing its quarterly dividend as sales dropped in its fiscal second quarter with consumers continuing to be more cautious about their purchases. Shares tumbled more than 33% on Wednesday. The footwear and clothing retailer said quarterly sales declined to $1.86 billion from $2.07 billion. That’s short of the $1.88 billion that analysts polled by Zacks Investment Research were calling for. Same-store sales, a key indicator of a retailer’s health, dropped 9.4% in the quarter.
___
UPS workers approve 5-year contract, capping contentious negotiations that threatened deliveries
The union representing 340,000 UPS workers says its members voted to approve the tentative contract agreement reached last month. The vote results announced Tuesday put a final seal on contentious labor negotiations that threatened to disrupt package deliveries for millions of businesses and households nationwide. The Teamsters said that 86% of the votes casts were in favor of ratifying the national contract. Voting on the new five-year contract began Aug. 3 and concluded Tuesday. After negotiations broke down in early July, UPS reached a tentative contract agreement with the Teamsters just days before an Aug. 1 deadline.
___
With contracts set to expire Sept. 14, auto union chief says talks with Detroit 3 aren’t going well
DETROIT (AP) — With about three weeks until contracts expire with Detroit’s three automakers, the head of the United Auto Workers union says bargaining isn’t going well. UAW President Shawn Fain told workers outside a Detroit factory that their walk Wednesday to practice picketing would become reality if General Motors, Ford and Stellantis don’t start negotiating seriously. Contracts between the union representing about 146,000 workers at the companies expire at 11:59 p.m. on Sept. 14. Members are voting this week on whether to give union leaders authorization to call a strike. The companies say they’re bargaining in good faith.
___
Dollar Tree and Family Dollar agree to take steps to improve worker safety at the bargain stores
NEW YORK (AP) — U.S. regulators have announced a settlement with the company that runs Dollar Tree and Family Dollar aimed at improving worker safety at thousands of the bargain stores across the country. Labor Department officials cited issues at the stores including blocked exits, unsafe storage of materials and improper access to fire extinguishers and electrical panels. The department says that the chains operated by Dollar Tree Inc. are required make changes to correct within two years violations cited by the Occupational Safety and Health Administration. Dollar Tree and Family Dollar have also agreed to pay $1.35 million in penalties to settle existing contested and open inspections of similar alleged violations — and face hefty violations for any future offenses.
___
Kohl’s posts declines in 2Q profits and sales, joining other stores facing cautious spending
NEW YORK (AP) — Kohl’s reported on Wednesday that profits dropped nearly 60% on weak sales in the second quarter, joining a slew of retailers that are wrestling with shoppers’ cautious spending in a challenging economy. But Kohl’s results beat Wall Street expectations as the retailer cut inventory and expenses. The department store chain also reaffirmed its annual guidance. Shares rose nearly 4% in midday trading. Kohl’s, based in Menomonee Falls, Wisconsin, is among the last group of retailers to report second-quarter results in an earnings season that has shown how still-high inflation, despite some easing, and higher interest rates are making shoppers cut back on discretionary items like clothing in order to afford their larger grocery bills.
___
The S&P 500 rose 48.46 points, or 1.1%, to 4,436.01. The Dow Jones Industrial Average gained 184.15 points, or 0.5%, to 34,472.98. The Nasdaq composite added 215.16 points, or 1.6%, to 13,721.03. The Russell 2000 index of smaller companies advanced 19.20 points, or 1%, to 1,870.03.