STOCK MARKET NEWS: US markets and oil higher, Americans expect lower inflation

Americans expect inflation of drop below 6% one year from now, according to the New York Federal Reserve's Survey of Consumer Expectations.

The outlook for rising prices is lower than June, when Americans said they expected 6.2% inflation a year from then.

Consumers in the latest survey anticipate that prices will drop even further over the next five years, projecting that the inflation rate will hover around 2% in 2027.

Wells Fargo has agreed to pay $131.8 million, plus a $13.2 million penalty, for allegedly overpaying for company stock purchased for Wells Fargo's 401(k) plan.

“Our investigation found those responsible for Wells Fargo’s 401(k) plan paid more than fair market value for employer stock and, by doing so, betrayed the trust of the plan’s current and future retirees,” said Secretary of Labor Marty Walsh. “Today’s settlement shows the Department of Labor will act when we find retirement assets are misused and benefit plans suffer.

”Once Wells Fargo pays the settlement amount to the trust, the funds will be allocated to current and former participants affected by these transactions. Wells Fargo will redeem the remaining convertible preferred stock for common stock and will stop using dividends from the convertible preferred shares to repay the stock purchase loans.

Third Point Capital’s Dan Loeb says his firm looks forward to seeing how Disney can take advantage of growth synergies from ESPN, easing pressure on the Mouse of House to separate the sports network.

ESPN+ accounts for 22.8 million of Disney’s 221.1 million subscribers across its platforms.

More than 1,200 flights within, into, or out of the United States were delayed Monday. The latest data from flight tracker FlightAware comes on top of thousands of delays on Friday and Sunday.

Twitter is standing by the validity of $7.75 million of severance payments made to former security chief Peiter "Mudge" Zatko.

Billionaire Elon Musk, who is trying to back away from a deal to buy the social media platform, said the payments violated terms of the acquisition deal.

Musk’s lawyers sent a third termination notice Friday, which Twitter called "invalid and wrongful".

Grocery prices led an inflation in online inflation in August. Grocery prices jumped 14.1% year-over-year (YoY). Electronics prices fell 10% YoY. Overall, online inflation rose 0.4% YoY and 2.1% month-over-month.

“The modest uptick we see in online prices for August was driven in large part by rising food costs that show no signs of abating, just as seasonal discounts in a category like apparel phased out through the end of Summer,” said Patrick Brown, vice president of growth marketing and insights, Adobe.

A new Gallup poll shows a majority of Americans now say price increases are causing financial hardships.

Republicans (67%) are far more likely than Democrats (44%) to say rising prices are hurting their families. Independents fall between the party groups, at 56%.

Although more Americans now than last fall say they are experiencing hardship, the percentage who are suffering severe hardship has held relatively steady at around 10%.

Bristol Myers Squibb opened higher in Monday trading. The drugmaker announced Friday that the U.S. Food and Drug Administration approved Sotyktu (deucravacitinib), a first-in-class, oral, selective, allosteric tyrosine kinase 2 (TYK2) inhibitor, for the treatment of adults with moderate-to-severe plaque psoriasis who are candidates for systemic therapy or phototherapy.

“Sotyktu has the potential to become the new standard of care oral treatment for people with moderate-to-severe plaque psoriasis, given its profile in helping patients achieve clearer skin as demonstrated in the POETYK PSO clinical program,” said April Armstrong, MD, MPH, clinical investigator in the POETYK PSO-1 trial and Associate Dean and Professor of Dermatology at the University of Southern California.

Land’s End chief executive Jerome Griffith is retiring, the retailer announced. Griffith will be replaced by Andrew McLean, President, International of American Eagle Outfitters.

McLean will join as CEO-Designate, effective November 1 and will become CEO at the conclusion of Lands’ End’s 2022 fiscal year ending January 27, 2023.

After the CEO transition, Griffith will continue to serve as a Director and is expected to be nominated for re-election to the Board at the Company’s 2023 Annual Meeting of Stockholders. As part of this transition, he will become Executive Vice Chair after he retires as CEO.

The heads of the nation's two largest rail unions said Sunday that the freight railroads' move to begin delaying some shipments ahead of this week's looming strike deadline is only an attempt to get shippers to increase the pressure on Congress to intervene and block a work stoppage by imposing a contract on workers.

The heads of the unions that represent engineers and conductors — the Sheet Metal, Air, Rail and Transportation Workers — Transportation Division union and the Brotherhood of Locomotive Engineers and Trainmen union — issued a joint statement blasting the move, which the railroads announced late Friday.

A strike or lockout won't be allowed until this coming Friday, but the railroads appear to be bracing for one by saying they would begin curtailing shipments of hazardous materials and other chemicals on Monday to ensure carloads of those dangerous products won't be stranded along the tracks if the trains stop moving.

Five of the 12 railroad unions that together represent 115,000 workers had already reached tentative agreements based on the Presidential Emergency Board's recommendations that will deliver 24% raises and $5,000 in bonuses over a five-year contract that's retroactive to 2020. The coalition negotiating on behalf of the railroads announced three more tentative agreements Sunday, so deals covering roughly 45,000 workers have now been announced. Members of the unions with tentative deals still have to vote on them.

Johnson & Johnson (J&J) has reached a A$300 million ($204.90 million) settlement in two Australian class action suits filed by Shine Lawyers for selling defective pelvic mesh implants to Australian women, the law firm said on Monday.

The settlement, which Shine Lawyers said was the largest settlement in a product-liability class action in Australian history, follows multiple court proceedings involving more than 11,000 claimants, the pharmaceutical giant, and its subsidiary Ethicon.

Pelvic mesh manufacturers have faced thousands of lawsuits from women who said they suffered pain, urinary problems, bleeding, and other serious injuries from the implants. The total settlements for the companies have been more than $8 billion so far.

The company was ordered to pay $1.7 million to three Australian women in March 2020. A second class action suit was then filed by Shine Lawyers in April 2021 on behalf of women who received their implants on or after July 4, 2017, and were not eligible to join the first class action, with allegations similar to the first one.

The A$300 million settlement remains subject to the Federal court's approval.

In 2019, the U.S. Food and Drug Administration ordered all pelvic mesh makers to halt sales of the devices.

($1 = 1.4641 Australian dollars)

Cryptocurrency prices were mixed early Monday, with Bitcoin and Dogecoin higher and Ethereum trending lower.

At approximately 4:45 a.m. ET, Bitcoin was trading at more than $22,260 (+2.17%), or higher by about $487.

For the week, Bitcoin was trading higher by more than 9%. For the month, the cryptocurrency was lower by 9%.

Ethereum was trading at approximately $1,75 (-0.46%), or lower by $8.20.

For the week, Ethereum was trading higher by more than 12%. For the month, it was trading lower by more than 6.2%.

Dogecoin was trading at $0.064103 (+0.47%), or higher by approximately $0.000302. For the week, Dogecoin was higher by more than 0.9%. For the month, the crypto was lower by nearly 10%.

The average price of a gallon of gasoline Monday was $3.716. On Sunday, the price was $3.718, according to AAA. Saturday's price was $3.724. 

Gas has been on the decline since hitting a high of $5.016 on June 14, nearly 13 weeks ago. A week ago, the nationwide average price for a gallon of gasoline was $3.786. A month ago, that same gallon of gasoline cost $3.978. A year ago, a gallon of gasoline cost $3.175.

Analysts and traders say wholesale gasoline prices are expected to keep falling in coming months as U.S. refiners overproduce fuel to try to rebuild low stocks of diesel and heating oil. 

The price of a gallon of diesel Monday cost $5.011. On Sunday, the price was $5.013 per gallon.

A week ago, the nationwide average price for a gallon of diesel sold for $5.068. A month ago, that same gallon of diesel cost $5.06. A year ago, a gallon of diesel cost $3.295.

A Washington Post story by economy reporter Abha Bhattarai said Americans are getting used to inflation and "learning to deal with" it.

This runs contrary to various indicators, including a Gallup poll which found that 56% of Americans said inflation is causing hardship. 

"After months of gloom, Americans are finally starting to feel better about the economy and more resigned to inflation," Bhattarai wrote. "Americans are making small changes — buying meat in bulk, for example, or shifting more of their shopping to discount chains — suggesting that many families are learning to deal with higher prices," she continued. 

Following similar talking points as the White House, Bhattarai emphasized gas coming down from a record high of $5, saying the "25 percent drop in costs has been substantial for many Americans." 

"Overall inflation, meanwhile, has eased slightly — prices remained flat in July, though they’re still up 8.5 percent from a year ago — as a result of aggressive interest rate hikes by the Federal Reserve," she wrote. 

The article detailed the account of Nils Haaland, a man in Omaha who said "soaring prices for fuel and food this summer forced him and his wife to stop dining out, postpone summer travel and buy less meat." 

"Although prices are still relatively high, he says he feels less worried that inflation will continue to spiral out of control," The Post reported.

This is not the first mainstream media article geared at lowering the American public's expectations regarding their standard of living due to inflation.

Last year, Bloomberg published an article titled "For Americans Shocked by Inflation, Argentines Have Some Advice" which detailed ways in which Americans should modify their behavior and lower their expectations in order to cope with inflation.

U.S. stocks were moving higher early Monday morning as inflation will weigh on investors this week with the release of the August consumer and producer price indices. 

In addition to inflation data, investors will also weigh reports on retail sales, jobless claims, regional manufacturing, industrial production and consumer sentiment. 

On Friday, the S&P 500 closed 1.5% higher at 4,067.36, its third straight increase, and ended with a 3.7% gain for the week. That makes it the benchmark index's best week going back to July. Big gains for technology companies pushed the Nasdaq composite to a 2.1% gain, at 12,112.31. The Dow Jones Industrial Average rose 1.2% to 32,151.71. Both indexes also notched their first weekly gain in four weeks. 

Smaller company stocks also notched solid gains. The Russell 2000 index jumped 1.9% to 1,882.85. 

Those gains punctuated a holiday-shortened week of trading on Wall Street during which the market regained some of the ground it lost after a mid-August slump that wiped away the much of the gains from a mid-summer rally. 

All 11 industry sectors in the benchmark S&P 500 rose, though makers of household goods and utilities, which are typically considered less risky investments, lagged the market. U.S. crude oil prices rose 3.9%, helping push up energy sector stocks. Exxon Mobil rose 1.7%. 

The Federal Reserve is in the spotlight as investors they try to figure out whether the U.S. central bank's plan to cool the hottest inflation in four decades will work or possibly tip an already slowing economy into a recession. 

Stocks spent July and part of August gaining ground on hopes that the Fed would ease up on its interest rate hikes, but slumped over the last few weeks as it became clear the central bank remained resolute in raising rates. 

The central bank has already raised rates four times this year and markets expect it to deliver another jumbo-sized increase of three-quarters of a percentage point at its next meeting in two weeks. Fed officials, including Chair Jerome Powell, have all reaffirmed the central bank's determination in raising rates until inflation is under control.

Meanwhile, shares climbed Monday in Asia after last week’s strong close on Wall Street snapped a three-week losing streak. 

Many regional markets were closed for holidays, while Tokyo and Sydney advanced. 

Tokyo's Nikkei 225 gained 1.2% to 28,542.11 and the S&P/ASX 200 in Sydney was up 1% at 6,963.00. Taiwan's benchmark gained 1.5%. Markets in Shanghai, Hong Kong and Seoul were closed for holidays.

Oil prices fell on Monday with the global fuel demand outlook overshadowed by COVID-19 restrictions in China and the potential for further interest rate hikes in the United States and Europe. 

Brent crude futures dropped $1.01, or 1.1%, to $91.83 a barrel by 0630 GMT, after settling 4.1% higher on Friday.

U.S. West Texas Intermediate crude was down $1.13 at $85.66 a barrel, or 1.3%, after a 3.9% gain in the previous session. 

Prices were little changed last week as gains from a nominal supply cut by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, were offset by ongoing lockdowns in China, the world's top crude importer. 

China's oil demand could contract for the first time in two decades this year as Beijing's zero-COVID policy keeps people at home during holidays and reduces fuel consumption. 

"The lingering presence of headwinds from China's renewed virus restrictions and further moderation in global economic activities could still draw some reservations over a more sustained upside," said Jun Rong Yeap, market strategist at IG. "The overall negatives seem to outweigh the positives," said Yeap, adding the $85 mark for Brent crude prices could be in sight. 

Meanwhile, the European Central Bank and the Federal Reserve are prepared to increase interest rates further to tackle inflation, which could lift the value of U.S. dollar against currencies and make dollar-denominated oil more expensive for investors. 

The G7 will implement a price cap on Russian oil to limit Russia's lucrative oil export revenue following its invasion of Ukraine in February and plans to take measures to ensure that the oil could still flow to emerging nations. Moscow calls its actions in Ukraine "a special operation."