Powell Speaks, But Data Will Carry the Big Stick in Inflation Battle

The latest rally has been broad-based, but few investors want to call the bottom. After its recent strength the Nasdaq fizzled late last week to close 2% lower.

Mixed messages are expected to show up tomorrow in S&P Global’s composite “flash” purchasing managers’ indexes that last month signaled a first contraction in private sector business activity since June 2020. The services sector is forecast to have improved slightly, while manufacturing is predicted to have worsened in August.

The Fed’s preferred measure of prices, the personal consumption expenditures (PCE) price index, should deliver better news on Friday. It is predicted to have risen by less than June’s 0.6% gain, which excluded food and energy costs.

With consumers eking out their grocery budgets, discounters Dollar General and Dollar Tree, which update on Thursday, should be thriving. Also in the corporate earnings calendar, any further softening at chipmaker Nvidia tomorrow will weigh on the tech sector. Internationally, China began the week cutting lending rates again in a bid to revitalize its slowing economy.

Last year at the Wyoming event, Powell said he thought inflationary pressures would probably prove transitory. He was soon proven wrong and had to play catch up with soaring prices.

Another inflation report and more jobs numbers are coming before the Fed’s next rate decision on September 21. So no matter what Powell says, investors are likely to be kept waiting on whether it is a 50 or 75 basis point rise this time.

—James Ashton

*** Join Barron’s deputy editor Ben Levisohn and senior writer Al Root today at noon when they discuss the outlook for financial markets, industry sectors, and individual stocks. Sign up here.

***

Amazon and UnitedHealth Join Race to Buy Signify Health

Shares of

Signify Health

jumped in early trading Monday after it was reported that

amazon.com

was among a handful of bidders for the company.

• UnitedHealth Group
  
  and Option Care Health are also seeking to buy the company, The Wall Street Journal reported Monday. CVS Health previously was reported as being a suitor.

• Signify Health’s current market value is around $5 billion. The Journal reported that Signify was for sale in an auction that could value it at more than $8 billion.

• Bids for the company, which uses analytics to help people receiving in-home care, are due around Labor Day but it’s possible a deal could be reached before then.

What’s Next: Signify Health stock soared more than 30% in premarket trading. The board of the healthcare company is expected to meet on Monday to discuss the offers.

—Joe Woelfel

***

Voters Are Dissatisfied, But It’s Not Just About the Economy

While Americans polled by NBC News continue to be dissatisfied with the direction the country is headed in, the economy isn’t considered the top issue facing the US, according to a poll released Sunday. “Threats to democracy” was named the top issue, edging out “cost of living.”

• Three-quarters of registered voters surveyed by NBC News said the county is headed in the wrong direction, and 58% said the best years are behind it. Of 1,000 voters surveyed Aug. 12-16, about 58% of Americans polled disapprove of the Supreme Court decision overturning Roe v. Wade.

• President Joe Biden’s approval rating was 42%, the same as in May, but 40% approved of Biden’s handling of the economy, up 7 points from May. Biden signed the climate change and healthcare bill last week, the Democrats’ latest legislative victory before the November midterms.

• About 57% of registered voters said the investigations into alleged wrongdoing by former President Donald Trump should continue, while 40% said they should stop.

• Democrats and Republicans are fighting for control of Congress. Of those polled, 47% wanted Republicans to win control, while 45% wanted Democrats to win. Biden is planning to travel around the country in September to discuss the new climate and healthcare law.

What’s Next: Inflation has been on voters’ minds. On Friday, Federal Reserve Chairman Jerome Powell is scheduled to speak at the central bank’s Jackson Hole, Wyo., conference, where he will stress the commitment to bringing down inflation even if it risks a recession, MarketWatch reported, citing economists.

—Janet H. Cho

***

Ukraine Warns of Escalating Conflict After Moscow Car Bombing

Ukrainian President Volodymyr Zelensky warned of an escalation in the conflict with Russia after the daughter of an ally to Russian President Vladimir Putin died in a car explosion outside Moscow. No one claimed responsibility immediately, but tensions have been rising as Russia’s war in Ukraine nears the six-month mark.

• Daria Dugina, 29, the daughter of Russian nationalist philosopher Aleksandr Dugin, died instantly, reports said. Her father is also known as “Putin’s brain” and supported Russia re-establishing its empire by taking Ukraine. Russia is investigating the blast, The Wall Street Journal reported.

• Ukraine’s government denied responsibility, the report said. The UK and the US both had sanctioned Daria Dugina, claiming she was responsible for spreading disinformation. She was a television commentator who shared views similar to her father, the Associated Press reported.

• Russia has continued striking Ukrainian cities including Mykolaiv and Odessa, where the Ukrainian military is monitoring grain exports from Black Sea ports. Russia and Ukrainian troops exchanged fire near the Zaporizhzhia nuclear power plant, raising alarms about a potential nuclear incident, the Journal reported.

• President Joe Biden spoke with European leaders including France’s Emmanuel Macron, Germany’s Olaf Scholz, and the UK’s Boris Johnson, and affirmed their support for Ukraine’s defense, the White House said Sunday. They discussed the need to avoid military operations near the Zaporizhzhia nuclear power plant.

What’s Next: Ukraine’s officials said Russia could plan attacks timed to Wednesday’s independence day, the first national holiday since Russia invaded the country on Feb. 24 and the six-month mark since the invasion. No official celebrations are expected, the Journal reported.

—Janet H. Cho

***

This Week’s Retail Stocks Offer More Insight Into Spending

This week will be another major one for retail stocks, from department stores

macy’s

and

Nordstrom

to discounters

Dollar General

and

Dollar Tree
,

as well as packaged food companies such as

JM Smucker
.

Their earnings reports should give economists more insight into consumer spending habits.

• Investors will be listening for repeats of concerns voiced last week by

  Walmart
  
  and

  target
  ,

  which both reported better-than-expected sales of groceries and essentials but softer purchases of more profitable, discretionary items such as clothing and household goods.

• July’s retail sales were unchanged from June, but subtracting gasoline prices, retail sales rose 0.7%, suggesting consumers are more resilient than they appear. “As gas prices fell, consumers had more money in their pockets for other items such as furniture and electronics,” wrote LPL Financial chief economist Jeffrey Roach.

• Specialty retailers reporting this week includes:

  Dick’s Sporting Goods
  
  and

  Urban Outfitters
  
  on Tuesday;

  Victoria’s Secret
  
  and

  Williams-Sonoma
  
  on Wednesday; and

  Abercrombie & Fitch
  ,

  Gap
  
  and

  Ulta Beauty
  
  on Thursday.

What’s Next: Technology companies also report this week, including

Zoom Video Communications

today

intuition

and

Nvidia

on Tuesday,

Salesforce

on Wednesday, and

Peloton Interactive

on Thursday.

—Janet H. Cho

***

Tesla Is Raising the Price of Its Full Self-Driving Software

Tesla

is doubling down on its Full Self-Driving software, announcing a price increase in September for the premium driver assistance software, amid heightened scrutiny of the product. CEO Elon Musk confirmed the price increase in a tweet Sunday.

• The price will rise to $15,000 where Sept. 5. It would be the second price increase in recent months. Full self-driving software went from $10,000 to $12,000 in January. FSD is the highest-level driver assistance product offered by the electric vehicle maker.

• Tesla vehicles come with a standard autopilot, including features such as lane-keeping assistance and adaptive cruise control. Enhanced autopilot has more features such as summoning the car to slowly maneuver itself to the driver from a parking spot.

• Autopilot is common in many cars. Some car makers including

  General Motors
  
  have higher-functioning systems similar to enhanced autopilot or FSD, that are, or will be, available soon. Safety advocate Ralph Nader wants FSD to be recalled.

• Traffic safety regulators said first quarter traffic fatality estimates were the highest in two decades. Car companies are investing in advanced driver-assistance technology to enhance safety. Regulators and Tesla did not respond to Barron’s request for comment about Nader’s recall idea.

What’s Next: The FSD software and upgrades so far have only been available to a limited group of Tesla drivers but Musk said at the annual shareholder meeting in early August that it would be available to anyone who asks for it by the end of the year.

—Al Root and Liz Moyer

***

MarketWatch Wants to Hear From You

What should you do if you have problems with the IRS? Here is advice to help you during that stressful time.

A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to thebarronsdaily@barrons.com.

***

Coming in September: Hear from Carl Icahn at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The legendary trader will reveal his view on this year’s wild market ride. Sign up here.

***

—Newsletter edited by Liz Moyer, Rupert Steiner and Brian Swint