Wall St subdued at open on mixed retail earnings ahead of Fed meet
The Dow Jones Industrial Average (.DJI), opens new tab fell 0.4 points, or flat, at the open to 44,922.7. The S&P 500 (.SPX), opens new tab fell 4.7 points, or 0.07%, at the open to 6,406.62, while the Nasdaq Composite (.IXIC), opens new tab dropped 45.3 points, or 0.21%, to 21,269.667 at the opening bell.
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Reuters
22 minutes ago
- Reuters
Fed dissenters appeared alone in favoring rate cut at July meeting, minutes show
WASHINGTON, Aug 20 (Reuters) - The two Federal Reserve policymakers who dissented against the U.S. central bank decision's to leave interest rates unchanged last month appear not to have been joined by other policymakers in voicing support for lowering rates at that meeting, a readout of the gathering released on Wednesday showed. "Almost all participants viewed it as appropriate to maintain the target range for the federal funds rate at 4.25% to 4.50% at this meeting," the minutes of the July 29-30 meeting said. Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller both voted against the decision to leave the benchmark interest rate unchanged, favoring instead a quarter-percentage-point reduction to guard against further weakening of the job market. It was the first time since 1993 that more than one Fed governor dissented against a rate decision. Not even 48 hours after the conclusion of last month's meeting, data from the Labor Department appeared to validate the concerns of Bowman and Waller when it showed far fewer jobs than expected were created in July, a rise in the unemployment rate and a drop in the labor force participation rate to the lowest level since late 2022. More unsettling, though, was an historic downward revision for estimates of employment in the previous two months. That revision erased more than a quarter of a million jobs thought to have been created in May and June and put a hefty dent in the prevailing narrative of a still-strong-job market. The event was so angering to President Donald Trump that he fired the head of the Bureau of Labor Statistics. Data since then, however, has provided some fodder for the camp more concerned that Trump's aggressive tariffs risk rekindling inflation to hold their ground against moving quickly to lower rates. The annual rate of underlying consumer inflation accelerated more than expected in July and was followed by an unexpectedly large jump in prices at the producer level. The minutes showed officials continued an active debate on the effects of tariffs on inflation and the degree of restrictiveness in their policy stance. Several policymakers commented that the current level of the federal funds rate may not be far above its neutral level, where economic activity is neither stimulated nor constrained. Fed policymakers assessed that the effects of higher tariffs had become more apparent in some goods prices but that the overall effect on the economy and inflation remained to be seen, the minutes showed. Looking ahead, participants noted they may face difficult tradeoffs ahead if elevated inflation proved more persistent while the job market outlook weakened. Heading into the release of the minutes, CME's FedWatch tool assigned an 85% probability of a quarter-percentage-point reduction in the Fed's policy rate at the September 16-17 meeting. That rate has been unchanged since December. The minutes were released just two days before a highly anticipated speech from Fed Chair Jerome Powell at the annual economic symposium near Jackson Hole, Wyoming, which is hosted by the Kansas City Fed. Powell's keynote speech on Friday morning - set to be his last such address as head of the central bank, with his term expiring next May - could show whether he has joined ranks with those sensing the time has come for steps to shield the job market from further weakening or if he remains in league with those more wary of inflation in light of its moves away from the Fed's 2% target. The lack of rate cuts since Trump returned to the White House has agitated the Republican president, and he regularly lashes out at Powell for not engineering them. Trump is already in the process of screening possible successors to Powell. After the unexpected resignation earlier this month of one of the seven Fed governors, Trump has a chance to put his imprint on the central bank soon. The president has nominated Council of Economic Advisers Chair Stephen Miran to fill the seat recently vacated by former Fed Governor Adriana Kugler, a term that expires at the end of January. It is unclear whether Miran will win Senate confirmation before the Fed's next meeting. On Wednesday Trump demanded that Fed Governor Lisa Cook resign from the central bank over allegations of wrongdoing connected to mortgages on properties she owns in Georgia and Michigan.
Reuters
22 minutes ago
- Reuters
Breakingviews - Thoma Bravo hails tech's ‘show me the money' era
TORONTO, Aug 20 (Reuters Breakingviews) - The cycle of technology fads is brutal. Once the darlings of public markets, given wide latitude to chase unprofitable growth, cloud software developers now seem pedestrian next to the incredible promise of artificial intelligence. Private equity firm Thoma Bravo's $11.2 billion mooted deal to buy, opens new tab human resources application provider Dayforce (DAY.N), opens new tab, disclosed on Wednesday, signals the end result of this shift: accept being a bit boring and transition into a cashflow machine, or become a target. Interest-rate hikes beginning in 2022 challenged the industry's 'expand at all costs' mantra: burning cash became more expensive, forcing a retrenchment that trimmed growth and valuations. Some firms have since regained speed, steadily beating, opens new tab Wall Street's revenue expectations by growing margins since early 2024, according to Altimeter Capital. Valuations, though, are still in the dumps. It might be a matter of measuring up to the next big thing. Bessemer Venture Partners research, opens new tab shows that, on average, private cloud software firms have taken about 7 years to hit $100 million in annual recurring revenue. Successful AI startups are crossing that threshold in just 4 years, or as little as 18 months for particularly hot breakthroughs. Just compare the BVP Nasdaq Emerging Cloud Index, which is down 10% year-to-date, to an exchange-traded fund tracking the AI-exposed Magnificent Seven stocks, up 7%. If you can't impress with growth, the next best thing is to at least throw off cash. Here, Dayforce has fallen behind its peers. The company is expected to achieve a free cash flow margin of 13.7% in the financial year ending this December, according to Visible Alpha. Rivals Paycom Software and Paylocity should notch margins of 18% and over 20%, respectively. Little wonder that Dayforce's stock had fallen over 25% thus far in 2025 before news of a potential sale arrived. Thoma Bravo's mooted $70 per share offer would represent a respectable 32% premium, valuing the company at a little over 6 times last year's revenue. That roughly matches the average multiple paid in deals across the industry in the second quarter, according to, opens new tab Software Equity Group data. Buyout barons can benefit from software investors' short attention spans. TD Cowen analysts reckon that Thoma Bravo could plausibly increase Dayforce's cash flow margin to over 20% while maintaining low-double-digit topline growth. If it can subsequently exit after five years at a multiple of between 6 and 7 times revenue, an average of where peers Automatic Data Processing and Paychex trade, its annualized rate of return could hit 24%, Breakingviews calculates. Dayforce struggled to meet public markets' 'show me the money' challenge. Private equity is probably happy to do the job.
The Guardian
25 minutes ago
- The Guardian
Target CEO steps down as company faces weak sales and customer boycott
$The CEO of Target is stepping down, as the embattled retail giant seeks to turn around its fortunes amid an ongoing customer boycott over its scaling back of diversity, equity and inclusion (DEI) initiatives. Brian Cornell will be replaced next year by Michael Fiddelke, Target's chief operating officer, the company said on Wednesday. Cornell helped re-energize the company when he became CEO in 2014, but has struggled to turn around weak sales in a more competitive retail landscape since the Covid pandemic. Sales at Target, which has almost 2,000 stores across the US, fell more than expected in the first quarter of 2025, and the retailer warned earlier this year that sales will continue to slip through the rest of the year. Target said people were scaling back spending over worries about the impact of tariffs and the state of the economy. The company also said customer boycotts affected sales. The company scaled back many DEI initiatives in January after they came under attack by conservative activists and the White House. The retreat created a backlash, and a poll in February found that Americans had changed their shopping habits and abandoned some stores in response to corporations shifting their policies to align with the Trump administration. The Guardian reported in July that many Black Americans were boycotting stores including Target and Amazon, and earlier this year more than 250,000 people signed a pledge to boycott Target after the Rev Jamal Bryant, pastor of New Birth Baptist church in Georgia, called for a 40-day 'Target Fast' that started at the beginning of the Lenten season. The company had previously come under fire in 2024 after it reduced its collection of LGBTQ+-themed merchandise for Pride month, in response to rightwing criticism. Target reported a 21% drop in net income in second quarter of this year. Sales were down slightly and the company reported a 1.9% dip in comparable sales – those from established physical stores and online channels. The company has seen flat or declining comparable sales in eight out of the past 10 quarters including the latest period.
