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Consumer prices leapt higher in April, data released on Wednesday showed, a much-faster-than-expected jump that could resonate on Wall Street as investors try to determine if inflation could alter Federal Reserve policy.
The Consumer Price Index climbed 4.2 percent during the month, from a year earlier, the Labor Department said, the fastest pace of increase since 2008. From March to April, prices increased 0.8 percent. Economists had expected the C.P.I. to rise 3.6 percent over the year, and 0.2 percent from the month before, based on the median forecast in a Bloomberg survey.
The core index, which strips out volatile food and energy, rose 0.9 percent in April from March — its biggest monthly increase since April 1982.
Prices are shooting higher as inflation figures lap extremely weak readings from 2020 and as supply chain disruptions begin to bite and demand climbs. The monthly increase in April was broad-based, as prices for used cars accelerated and the cost of air travel, shelter and home furniture also increased.
Central bankers have previously said they think the jump in prices will be short-lived, and have made it clear that they plan to look past a temporary increase when setting policy. The technical quirks at work in April will last only a few months, officials point out, and while it is less clear when shortages will be resolved, they are expected to eventually work their way through the system as businesses ramp up production to meet demand.
But the concern on Wall Street, and among some economists, is that the fast recovering economy, huge stimulus efforts from Washington and pent-up demand from consumers could mean that price gains are more pronounced or sustained than the Fed can tolerate.
A key part of the central bank’s role is to keep price increases contained, so a steep acceleration in prices that is expected to last might prompt it to dial back policies that keep money cheap and credit flowing. Reducing the support would probably cause stock prices to sink.
While the Fed defines its inflation target using a separate measure, the Personal Consumption Expenditure index, that metric relies on data from the C.P.I. and is also expected to move above the central bank’s goal. Fed officials aim for 2 percent annual inflation on average.
Central bankers have been clear that they would react if, contrary to their expectations, signs of a persistent price takeoff emerged. But they have also said they want to avoid withdrawing support from the economy early, which could leave the labor market incompletely healed and put longer-run inflation at risk of returning to uncomfortably low levels, where they have been mired for much of the past decade.
Lael Brainard, a Fed governor, said during a speech on Tuesday that “remaining patient through the transitory surge associated with reopening will help ensure” the economic momentum to “reach our goals.”
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The economic outlook has brightened considerably across Europe after lockdowns restricted growth at the start of the year. Now, economists can foresee the complete recovery by the end of next year from the early effects of the pandemic.
The British economy grew 2.1 percent in March from the previous month, the Office for National Statistics said on Wednesday. The reopening of schools was one of the biggest reasons for the larger-than-expected jump in economic growth, as well as a rise in retail spending even though many stores remained closed because of lockdowns.
The statistics agency estimated that gross domestic product fell 1.5 percent in the first quarter, slightly less than economists surveyed by Bloomberg had predicted, while the country was under lockdown with nonessential stores, restaurants and other services such as hairdressers shut.
Though the British economy is still nearly 9 percent smaller than it was at the end of 2019, before the pandemic, the Bank of England forecasts it to return to that size by the end of this year.
The European Commission also upgraded its forecasts for the region on Wednesday. It predicted the European Union economies would grow 4.2 percent this year, up from a forecast of 3.7 percent three months ago. Germany’s economy is forecast to grow 3.4 percent this year and Spain, which suffered Europe’s deepest recession last year, is expected to grow nearly 6 percent.
“The E.U. and euro area economies are expected to rebound strongly as vaccination rates increase and restrictions are eased,” the commission, the executive arm for the European Union, said on Wednesday. The recovery will be driven by household spending, investment, and a rising demand for European exports, it said.
Still, despite the optimistic outlook, the commission warned that the risks were “high and will remain so as long as the shadow of the COVID-19 pandemic hangs over the economy.”
Even as millions of people were vaccinated, the number of new coronavirus cases globally reached a peak in late April as the pandemic has struck especially hard in India. The uneven distribution of vaccines around the world and the emergence of new variants has the potential to set back the recovery.
The National Institute Of Economic and Social Research in London said on Monday that it did not expect the British economy to return to its prepandemic size until the end of 2022, predicting a slower recovery than the central bank.
Economists at the institute expect lower global growth because of uncertainty about the global vaccine rollout and lingering doubts about the end of the pandemic inducing more people to hold onto their savings, rather than spend it.
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The comeback continued for SoftBank on Wednesday, as the Japanese technology investment firm posted a net profit of more than $36 billion for the year ending in March.
Yet a recent slide in confidence in technology stocks could make it more difficult for Masayoshi Son, the founder of the technology conglomerate turned investment powerhouse, to keep up the momentum after what seemed like an impossible change of fortune.
Last May, SoftBank was in crisis after posting a loss of more than $12 billion. Its big bets on Wall Street favorites, like WeWork, the troubled office space company, and Uber, resulted in huge losses.
But it was not down for long. Riding high on a post-pandemic stock boom, SoftBank has since notched seemingly unthinkable gains. When compared with its previously released figures, the year-end results implied a profit for the first three months of 2021 alone of more than $17 billion.
In a live-streamed press event Wednesday, Mr. Son opened by showing a photo of the humble town where SoftBank began, before calling the huge earnings numbers “lucky plus lucky plus lucky.”
SoftBank Group’s net income
Mr. Son told investors on Wednesday that he would not deny that he is a gambler. But he said he regretted some decisions. The question now is whether his current run of luck can continue.
SoftBank’s profit, mostly paper gains from increases in investment values, was based heavily on a jump in the price of South Korean e-commerce firm Coupang after it listed earlier this year. Results were also lifted by strong share price rises from other SoftBank investments, DoorDash and Uber.
The share price of all three companies has fallen sharply over the past month on a broader pullback in technology shares, in part related to fears over inflation out of the United States.
Investors appeared more interested in the broader tech sell off than Mr. Son’s luck, as SoftBank’s shares fell more than 3 percent on Wednesday, despite the solid gains.
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Amazon on Wednesday won an appeal against European Union efforts to force the company to pay more taxes in the region, illustrating how American tech giants are turning to the courts to beat back tougher oversight.
The General Court of the European Union struck down a 2017 decision by European regulators that ordered Amazon to pay $300 million to Luxembourg, home of the company’s European headquarters and where regulators said the company received unfair tax treatment. The court said regulators did not sufficiently prove that Amazon had violated a law meant to prevent companies from receiving special tax benefits from European governments.
The decision, which comes as European Union and American officials attempt to reach a global tax agreement that could result in higher levies against tech companies, undercuts an effort by Margrethe Vestager, an executive vice president at the European Commission, who issued the Amazon penalty and has led efforts to force big tech firms to pay more in taxes. The companies have been criticized for using complex corporate structures to take advantage of low-tax countries like Luxembourg and Ireland. In 2020, Amazon earned 44 billion euros in Europe, but reported paying no taxes in Luxembourg.
Tech companies are using the courts to fight European regulators trying to rein in the industry’s power. Last year, Apple won an appeal against Ms. Vestager to annul a decision to repay about $14.9 billion in taxes to Ireland, where the company has a European headquarters. That case is now before the European Union’s highest court.
Google has appealed three decisions and billions of dollars in fines issued by the European Commission over anticompetitive business practices related to its search engine, advertising business and Android mobile operating system.
More legal battles may loom, as regulators have issued preliminary charges against Apple and Amazon for violating antitrust laws.
On Wednesday, Amazon cheered the decision by the Luxembourg-based court.
“We welcome the court’s decision, which is in line with our longstanding position that we followed all applicable laws and that Amazon received no special treatment,” Conor Sweeney, a company spokesman, said in a statement.
Ms. Vestager said the European Commission would study the Amazon ruling before deciding whether to appeal.
“All companies should pay their fair share of tax,” Ms. Vestager said in a statement. “Tax advantages given only to selected multinational companies harm fair competition in the E.U.”
With the Colonial Pipeline, a vital fuel pipeline stretching from Texas to New Jersey, shut down after a ransomware attack, airlines, consumers and state leaders are responding as gas prices rise in part of the country.
Industry analysts said the impact of the shutdown would remain relatively minor as long as the artery was fully restored soon, but drivers scrambled to fuel their vehicles at filling stations across the Southeast on Tuesday in a panic-buying spree that left thousands of outlets out of gasoline.
Gasoline in Georgia and a few other states rose 3 to 10 cents a gallon on Tuesday, a price jump typically seen only when hurricanes interrupt Gulf of Mexico refinery and pipeline operations
A gallon of gas increased an average of nearly 7 cents in South Carolina and 6 cents in North Carolina on Tuesday, while gas in Virginia rose about 3 cents a gallon.
Filling stations in Southern states were selling two to three times their normal amount of gasoline on Tuesday, according to the Oil Price Information Service, an organization that tracks the oil sector. Some stations are running out of fuel while others are limiting purchases to 10 gallons.
Gov. Brian Kemp of Georgia signed an executive order suspending his state’s gasoline tax through Saturday, which amounts to roughly 20 cents a gallon. Gov. Roy Cooper of North Carolina and Gov. Ralph Northam of Virginia each declared a state of emergency in an effort to suspend some fuel transport rules.
American Airlines said it had added stops to two daily flights out of Charlotte, N.C. One, to Honolulu, will stop in Dallas, where customers will change planes. The other, to London, will stop in Boston to refuel. The flights are expected to return to their original schedules on Saturday.
Southwest Airlines said it was flying in supplemental fuel to Nashville, and United Airlines said it was flying extra fuel to Baltimore; Nashville; Savannah, Ga.; and Greenville-Spartanburg International Airport in South Carolina.
The pandemic revealed just how important e-commerce is to the future of the global fashion industry. In a year of lockdowns, millions of shoppers turned online to satisfy their desire for clothes, accelerating a shift toward digital sales and rapid growth for many e-commerce companies.
This week, two leading European names announced their latest funding rounds, as investors look to capitalize on the expansion of the online fashion market.
Lyst, a London-based online fashion platform with 150 million users, said it had raised $85 million ahead of a planned initial public offering. In 2020, the company — which acts as an inventory-free search portal for high-fashion brands and stores to sell to trend-focused online shoppers — said it had seen a 1,100 percent increase in new users on its app. It said the company has a gross merchandise value of more than $500 million.
Appetite for secondhand fashion also boomed in the last year, as more shoppers looked to declutter wardrobes, earn cash by selling old clothes and became more aware of the environmental impact of the industry.
Vinted, which is based in Lithuania, says it is Europe’s largest secondhand fashion marketplace with more than 45 million members globally. On Tuesday, the company said it had raised 250 million euros in a Series F funding round, giving the start-up a valuation of 3.5 billion euros, or $4.24 billion.
“We want to replicate the success we’ve built in our existing European markets in new geographies and will continue investing not only to improve our product, but also to ensure we continue to have a positive impact,” said Vinted’s chief executive, Thomas Plantenga.
Stocks on Wall Street were set for a decline on Wednesday as the latest data on consumer prices fueled investors’ concerns about inflation, and the prospect that it might prompt the Federal Reserve to pull back on monetary stimulus sooner than expected.
Futures on the S&P 500 pointed to a drop of about 0.8 percent in the moments after the data was released. Yields on government bonds rose, and technology stocks — which are particularly sensitive to rising interest rates — were on track for a sharper decline.
The Stoxx Europe 600 was unchanged after erasing a small gain earlier in the day. Asian stocks ended mixed, and the Taiwan stock exchange closed 4 percent lower as an outbreak of Covid-19 infections raised fears of government restrictions in a country that has avoided the worst of the pandemic.
The Consumer Price Index climbed 4.2 percent during the month, from a year earlier, the Labor Department said, the fastest pace of increase since 2008. From March to April, prices increased 0.8 percent. Economists had expected the C.P.I. to rise 3.6 percent over the year, and 0.2 percent from the month before.
Traders are worried that if the Consumer Price Index remains elevated, central bankers will have a reason to start pulling back on their stimulus measures and raise interest rates.
Economic data out of Europe
The European Union raised its estimates of economic growth among member countries this year, to 4.2 percent, from an earlier projection of 3.7 percent. In Britain, the economy grew 2.1 percent in March from the previous month, much faster than economists had forecast, as schools reopened and people kept shopping. But the government said the economy contracted 1.5 percent in the January-March period, a shrinkage that was generally expected because most shops, restaurants and schools were shut early in the year.
The International Energy Agency said global demand for oil would be slightly less than expected in the second quarter of this year because of the toll of the pandemic in India. Still, it said, its projections for overall growth in the second half of the year were mainly unchanged, “based on expectations that vaccination campaigns continue to expand and the pandemic largely comes under control.”
In the oil markets, Brent crude, the global benchmark, gained 1.1 percent to $69.30 a barrel, and West Texas Intermediate, the U.S. crude benchmark, rose 1.1 percent, to just above $66 a barrel.
Gasoline prices continued to rise as the Colonial Pipeline, a 5,500-mile conduit stretching from Texas to New York, remained closed because of a ransomware attack. The AAA motor club said Wednesday that the national average price had reached $3.008 a gallon, up about 2 cents from Tuesday’s average price and 8 cents from a week ago. A year ago, the average price was $1.854.
Credit…Tony Dejak/Associated Press
Lordstown Motors is one of a dozen electric vehicle start-ups that have wowed investors with big plans to revolutionize the auto industry.
But in February, a prototype it was testing in Michigan caught fire. Then, in April, another prototype dropped out of a 280-mile off-road race in Baja California after just 40 miles. Lordstown is also being investigated by the Securities and Exchange Commission, and its stock has tumbled from a high of about $30 last year to less than $8.
The swift rise and stunning decline of Lordstown are emblematic of the recent mania for E.V. businesses that are far from making a product, let alone selling it, Neal E. Boudette and Matthew Goldstein report for The New York Times. That frenzy has been driven by investors looking for the next Tesla, a pioneer in the industry that has a strong sales lead over other electric-car makers.
But Lordstown seems far from achieving its goal of churning out electric pickup trucks starting in September and becoming a challenger to G.M. and Ford Motor.
It’s not alone. Shares of Nikola, which is developing heavy trucks, have fallen from around $65 to about $11, for example. The S.E.C. is looking into allegations by an investment firm that Nikola made false statements about its technology.
Growing concerns in Taiwan about a small but worsening coronavirus outbreak drove a sharp intraday plunge in its stock market on Wednesday, as investors worried about new government restrictions on businesses in a place that has largely escaped the pandemic.
On Wednesday morning, Taiwan’s health minister, Chen Shih-chung, said that the island’s new outbreak has reached a “very severe stage” and that restrictions could be upgraded in “the coming days.” He spoke after the government reported 16 new cases of local infection on Wednesday and seven on Tuesday.
The Taiwan Stock Exchange weighted index slumped as much as 8.6 percent intraday following the news, a nearly 13 percent loss from its April peak. The market regained some ground later in the day and finished down 4.1 percent.
Taiwan has been a rare success story in a pandemic-stricken world. The island democracy threw up its borders when the pandemic first began to spread from mainland China and has heavily limited travel. It has recorded only 1,210 total cases, according to a tally by The New York Times.
But the authorities haven’t been able to trace the handful of cases that have popped up in recent days, raising questions about whether the government will limit the number of people who can gather within restaurants or other businesses.
Taiwan instituted some Covid-related restrictions on Tuesday, the first in a long time. It suspended large events, limiting outdoor gatherings to 500 people and indoor gatherings to 100 people. On Wednesday morning, the health minister said that the restrictions might be stiffened within days.