Business Highlights: Worst day in months for Wall Street; Edison's light bulb fades into history

Dec 16, 2023

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Fitch downgrades US credit rating, citing mounting debt and political divisions

WASHINGTON — Fitch Ratings has downgraded the United States government’s credit rating, citing rising debt at the federal, state, and local levels and a “steady deterioration in standards of governance” over the past two decades. Fitch says the worsening political polarization around spending and tax policy are key reasons for the downgrade. It said U.S. governance has declined relative to other highly rated countries and cited “repeated debt limit standoffs and last-minute resolutions.” The rating was cut Tuesday one notch to AA+ from AAA, the highest possible rating. The new rating is still well into investment grade.

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Why are gas prices rising? Experts point to extreme heat and oil production cuts

NEW YORK — Drivers are in for another headache at the pump as U.S. gas prices continue to rise. The national average for gas prices stood at about $3.78 a gallon on Tuesday — about 25 cents higher than that seen one month ago, according to motor club AAA. While today’s prices at the pump remain far lower than they were last year, when energy costs soared worldwide in the months following Russia’s invasion of Ukraine, experts say such a jump is unusual. There are a few factors causing oil prices to rise, experts say, including global supply production cuts and impacts of this summer’s extreme heat on refineries. Here’s what you need to know.

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IRS aims to go paperless by 2025 as part of its campaign to conquer mountains of paperwork

Most taxpayers will be able to digitally submit a slew of tax documents and other communications to the IRS next filing season and the agency plans to go completely paperless in 2025. The effort to reduce the exorbitant load of paperwork that has plagued the agency — dubbed the “paperless processing initiative” — is set to be announced by U.S. Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel on Wednesday. It comes from the assistance of an $80 billion infusion over 10 years under the Inflation Reduction Act passed into law last August.

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Adidas gives Yeezy sneaker sales a silver lining via donations to anti-hate groups, some US Jews say

Last October, sportswear giant Adidas cut ties with Ye, the rapper formerly known as Kanye West, due to his antisemitic comments. As a result, Adidas was left with more than a billion dollars worth of high-end Yeezy sneakers. Now, Jewish Americans are evaluating the German company’s plan to give some of the proceeds from the sneakers’ sale to groups engaged in fighting antisemitism. Several Jewish civic leaders contacted by The Associated Press said they weren’t planning to buy a pair of Yeezys themself. But they generally welcome the plan to support anti-hate organizations, saying the company is trying to make the best of a bad situation.

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Mideast countries that are already struggling fear price hikes after Russia exits grain deal

CAIRO — Egypt and other lower-income Middle Eastern countries like Lebanon and Pakistan are worried about what comes next after Russia pulled out of a crucial wartime grain deal. They’re already struggling with economic woes that have driven more people into poverty and fear rising food prices will create even more pain for households, businesses and government bottom lines. Many have diversified their sources of wheat, and there is enough of the grain to go around in the world. But the end of the deal that allowed Ukraine’s grain to flow during a global food crisis has created uncertainty about price hikes, a major driver of hunger.

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Stock market today: Wall Street tumbles to its worst loss in months

NEW YORK — Wall Street tumbled to its worst day in months as its torrid rally that critics called overdone lost more momentum. The S&P 500 fell 1.4% Wednesday for its sharpest drop since April. It was the index’s second straight loss after hitting a 16-month high last week. The Dow lost 1%, and the Nasdaq sank 2.2%. Yields were mixed after Fitch cut the U.S. government’s credit rating. The downgrade strikes at the core of the financial system, but it’s so far caused less drama than a similar cut in 2011. The big concerns remain corporate profits and the economy. Reports on those were mixed.

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Banking executive Jeffrey Schmid named president of Kansas City Federal Reserve Bank

WASHINGTON — Jeffrey Schmid, a former banking executive, has been appointed the next president of the Federal Reserve Bank of Kansas City, beginning Aug. 21. As president of one of the 12 regional Fed banks, Schmid will participate in the eight meetings the Fed holds each year to determine the path of short-term interest rates. Schmid is joining at a fraught time, as Fed officials are considering whether to lift their key interest rate for a 12th time in the past year and a half at their next meeting in September.

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Prepare to flick off your incandescent bulbs for good under new US rules that kicked in this week

SAN FRANCISCO — Thomas Edison’s pioneering incandescent light bulb, which cast illumination by heating a filament until it glowed, is fading into history. New federal rules governing the energy efficiency of lighting systems went into full effect Tuesday, effectively ending the sale and manufacture of bulbs that trace their origin to an 1880 Edison patent. The big winners are likely to be more efficient and longer-lasting LED bulbs. The rules have been whipsawed by politics for years, and as a result may not result in sweeping change simply because businesses and consumers have already begun to embrace more efficient lighting on their own.

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To boost donations to nonprofits, Damar Hamlin encourages ‘Donate Now, Pay Later’ service

NEW YORK — Damar Hamlin will expand his efforts to promote charitable giving by supporting a company that allows donors to give to nonprofits immediately, while actually paying later. It’s the Buffalo Bills safety’s latest move to direct the outpouring of support he received after collapsing on the field during a game in January. Hamlin announced Thursday that he will be a brand ambassador for the tech platform B Generous. The company says its “Donate Now, Pay Later” service yields much higher average donations compared to the average online donation collected last year. The service is free for donors but charges nonprofits a fee.

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CVS Health turns in better-than-expected 2Q even as pharmacy pricing, increased care use hurt

CVS Health topped second-quarter expectations, but the health care giant’s profit sank as pricing pressure hurt its drugstores and a jump in care use hit the insurance side. The company also booked a $496 million, pretax restructuring charge to cut costs and improve efficiency. CEO Karen Lynch told analysts Wednesday that charge was tied partly to eliminating about 5,000 jobs that don’t involve dealing with customers. CVS Health runs prescription drug plans through one of the nation’s largest pharmacy benefits managers. Its Aetna insurance covers more than 25 million people, and the company has nearly 10,000 drugstores.

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The S&P 500 fell 63.34 points, or 1.4%, to 4,513.39. The Dow Jones Industrial Average fell 348.16 points, or 1%, to 35,282.52. The Nasdaq composite fell 310.47 points, or 2.2%, to 13,973.45. The Russell 2000 index of smaller companies fell 27.33 points, or 1.4%, to 1,966.83.

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