Wall Street hammered amid plunging global markets | The Excerpt
On Tuesday’s episode of The Excerpt podcast: USA TODAY Money and Personal Finance Reporter Medora Lee explains what happened to the markets Monday. The Supreme Court rejects Missouri's effort to delay former President Donald Trump's hush money sentencing. A man is charged with threatening Vice President Kamala Harris and other top elected officials. USA TODAY Pentagon Correspondent Tom Vanden Brook breaks down the latest tensions between Israel and Iran. Robert F. Kennedy Jr. posts a video admitting to dumping a dead bear in Central Park in 2014. A judge rules that Google illegally monopolized search on phones and browsers. Simone Biles adds another medal, but misses gold. Here's what to check out on Day 11.
Hit play on the player below to hear the podcast and follow along with the transcript beneath it. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.
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Taylor Wilson:
Good morning, I'm Taylor Wilson and today is Tuesday, August 6th, 2024. This is The Excerpt. Today, what happened to the stock market yesterday? Plus, the Supreme Court rejects an effort to delay Trump's September hush money sentencing, and we discuss tensions between Israel and Iran.
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It was a rough start to the week for Wall Street. The S&P500 index closed down 3% yesterday after a hair-raising morning drop, while the technology-heavy Nasdaq Composite fell 3.43% and the Dow Jones plummeted more than 100 points, losing 2.6%. I spoke with USA TODAY money and personal finance reporter, Medora Lee, to find out what led to the plunge and what's next? Medora, thanks for hopping on.
Medora Lee:
Thanks for having me.
Taylor Wilson:
So Medora, what happened to the markets yesterday?
Medora Lee:
So the markets really sold off because last Friday when the jobs data came out and it was weaker than expected, but the really big scary part was that the unemployment rate rose to 4.3%, and some economists put that in their super special formula and it turns out that that is now signaling a recession.
Taylor Wilson:
All right, so you spoke with Chicago Federal Reserve president, Austan Goolsbee. What did he say about this moment and rate cuts and really the Fed's role in all this?
Medora Lee:
He admitted that that jobs number that we got last Friday for July, was weak. However, he did not think it was as bad as maybe other people thought it was, because down in the details, he said that really the unemployment rate rose because there were more people looking for jobs not because of layoffs, which is what would happen in a recession. So he was not quite as negative about it. As far as the market sell-off, he said the market sell-off made people panic, economists were revising their estimates and some were calling for emergency rate cuts to stave off the recession. He says that he doesn't look at that. He said the Fed's mandate is price stability and full employment, and that is what they focus on. So he said there's nowhere in the law that says the job should be trying to make investors whole again after market gyrations.
Taylor Wilson:
And Medora, do we have any sense on what the Fed's next move will be?
Medora Lee:
So having said all of that, he suggested or hinted that it might be time to look at lowering rates soon, making the point that we have had our Fed funds rate at a 23-year-high now for just over a year, and when they put it up that high, it was a very different economy than it is now. And since then, inflation has come down and the economy has weakened a bit. So suggesting that maybe it's time to take a look.
Taylor Wilson:
So there are clearly fears about the possibility of a recession. How likely is that at this point Medora?
Medora Lee:
So it depends on who you talk to, but I think that a lot of people would say that the market sell-off was an overreaction, that we're not really there yet. So there are a lot of differing opinions. And again, like the Chicago Fed president said, this is only one month of data. That doesn't really necessarily mean anything. And some people said that it was Hurricane Beryl that goosed those unemployment figures.
Taylor Wilson:
So it was clearly a rough day stateside. What's happening around the world Medora, and what impact is that happening on the U.S. markets?
Medora Lee:
That's another thing that the Chicago Fed president also mentioned. He said that he also thinks that Monday's sell-off, there are more factors than just the monthly jobs report. He said the Bank of Japan raised rates more than expected last week and that fueled some technical trading that maybe people were doing. They were borrowing money in Japan at low interest rates and then reinvesting it into higher yielding investments like U.S. stocks and things like that. And so now that Japan's raising rates, we might look like we're going to lower rates, people might be redoing their portfolios and selling off their high yielding assets and moving money around.
Taylor Wilson:
So Medora, folks tend to freak out in moments like these, right? What do experts advise investors to do in this moment?
Medora Lee:
So the financial advisors always come out and tell everybody, don't look at your 401k balance today, and you have to remember this, you're investing for the longterm. And the longterm, ultimately, the markets go up.
Taylor Wilson:
All right, Medora Lee covers money and personal finance for USA TODAY. Thank you, Medora.
Medora Lee:
Thank you. Have a good day.
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Taylor Wilson:
The Supreme Court yesterday rejected an effort by Missouri's Attorney General, Andrew Bailey, to delay former president Donald Trump's September 18th sentencing in his New York hush money case until after the November election. The high court dismissed his request without comment. Bailey argued the sentencing and a gag order impedes Trump's ability to campaign for president, making it difficult for Missouri's voters to get the information they need to cast a ballot. New York Attorney General, Letitia James, told the court that Missouri was attempting an extraordinary and dangerous end run around Trump's court proceedings. James also said Trump is free to speak about all the topics voters want to hear about, including Trump's views on the prosecutor, witnesses, jurors and judge. Originally scheduled for July, Trump's sentencing was moved to September to allow him to argue his conviction should be thrown out because of the Supreme Court's July immunity ruling. That landmark decision found that presidents have broad immunity from criminal prosecution. Trump was convicted in May of falsifying 34 business records in order to cover up a 2016 election interference conspiracy involving hush money to porn star Stormy Daniels.
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A Virginia man has been arrested and charged with threatening to kill Vice President Kamala Harris six days after she launched her presidential campaign. Frank Lucio Carrillo was charged in federal court in Virginia on Friday, with threats against the Vice President of the United States after posting messages targeting Harris and other elected officials including President Joe Biden and FBI Director Christopher Wray, on a conservative social media site, according to court records. Messages threatening Harris were posted July 27th, court record said. That's less than a week after Biden announced he would not seek reelection and two weeks after an assassination attempt on former president Donald Trump.
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At least five U.S. personnel were injured in an attack against a military base in Iraq yesterday. It's still unclear whether the attack was linked to threats by Iran to retaliate following the recent assassinations of senior Iranian-backed militant leaders in Beirut and Tehran. For more on continued tensions in the region, I spoke with USA TODAY Pentagon correspondent, Tom Vanden Brook. Hiya Tom.
Tom Vanden Brook:
Taylor, good to be here.
Taylor Wilson:
Good to have you on as always, Tom. So let's just start with this. Tensions clearly remain high in the Middle East. What do we know about the recent assassinations of senior Iranian-backed militant leaders?
Tom Vanden Brook:
Well, we know that they happened. We know that Israel claims credit for the first one, with an airstrike in Beirut on the Hezbollah leader, and that followed an attack that killed 12 children in Israel. Israel's not claiming credit for the Hamas leader who was killed in Iran last week, but the suspicion is that they assassinated him, and that's what has brought this to the brink of what appears to be some sort of retaliation by Iran.
Taylor Wilson:
Yeah. So what have the Israeli and Iranian responses been like after those killings?
Tom Vanden Brook:
So far, just a lot of angry rhetoric coming out of Iran. Israel's not claiming credit for this latest assassination in Iran, but we'll see what happens. The last time Iran made major threats like this in April, they fired 300 missiles and drones at Israel. So it's a serious issue and the Pentagon is taking it as such, and has sent F-22 fighter jets and numerous ships to the region in order to deter Iran from attacking Israel.
Taylor Wilson:
Yeah, I want to hear a little bit more about the U.S. response here, Tom. They've also sent officials to the region, I know. What is the U.S. strategy really, amid all this?
Tom Vanden Brook:
To put up a big show of force at the moment, to deter Iran from doing what it did last time, or at least to be able to prevent Israel from being struck by these missiles. A number of these ships that are being sent have anti-ballistic missile capability. The extra fighter aircraft, in addition to being a deterrent to Iran because they could do serious damage if it ever came to that, and hopefully it won't, but in the last go round, the Air Force shot down a number of these drones that were headed toward Israel. So deterrence and then failing that, to be able to defend Israel against an attack. And at the moment, the chief US military official for the region, General Erik Kurilla, is in the Middle East speaking with allies, speaking with Israel, about what the contingency plans are to protect them and hopefully to prevent it from happening in the first place.
Taylor Wilson:
Yeah. So as you mentioned, US officials worried last week that an attack by Iran was imminent. Do they still feel that way? What's the chance Iran attacks Israel now and really what are the concerns about Iran's proxy groups, as well, in the region?
Tom Vanden Brook:
Yeah, those are good questions. The attack still seems, according to officials I speak to, they think it's inevitable. Of course, that could change. Whether it's imminent or not, it's another thing. In speaking to officials, they've been telling me that an attack does not seem imminent right now, that there are no indications that it's going to happen anytime soon. But there is a feeling that it's inevitable. A big issue is the control that Iran has, these proxy groups that it has: Hamas, Hezbollah, the Houthis in Yemen. They've armed them, trained them, and whether or not they have complete control over how they respond to this is, an open question. Adam Smith, the ranking member of the Armed Services committee, was talking about how Iran may not have the leash that it thinks it has on these groups and they could respond on their own unilaterally and attack Israel.
Taylor Wilson:
All right, interesting insight as always. Tom Vanden Brook covers the Pentagon for USA TODAY. Thank you, Tom.
Tom Vanden Brook:
You're welcome, Taylor.
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Taylor Wilson:
Third-party presidential candidate, Robert F. Kennedy Jr. posted a video to social media on Sunday, of him talking with actress Roseanne Barr, where he admits placing a dead bear cub in New York's Central Park and staging it to look as if a cyclist had run over the animal. Kennedy said he was on his way to go falconing in the Hudson Valley in New York in 2014, when a van in front of him hit and killed the bear. Kennedy said he picked up the bear and put it in his car with the intention of skinning it and putting its meat in his refrigerator. But he had a dinner back in New York City that ran late and had to travel to the airport right afterward. The video was apparently released to get ahead of a story by the New Yorker, Kennedy said, adding that the outlet had found out about the incident.
And in a strange twist of events, a reporter who first covered the story for the New York Times when the bear was found in 2014, was Tatiana Schlossberg, Kennedy's second cousin and the daughter of Caroline Kennedy, the outlet reported. After the news broke Sunday, Schlossberg told the New York Times that she had no idea who was responsible for the incident when she wrote the story.
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In the most significant legal ruling against a major technology giant in more than two decades, a federal judge says Google illegally monopolized online search and advertising by paying companies like Apple and Samsung billions of dollars a year to install Google as the default search engine on smartphones and web browsers. By monopolizing searches on smartphones and browsers, Google abused its dominance in the search market, throttling competition, and harming consumers, according to U.S. District Judge Amit P. Mehta. Google owes much of its more than $300 billion in annual revenue to search ads.
Yesterday's ruling did not include remedies. Those will be decided separately, likely after an appeal, which Google said it would make. One remedy could see Google lose its ability to strike device deals that have helped make its search engine so ubiquitous. Google has argued that its distribution deals are common in the business world and that it pays for its search engine to be on phones the way a food manufacturer pays to promote its products at eye level in a grocery store aisle. You can read more about the implications of yesterday's ruling with a link in today's show notes.
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Simone Biles added yet another medal to her massive career haul yesterday, winning silver in the women's gymnastics floor exercise final, giving her four medals, including three golds at these games. But it was the first time Biles had not won gold in a floor exercise final ever. Still, the medal is the 11th of her Olympic career. Brazil's Rebecca Andrade won gold, and after an inquiry, Team USA's Jordan Chiles score was updated to move her into third place and the bronze. Meanwhile, American Caroline Marks won gold in Tahiti in the women's shortboard surfing competition. And Team USA also captured medals in triathlon, shooting, pole vaults and three-on-three basketball. Medal events are scheduled for today in track, boxing, cycling, diving, equestrian, sailing, skateboarding, and wrestling. As always follow along with USA TODAY Sports.
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And thanks for listening to The Excerpt. You can get the podcast wherever you get your pods, and if you're on a smart speaker, just ask for The Excerpt. I'm Taylor Wilson, and I'll be back tomorrow with more of The Excerpt from USA TODAY.
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