On The Money — Stock market tanks as interest rates spike
Don’t check your 401(k) for a little while. We’ll also look at Senate Majority Leader Charles Schumer’s (D-N.Y.) shutdown snag and easing sanctions to boost Internet access in Iran.
But first, Tom Brady might become the state gym teacher of Florida.
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.
Dow at lowest since 2020 as recession fears grow
Markets are plunging as they process the latest interest rate hikes from the Federal Reserve in its battle to fight 40-year-high inflation.
- The Dow Jones Industrial average dropped nearly 500 points to hit 29,590 at market close on Friday — its lowest point in nearly two years. Since the Fed started raising interest rates in March, the index has lost more than 13 percent of its value and is down more than 19 percent on the year.
Other indices have followed suit.
- The S&P 500 fell 65 points to close at 3,693 on Friday, down more than 15 percent since March and almost 23 percent on the year.
- The technology-heavy Nasdaq dropped nearly 200 points, or 1.8 percent, to close at 10,867, down almost 20 percent since March.
The background: The Fed has raised its baseline interest rate range by 3.25 percentage points from near-zero levels in March. Consumer inflation did come down slightly over the summer, falling to 8.3 percent in August from 8.5 percent in July and 9.1 percent in June.
But the little headway made by the Fed in fighting inflation comes at the price of slowing the economy and potentially even driving it into a recession, a trade-off that some market commentators don’t think is worth it.
The Hill’s Tobias Burns has more here.
LEADING THE DAY
Schumer looks for way out of the box on Manchin deal
Senate Majority Leader Charles Schumer (D-N.Y.) is looking for a way to avoid a government shutdown next week while also keeping his promise to Sen. Joe Manchin (D-W.Va.) to pass permitting reform before October.
- Most Senate Republicans say they will vote against the government funding measure if it includes Manchin’s permitting reform bill, and a group of Democrats are pressing Schumer to separate the continuing resolution and permitting reform.
- That means Schumer is likely to fall short of the 60 votes he needs to overcome an expected filibuster to a short-term government funding resolution that also includes Manchin’s permitting reform provisions, which would alter the federal approval process for energy projects.
But Schumer has promised Manchin that he will include permitting reform in the stopgap funding measure, which must pass by Sept. 30 to avoid a government shutdown.
The Hill’s Alexander Bolton has the latest here.
SANCTIONS EASING
Biden administration eases sanctions to boost Iranian people’s internet access
The Treasury Department announced exceptions to Iranian sanctions Friday to allow companies to provide more online services in the country after Iran’s government cut internet access for most of the country amid protests.
The guidance authorized tech companies to offer Iranian people with more options for secure, outside platforms and services, the department said in an announcement.
- The update seeks to modernize the existing sanction exemptions for companies to provide internet access by adding exceptions for social media platforms, video conferencing services and cloud-based services.
- The sanctions abatement comes after the Iranian government cut the internet for most of its citizens following the violent crackdown on peaceful protests in the country. The protests were spurred by the death of Mahsa Amini, a 22-year-old woman, in police custody.
The Hill’s Rebecca Klar has more details here.
HISTORIC FIRST
California first state to ban natural gas heaters and furnaces
A new proposal passed by the California Air Resources Board (CARB) cements the state as the first to ban natural gas heaters and furnaces. Good to Know
The decision, which was passed unanimously, aims to phase out sales of the space heater and water heater appliances by 2030.
- The commitment is part of a broader range of environmental efforts passed by the board this week to meet the federal 70 parts per billion, 8-hour ozone standard over the next 15 years.
- Residential and commercial buildings in California account for approximately five percent of the state’s total nitrogen oxide emissions due to natural gas combustion, according to the originally proposed plan, released in August 2022. In addition, space and water heating make up nearly 90 percent of all building-related natural gas demand.
Read more here from The Hill’s Gianna Melillo.
Good to Know
The innovation office of the U.S. military is introducing an effort to assess cryptocurrency threats to national security and law enforcement, aiding authorities in preventing illegal uses of digital assets.
“The program underway here involves mapping out the cryptocurrency universe in some detail,” DARPA program manager Mark Flood said.
Here’s what else we have our eye on:
- The U.S. and Pfizer will be lowering their number of global vaccine donations in response to a “reduced demand,” though the company says it is still committed to supplying the roughly 1 billion doses that the U.S. has committed to providing.
- The largest online forum of the “incel” movement has seen an increase in calls for violence, according to a new report released on Friday.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you next week.