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Stock futures are flat ahead of Big Tech earnings

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A trader works inside his post on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters

Stock futures were flat in overnight trading Monday ahead of quarterly earnings reports from several mega-cap technology companies.

Futures on the Dow Jones Industrial Average added 6 points, or 0.02%. S&P 500 futures and Nasdaq 100 futures traded near the flatline.

Shares of Tesla rose after hours Monday following a better-than-expected second-quarter earnings report. The electric vehicle maker passed $1 billion in quarterly net income for the first time.

The major U.S. stock averages closed Monday’s regular session at record highs to each notch five-day win streaks. The Dow gained 82.76 points, or 0.24%. The S&P 500 also added 0.24% and the tech-heavy Nasdaq Composite closed 0.03% higher.

Second-quarter earnings season continues with Google-parent Alphabet, Microsoft and Apple set to report after the bell Tuesday.

“It appears that we’re going to get really solid earnings from these companies and that should give a little bit of a boost to the market. Some of these names have already run so much this year that perhaps we don’t get a large bounce,” said Victoria Fernandez, Crossmark Global Investments chief market strategist.

“Apple may be your best opportunity to see some movement because they’ve been in more of a consolidation phase over the last few months,” Fernandez added.

JetBlue, UPS, General Electric and Starbucks are also scheduled to post earnings Tuesday.

The Federal Reserve’s two-day policy meeting is also set to begin Tuesday. Investors are awaiting insights into the central bank’s monetary policy.

The Federal Open Market Committee and the Board of Governors are scheduled to release a statement after the meeting ends Wednesday.

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Elizabeth Warren urges Federal Reserve to break up Wells Fargo

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Senator Elizabeth Warren, a Democrat from Massachusetts, questions Jerome Powell, chairman of the U.S. Federal Reserve nominee for U.S. President Donald Trump, right, during a Senate Banking Committee confirmation hearing in Washington, D.C., U.S., on Tuesday, Nov. 28, 2017.

Andrew Harrer | Bloomberg | Getty Images

Sen. Elizabeth Warren on Tuesday urged the Federal Reserve to break up Wells Fargo, arguing a string of scandals at the financial titan puts consumers at risk.

In a letter to Fed Chair Jerome Powell, the Massachusetts Democrat called on the central bank’s board of governors to use its authority to separate Wells Fargo’s banking unit from its financial services businesses. She said the Fed could break up Wells Fargo by revoking its license to operate as a financial holding company.

“The Fed has the power to put consumers first, and it must use it,” Warren wrote. “By invoking its full authority to protect consumers and the financial system and requiring Wells Fargo to separate its consumer-facing banking arm from the rest of its financial activities, the Fed can ensure that Wells Fargo faces appropriate consequences for its longstanding ungovernable behavior.”

While Wells Fargo did not directly respond to Warren on Tuesday, it put out a press release highlighting efforts to change its practices and meet regulators’ demands. The company said “we are a different bank today than we were five years ago because we’ve made significant progress.”

The financial giant pointed to moves to split business units into smaller groups, change company leaders, and create teams to better monitor sales practices and risks.

Wells Fargo shares were up slightly on Tuesday.

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Washington has increased its scrutiny of Wells Fargo’s practices since the 2016 revelation that the company created millions of bank accounts in real people’s names without their knowledge or consent. Wells Fargo has paid more than $4 billion in penalties since the scandal came to light.

The company’s issues did not end there. Last week, the Office of the Comptroller of the Currency hit Wells Fargo with a $250 million fine, saying it violated a 2018 consent order, a measure that requires financial institutions to address violations of regulatory standards.

Even so, Wells Fargo said last week that a 2016 Consumer Financial Protection Bureau consent order tied to the fake account scandal had expired. That could signal an easing of government pressure on the company.

The Fed put an asset cap on Wells Fargo in 2018.

Warren cited the scandal with fake accounts, and other practices in Wells Fargo’s insurance and wealth management businesses, in contending the company is an “irredeemable repeat offender” with an “inability to meet regulatory requirements and treat its consumers honestly and fairly.”

— CNBC’s Hugh Son contributed to this report

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Firm behind ‘most powerful tidal turbine’ to head up new project

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This image shows Orbital Marine Power’s 2 megawatt turbine, the Orbital O2.

Scottish engineering firm Orbital Marine Power is to lead a consortium focused on the commercial deployment of floating tidal energy.

In a statement on Monday, the company, which has previously described its 2 megawatt O2 tidal turbine as the “world’s most powerful”, said the 26.7 million euro ($31.5 million) Forward-2030 project would receive a 20.5 million euro grant from the European Union’s Horizon 2020 program.

Although the U.K. officially left the European Union on Jan. 31, 2020, its companies and researchers are still able to access funding from Horizon 2020.

In a statement, Orbital said the project would work on the development of a system combining “floating tidal energy, wind generation, grid export, battery storage and green hydrogen production.” The company will assume the role of both project coordinator and lead technology developer.

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Breaking things down, the next iteration of Orbital’s floating tidal turbine will be installed at the European Marine Energy Centre in Orkney, an archipelago located north of mainland Scotland.

There, the turbine will be integrated with battery storage and a hydrogen production facility. The new turbine will sit alongside the already-installed O2, which started grid-connected power generation earlier this year.

Others involved in the project include the University of Edinburgh, which will undertake what Orbital described as a “techno-economic analysis of tidal energy.”

Elsewhere, Engie Laborelec — part of Tractebel, a subsidiary of major French utility Engie — will “assess large scale integration of tidal energy to the European energy system, develop a smart energy management system and an operational forecasting tool.”

Matthijs Soede, who is senior policy officer at the European Commission’s directorate general for research and innovation, said the Forward-2030 project had “the potential to accelerate the commercial deployment of tidal energy, whilst firming up Europe’s position as a leader in tidal energy.”

Monday’s news represents the latest shot in the arm for the U.K.’s marine energy sector. Last week saw another Scottish company, Nova Innovation, announce it would receive £6.4 million ($8.89 million) from the Scottish National Investment Bank.

The investment, Nova said, would be used to fund the manufacture and distribution of its subsea tidal turbines. The money would also be used to fund ongoing marine energy R&D, it said.

While interest in marine-based energy systems appears to be growing, the current footprint of the industry and its technologies remains small.

Figures from Ocean Energy Europe show that only 260 kilowatts of tidal stream capacity was added in Europe last year, while just 200 kW of wave energy was installed.

By contrast, 2020 saw 14.7 gigawatts of wind energy capacity installed in Europe, according to industry body WindEurope.

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Consumer price index August 2021

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Prices for an array of consumer goods rose less than expected in August in a sign that inflation may be starting to cool, the Labor Department reported Tuesday.

The consumer price index, which measures a basket of common products as well as various energy goods, increased 5.3% from a year ago and 0.3% from July. A month ago, prices rose 0.5% on the month.

Economists surveyed by Dow Jones had been expecting a 5.4% annual rise and 0.4% on the month.

Stripping out volatile food and energy prices, the CPI rose just 0.1% for the month vs. the 0.3% estimate, and 4% on the year against the expectation of 4.2%.

The 5.3% annual increase still keeps inflation at its hottest level in about 13 years, though the August numbers indicate the pace may be abating.

Markets rallied following the release, with stock index futures well off their morning lows.

Energy prices accounted for much of inflation increase for the month, with the broad index up 2% and gasoline prices rising 2.8%. Food prices also were up 0.4%. Energy is up 25% from a year ago and gasoline has surged 42% during the period.

However, excluding those two categories resulted in the slowest monthly CPI increase since February.

Used car and truck prices, which had been a major feeder of the headline inflation gains, fell 1.5% in August but are still up 31.9% from a year ago. New vehicle prices, though, rose 1.2%.

Transportation services also declined 2.3% for the month.

Federal Reserve officials have been watching inflation closely but have largely said they believe this year’s burst will be temporary and due to factors that will soon fade. They cite supply chain bottlenecks, shortages of critical products like semiconductors and heightened pandemic-related demand for goods as major contributors that at some point will drift back to normal levels.

Markets largely expect the Fed to start pulling back on some of the unprecedented monetary policy help the central bank has provided during the pandemic. Fed policymakers themselves have indicated that they probably will start slowing the pace of their monthly bond purchases before the end of the year.

Investor fears about inflation have calmed as well. The Bank of America Fund Manager Survey for September indicated that a net level of respondents now expect inflation to fall over the next 12 months. As recently as April, a net 93% were expecting it to increase.

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