The S&P 500 Just Avoided an Unwanted Statistic. This Is the Next Test.

That’s unlikely to provide much solace for investors, though—the S&P 500 is down 3.4% this month.

The fact August is almost over probably won’t offer any comfort either. September is historically the worst month for stocks, with the S&P 500 falling an average of 1.12% dating back to 1928.

Fortunately, history is only a guide, if relevant at all. The new month begins with August’s jobs report Friday and a chance for the market to find the answers it needs about the Federal Reserve’s next moves.

Fed Chairman Jerome Powell, although hawkish, offered little in the way of new clues in his Jackson Hole speech. That places greater emphasis on the economic data ahead. The big question, of course, is whether the central bank is done or has another rate hike left in it.

The market is pricing in a 22% chance of a hike in September, and a 48% chance of one in November—both higher than a week ago, according to the CME’s FedWatch tool.

Economists are predicting 170,000 new jobs were added in August, down from the 187,000 created in July. “Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response,” Powell said in his speech.

He will be watching the data closely, and so should investors.

—Callum Keown

*** Join Barron’s associate editor Reshma Kapadia today at noon for a discussion with Neuberger Berman senior research analyst Evelyn Chow about the U.S. pivot toward more aggressive industrial policy to tackle the twin threats of a rising China and climate change and the opportunities created by the CHIPS and Science Act and the Inflation Reduction Act. Sign up here.

Try your hand at this morning’s Barron’s Daily crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week’s cover story, click here.

***

3M Agrees Settlement Over Combat Earplugs Claims

The board of materials giant

3M

has agreed a $6 billion settlement over more than 300,000 claims by U.S. military veterans that combat earplugs made by the company and its Aearo Technologies subsidiary failed to protect them from hearing loss. The potential settlement is half of what analysts had forecast.

• The company said the settlement was not an admission of liability, and that the products were safe and effective when used properly. The settlement caps the U.S.’s largest mass tort litigation.
• The $6 billion is substantially less than the $10 billion to $15 billion some analysts had forecast. The earplugs, developed by Aearo, were designed to protect wearers’ hearing from loud noises, but allow them to hear voices or softer noises. 3M didn’t respond to a request for comment.
• 3M agreed in 2018 to pay $9.1 million to resolve allegations that its earplugs were defective because they could imperceptibly loosen in a wearer’s ear. At the time, the Justice Department said it settled claims brought by a whistleblower.
• Separately, 3M reached an agreement in June with municipal water providers, that needs court approval, for claims over so-called “forever chemicals” detected in drinking water. That could cost as much as $12.5 billion over 13 years.

What’s Next: Citi analyst Andrew Kaplowitz said the potential combat earplug settlement could help 3M ease its legal burden and move away from the “noise that has been weighing on 3M’s valuation.” He noted that 3M still faces consumer litigation over water pollution.

—Al Root and Janet H. Cho

***

Tesla, China’s BYD Pulling Ahead of the EV Pack

Tesla

and the Chinese electric-vehicle company

BYD

are pulling away from the EV pack. Both are profitable, unlike most peers, and both are delivering vehicles faster than the overall market. BYD is also closing its profitability gap with market leader Tesla.

• BYD reported first-half sales of roughly $21 billion, and gross profit of $3 billion. Sales rose 66% from last year, and gross profit grew 75%. Tesla reported first-half sales of about $48 billion and gross profit of $9 billion. Sales grew 35% from last year, but price cuts meant gross profit fell 7%.
• Chinese EV start-up

  XPeng
  ’s
  shares surged Monday after it announced plans to acquire ride-hailing app DiDi Global ’s smart vehicle unit. DiDi will receive a 3.25% stake in XPeng in a deal worth about $744 million. XPeng will introduce a compact smart EV costing about $21,000 next year.

• NIO reported disappointing second-quarter numbers early Tuesday amid questions about the Chinese EV start-up’s competition, demand, pricing, and the Chinese economy. It posted an adjusted second-quarter loss of 45 cents a share from sales of $1.2 billion. Wall Street was looking for a per-share loss of about 33 cents a share from $1.3 billion in sales.
• Vietnamese EV start-up

  VinFast Auto
  ’s
  shares rose for a sixth-consecutive day, and the stock’s market value of about $190 billion is larger than that of

  General Motors
  ,

  Ford Motor
  ,
  and Chrysler parent

  Stellantis
  
  combined. S3 Partners recently told Barron’s that short interest in VinFast stock has dwindled to almost zero.

What’s Next: U.S. EV start-up

Fisker

is expanding deliveries of its Ocean SUV next month into three more countries: Belgium, the Netherlands, and Switzerland. Fisker and its partner Magna International expect to produce 20,000 to 23,000 vehicles this year, lower than earlier guidance, citing supply-chain problems.

—Al Root and Janet H. Cho

***

OpenAI Rolls Out Business Chatbot Tool, Competing With Microsoft

The artificial intelligence start-up OpenAI unveiled a business version of its popular ChatGPT chatbot technology and said it is already working with companies such as

Estée Lauder
,
Canva, and PwC. The move puts it in competition with its largest investor,

Microsoft
.

• ChatGPT Enterprise is built on OpenAI’s most advanced language model, GPT-4. The firm said to protect the proprietary information of the companies using it, it won’t use their data to train the product or improve its own offerings.
• Microsoft has already rolled out its Bing Chat Enterprise, which is also built with OpenAI’s technology. It is offered as a feature for some customers of its workplace software Microsoft 365. Microsoft has a 49% stake in OpenAI.
• Since the start-up introduced ChatGPT nine months ago, teams at more than 80% of Fortune 500 companies have adopted it, based on those with registered ChatGPT accounts. Companies are using the tool to speed coding tasks, answer complex questions, and help with creative work, it said.
• OpenAI sells access to GPT-4 and other tools to companies and individuals. It also has arrangements with other companies including

  Salesforce
  ,
  a software maker that rolled out Einstein GPT, which can be used to generate marketing emails.

What’s Next: ChatGPT Enterprise represents another opportunity for OpenAI to make money from the chatbot tool, but Brad Lightcap, the firm’s chief operating officer, wouldn’t say how much the product will cost, according to Bloomberg. It is expected to vary based on the needs of each business.

—Liz Moyer

***

Labor Day Travelers Face Higher Gas Prices, Potential Disruptions

Americans are heading into the long holiday weekend facing higher gasoline pump prices since the start of the year, and the potential for travel disruptions as a powerful tropical storm makes its way toward Florida’s Gulf Coast in coming days.

• Unleaded gasoline was averaging $3.8192 a gallon at the pump on Monday, 19.6% higher since Dec. 31, 2022, and up 2.3% from one month ago, according to data from Oil Price Information Service. Unleaded prices are down 1.2% from last week, OPIS said.
• More Americans are heading out of town for Labor Day weekend, and those who can work remotely from their destination are taking longer vacations this year, said Paula Twidale, senior vice president of AAA Travel. Domestic cruise bookings are 19% higher than last year.
• Europe and Canada are the top international destinations. Compared with 2022, international hotel bookings are up 82%, and international cruise bookings are up 44%. Airfares to Europe are averaging $1,132, down nearly 10% from last year, the Hopper travel app said.
• Domestic airfares are averaging $226 a ticket over the weekend, down 11% from last year and 20% lower than Labor Day weekend 2019, Hopper said. Hotel rooms are averaging $215 a night, up 3.8% from last year, while car rental prices are down 14.5%, to $41 a day.

What’s Next: The drop in gas prices may be short-lived, because one of the nation’s largest refineries partially shut last week after a storage tank fire, wrote Patrick De Haan, head of petroleum analysis at GasBuddy. Meteorologists expect Tropical Storm Idalia to become a major hurricane before making landfall.

—Janet H. Cho

***

Exxon Says World Will Miss Climate Change Targets

Exxon Mobil

said oil and natural gas will still account for more than 50% of global energy needs in 2050 and that the world is failing to meet its climate change targets.

• The oil supermajor said that while energy-related carbon dioxide emissions will decline by 25% to 25 billion metric tons by 2050, larger reductions to around 11 billion metric tons are needed to keep global warming from exceeding 2 degrees Celsius, or 3.6 degrees Fahrenheit, the nonbinding international target.
• In its global energy outlook, the company said substantial progress has been made but that more needs to be done. “The world will need to dramatically scale up lower-emission solutions—beyond the current trajectory—that preserve the advantages of today’s energy system while significantly and efficiently reducing emissions,” it said.
• Fossil fuels remain the most effective way to produce the “massive amounts of energy” needed to support the manufacturing, transportation, and industrial sectors that drive modern economies, Exxon added.
• The oil giant said it sees “great promise” in renewable energy, predicting energy from solar and wind to more than quintuple to 11% of the world’s supply from the current 2%.

What’s Next: Exxon is investing $17 billion in lower-emission initiatives through 2027, but faces dozens of lawsuits across the country accusing it of climate-change deception.

—Callum Keown

***

Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.

Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.

Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and at the end of the challenge the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.

Are you ready to compete? Join the challenge and pick your stocks here.

***

—Newsletter edited by Liz Moyer, Patrick O’Donnell, Callum Keown