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Today in the Market (8/25/2023)

Good Evening! On Friday, investors processed Chairman Powell’s remarks in a cautious manner, leading to a temporary decline in the performance of the primary market indexes. The Federal Reserve chairman recognized the decline of inflation from its highest point but emphasized that prices still persist at an elevated level. This stance suggests that the central bank may maintain its policy of monetary tightening.

All three indexes finished the week in the green by decent amounts with the Nasdaq Composite seeing the biggest increase by 0.94%, the S&P 500 rising by 0.67%, and the Dow Jones up by 0.73%.

CHAPTER 11 MIGHT BE IN PLAY

The shares of Rite Aid (RAD) had a decline above 50% on Friday following a report by The Wall Street Journal, which indicated that the retail drugstore is making preparations to initiate Chapter 11 bankruptcy proceedings. This decision is driven by the company’s escalating financial burdens arising from legal action associated with opioids.

How likely is it? Well… According to a reliable source, bankruptcy preparations are now being conducted, and it is anticipated that a significant aspect of this strategy would include the closure of almost 400 shops. On top of that, the company’s shares saw a decline in value amounting to 90% last year.

This actually helps RAD in ways as well… According to the Journal, the unsecured claimants in a bankruptcy filing would include those individuals making claims related to opioids. Furthermore, the initiation of bankruptcy proceedings might potentially enable Rite Aid to lawfully decline lease payments for locations that it intends to shut down, a prevalent strategy used in the realm of retail bankruptcy as a means to mitigate expenses

IT KEEPS RISING

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The expenses associated with preschool and daycare in the United States continue to rise, opposing the overall trend of decreasing costs and placing additional financial strain on parents who already struggle with inflationary pressures.

Why is it opposing? According to the most recent statistics from the Bureau of Labor Statistics, there was a 6% rise in the average cost of childcare and preschool nationwide in July, as compared to the same period in the previous year. Furthermore, it is worth noting that headline inflation exhibited an increase of 3.2% compared to the previous year in July, and a 3% increase in June, marking the lowest rate seen in the last two years.

Why is this happening? However, the combination of insufficient staffing levels and the halting of pandemic-related financial support is poised to worsen the difficulties parents face in terms of cost. The American Rescue Plan Act, enacted by Congress in 2021, allocated $24 billion in grants to provide stability to the childcare sector, along with around $15 billion to enhance the affordability of daycare for families. However, the previously mentioned funds are scheduled to expire by the end of September, and it seems doubtful that a deeply divided Washington would authorize more economic assistance.

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