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  • Jobs report shows 236,000 gain in March — lifting 2023 total above 1 million — but U.S. labor market shows hints of cooling

    Jobs report shows 236,000 gain in March — lifting 2023 total above 1 million — but U.S. labor market shows hints of cooling

    The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.

    The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.

    While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.

    The U.S. economy has shown recent signs of stress.

    The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.

    There was some good news in the report for the Fed, though.

    Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.

    The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.

    What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.

    When more people look for work, companies don’t have to compete as hard for workers via higher pay.

    Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.

    Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.

    “ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”

    Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.

    See: Why Good Friday complicates how stock-market traders will digest March jobs report

    Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.

    Americans are going out to eat a lot and spending relatively more on services than on goods.

    Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.

    Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.

    The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.

    Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.

    Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.

    On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.

    Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.

    If these trends continue the economy — and inflation — are bound to slow.

    The U.S. is still growing for now, however, and the labor market remains an oasis of strength.

    Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.

    Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets

    “Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.

    See: Traders see little chance interest rates will end up where Fed thinks in 2023

    Market reaction:  Futures contracts on the Dow Jones Industrial Average
    YM00,
    +0.19%
    rose 64 points, or 0.2%, to 33,723. S&P 500 futures
    ES00,
    +0.24%
    gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.

    The yield on the 10-year Treasury
    TMUBMUSD10Y,
    3.404%
    jumped to 3.36%.

    MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?

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  • Dow futures flip higher after March jobs report in thin Good Friday trading

    Dow futures flip higher after March jobs report in thin Good Friday trading

    U.S. stock-index futures turned higher in a holiday-shortened session after a solid March jobs report, though investors won’t fully digest the data until next week with cash trading in equities closed due to the Good Friday holiday.

    Trading in stock-index futures closed at 9:15 a.m. Eastern. Stock-index futures resume trading at their regular time, 6 p.m., on Sunday, as U.S. markets return to normal trading hours Monday.

    What stock-index futures are doing
    • Futures on the Dow Jones Industrial Average
      YM00,
      +0.19%
      rose 64 points, or 0.2%, to 33,723.

    • S&P 500 futures
      ES00,
      +0.24%
      gained 9.75 points, or 0.2%, to 4,141.75.

    • Nasdaq-100 futures
      NQ00,
      +0.10%
      ticked up 13.50 points, or 0.1%, to 13,184.25.

    With the exception of the Dow industrials, U.S. stocks finished the holiday-shortened week lower on Thursday after three consecutive weekly gains for the S&P 500 and the tech-heavy Nasdaq. The Dow
    DJIA,
    +0.01%
    rose 0.6% for the week, while the S&P 500
    SPX,
    +0.36%
    shed 0.1% and the Nasdaq
    COMP,
    +0.76%
    slumped 1.1%, after scoring its best quarter since 2020.

    Market drivers

    The U.S. added 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring and possibly making it harder for the central bank to tame inflation. Economists polled by The Wall Street Journal had forecast 238,000 new jobs.

    The unemployment rate, meanwhile, slipped to 3.5% from 3.6%. Wages rose 0.3% last month.

    “This month’s report indicates that interest rate hikes have yet to impact tight unemployment conditions,” said Steve Rick, chief economist at CUNA Mutual Group, in emailed comments.

    Treasury yields popped higher and the dollar rose, though traders noted conditions were thin due to the holiday. Fed-funds futures showed traders pricing in a nearly 70% chance the Federal Reserve will lift interest rates by a quarter-point in May and a roughly 30% chance policy makers will leave rates unchanged. Traders had seen a roughly 50-50 split on Thursday.

    “Today’s jobs report is consistent with a slow-moving recession unfolding in the U.S. and one that does not point to immediate resolution of inflation concerns,” said Jason Pride, chief investment officer of private wealth at Glenmede, in a note. “As such, the odds of another quarter-point rate hike in May should go higher as the data does not appear to justify a Fed pause.”

    That said, policy makers and investors will see a raft of data before the next Fed meeting, including next week’s consumer-price index reading, Pride noted.

    See: Jobs report ‘likely tips the scales toward another rate hike in May’ — economists react to March release

    Good Friday is a market holiday but not a U.S. federal holiday. That means the U.S. Labor Department released its March jobs report, as usual. Bond traders will see a half day of trading, with Sifma recommending a noon ET close to allow a reaction to the data.

    Read: Why Good Friday complicates how stock-market traders will digest March jobs report

    Investors saw a stream of jobs-related data over the course of the past week. Data on Tuesday showed the number of U.S. job openings dropped below 10 million to a 21-month low, indicating a hot jobs market may be starting to lose some sizzle.

    ADP on Wednesday said the private sector added 145,000 jobs in March, well below the 210,000 expected by economists. Weekly jobless claims data on Thursday morning showed first-time applications for benefits last week came in higher than expected.

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  • Jobs report shows 236,000 gain in March — lifting 2023 total above 1 million — but U.S. labor market shows hints of cooling

    Jobs report shows 236,000 gain in March — lifting 2023 total above 1 million — but U.S. labor market shows hints of cooling

    The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.

    The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.

    While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.

    The U.S. economy has shown recent signs of stress.

    The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.

    There was some good news in the report for the Fed, though.

    Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.

    The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.

    What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.

    When more people look for work, companies don’t have to compete as hard for workers via higher pay.

    Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.

    Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.

    “ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”

    Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.

    See: Why Good Friday complicates how stock-market traders will digest March jobs report

    Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.

    Americans are going out to eat a lot and spending relatively more on services than on goods.

    Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.

    Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.

    The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.

    Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.

    Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.

    On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.

    Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.

    If these trends continue the economy — and inflation — are bound to slow.

    The U.S. is still growing for now, however, and the labor market remains an oasis of strength.

    Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.

    Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets

    “Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.

    See: Traders see little chance interest rates will end up where Fed thinks in 2023

    Market reaction:  Futures contracts on the Dow Jones Industrial Average
    YM00,
    +0.19%
    rose 64 points, or 0.2%, to 33,723. S&P 500 futures
    ES00,
    +0.24%
    gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.

    The yield on the 10-year Treasury
    TMUBMUSD10Y,
    3.404%
    jumped to 3.36%.

    MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?

    Source link

  • Jobs report shows 236,000 gain in March — lifting 2023 total above 1 million — but U.S. labor market shows hints of cooling

    Jobs report shows 236,000 gain in March — lifting 2023 total above 1 million — but U.S. labor market shows hints of cooling

    The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.

    The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.

    While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.

    The U.S. economy has shown recent signs of stress.

    The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.

    There was some good news in the report for the Fed, though.

    Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.

    The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.

    What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.

    When more people look for work, companies don’t have to compete as hard for workers via higher pay.

    Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.

    Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.

    “ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”

    Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.

    See: Why Good Friday complicates how stock-market traders will digest March jobs report

    Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.

    Americans are going out to eat a lot and spending relatively more on services than on goods.

    Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.

    Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.

    The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.

    Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.

    Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.

    On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.

    Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.

    If these trends continue the economy — and inflation — are bound to slow.

    The U.S. is still growing for now, however, and the labor market remains an oasis of strength.

    Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.

    Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets

    “Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.

    See: Traders see little chance interest rates will end up where Fed thinks in 2023

    Market reaction:  Futures contracts on the Dow Jones Industrial Average
    YM00,
    +0.19%
    rose 64 points, or 0.2%, to 33,723. S&P 500 futures
    ES00,
    +0.24%
    gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.

    The yield on the 10-year Treasury
    TMUBMUSD10Y,
    3.404%
    jumped to 3.36%.

    MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?

    Source link

  • ‘We are losing our democracy. This is not OK.’: Tennessee lawmakers oust 2 Democrats over gun protest

    ‘We are losing our democracy. This is not OK.’: Tennessee lawmakers oust 2 Democrats over gun protest

    NASHVILLE, Tenn. — In an extraordinary act of political retaliation, Tennessee Republicans on Thursday expelled two Democratic lawmakers from the state Legislature for their role in a protest that called for more gun control in the aftermath of a deadly school shooting in Nashville. A third Democrat was narrowly spared by a one-vote margin.

    The split votes drew accusations of racism, with lawmakers ousting Reps. Justin Jones and Justin Pearson, who are both Black, while Rep. Gloria Johnson, who is white, survived the vote on her expulsion.

    Banishment is a move the chamber has used only a handful times since the Civil War. Most state legislatures possess the power to expel members, but it is generally reserved as a punishment for lawmakers accused of serious misconduct, not used as a weapon against political opponents.

    Jones, Pearson and Johnson joined in protesting last week as hundreds of protesters packed the Capitol to call for passage of gun-control measures. While demonstrators filled galleries, the three Democrats approached the front of the House chamber with a bullhorn and participated in a chant.

    The protest unfolded days after the shooting at the Covenant School, a private Christian school where six people were killed, including three children.

    “We are losing our democracy. This is not normal. This is not OK,” Pearson told reporters as he waited to learn whether he would be banished too. The three “broke a House rule because we’re fighting for kids who are dying from gun violence and people in our communities who want to see an end to the proliferation of weaponry in our communities.”

    Johnson, a retired teacher, said her concern about school shootings was personal, recalling a day in 2008 when students came running toward her out of a cafeteria because a student had just been shot and killed there.

    “The trauma on those faces, you will never, ever forget. I don’t want to forget it,” she said.

    Thousands of people flocked to the Capitol on Thursday to support the Democrats, cheering and chanting outside the House chamber so loudly that the noise drowned out the proceedings.

    The trio held hands as they walked onto the House floor, and Pearson raised his fist to the crowd during the Pledge of Allegiance.

    Offered a chance to defend himself before the vote, Jones said the GOP responded to the shooting with a different kind of attack.

    “We called for you all to ban assault weapons, and you respond with an assault on democracy,” he said.

    If expelled, Jones vowed that he would continue pressing for action on guns.

    “I’ll be out there with the people every week, demanding that you act,” he said.

    Republican Rep. Gino Bulso said the three Democratic representatives “effectively conducted a mutiny.”

    “The gentleman shows no remorse,” Bulso said, referring to Jones. “He does not even recognize that what he did was wrong. So not to expel him would simply invite him and his colleagues to engage in mutiny on the House floor.”

    The two expelled lawmakers may not be gone for long. County commissions in their districts get to pick replacements to serve until a special election can be scheduled. They also would be eligible to run in the special election.

    Under the Tennessee Constitution, lawmakers cannot be expelled for the same offense twice.

    Republican Rep. Sabi Kumar advised Jones, who is Black, to be more collegial and less focused on race.

    “You have a lot to offer, but offer it in a vein where people are accepting of your ideas,” Kumar said.

    Jones said he did not intend to assimilate in order to be accepted. “I’m not here to make friends. I’m here to make a change for my community,” he replied.

    Fielding questions from lawmakers, Johnson reminded them that she did not raise her voice nor did she use the bullhorn as did the other two, both of whom are new lawmakers and among the youngest members in the chamber.

    But she also suggested that race was likely a factor on why Jones and Pearson were ousted but not her, telling reporters that it “might have to do with the color of our skin.”

    That notion was echoed by state Sen. London Lamar, a Democrat representing Memphis.

    Lawmakers “expelled the two black men and kept the white woman,” Lamar, a Black woman, said via Twitter. “The racism that is on display today! Wow!”

    After sitting quietly for hours and hushing anyone who cried out during the proceedings, people in the gallery erupted in screams and boos following the final vote. There were chants of “Shame!” and “Fascists!”

    Lawmakers quickly adjourned for the evening.

    Outrage over the expulsions underscored not only the ability of the Republican supermajority to silence opponents, but its increasing willingness to do so.

    In Washington, President Joe Biden blasted the GOP’s priorities.

    “Three kids and three officials gunned down in yet another mass shooting. And what are GOP officials focused on? Punishing lawmakers who joined thousands of peaceful protesters calling for action. It’s shocking, undemocratic, and without precedent,” Biden tweeted.

    Many of the protesters traveled from Memphis and Knoxville, areas that Pearson and Johnson represent, and stood in a line that wrapped around the Capitol to get inside.

    Protesters outside the chamber held up signs that said, “School zones shouldn’t be war zones,” “Muskets didn’t fire 950 rounds per minute” with a photo of George Washington, and “You can silence a gun … but not the voice of the people.“

    Before the expulsion vote, House members debated more than 20 bills, including a school safety proposal requiring public and private schools to submit their building safety plans to the state. The bill did not address gun control, sparking criticism from some Democratic members that lawmakers were only addressing a symptom and not the cause of school shootings.

    Past expulsion votes have taken place under distinctly different circumstances.

    In 2019, lawmakers faced pressure to expel former Republican Rep. David Byrd after he faced accusations of sexual misconduct dating to when he was a high school basketball coach three decades earlier. Republicans declined to take any action, pointing out that he was reelected as the allegations surfaced. Byrd retired last year.

    Last year, the state Senate expelled Democrat Katrina Robinson after she was convicted of using about $3,400 in federal grant money on wedding expenses instead of her nursing school.

    Before that case, state lawmakers last ousted a House member in 2016 when the chamber voted 70-2 to remove Republican Rep. Jeremy Durham after an attorney general’s investigation detailed allegations of improper sexual contact with at least 22 women during his four years in office.

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  • U.S. economy forecast to create 238,000 jobs in March. The Fed wouldn’t be happy.

    U.S. economy forecast to create 238,000 jobs in March. The Fed wouldn’t be happy.

    Normally a big increase in new U.S. jobs is cause for celebration. Not right now.

    The Federal Reserve sees a tight labor market as a big obstacle in getting high inflation under control and wants hiring to slow as soon as possible, but it might not get its wish in March.

    …

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  • U.S. stocks finish higher as S&P 500 avoids third day in the red

    U.S. stocks finish higher as S&P 500 avoids third day in the red

    U.S. stocks eked out modest gains on Thursday after a choppy session, helping the S&P 500 avoid a third day of losses as investors await Friday’s jobs report. The S&P 500 SPX gained 14.61 points, or 0.1%, to finish at 4,104.99, according to preliminary closing data from FactSet. The Nasdaq Composite COMP rose by 91.09 points, or 0.8%, to 12,087.96. The Dow Jones Industrial Average DJIA finished just 2.63 points, or less than 0.1%, higher at 33,485.35. Cash trading in stocks will be closed Friday when the March report from the Department of Labor is released. Economists polled by the Wall Street Journal have a median forecast…

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  • FDA pulls preterm-birth drug Makena and its generics from market after 12 years

    FDA pulls preterm-birth drug Makena and its generics from market after 12 years

    The U.S. Food and Drug Administration said Thursday it had reached a final decision to fully withdraw approval of preterm-birth drug Makena and its generics, a full 12 years after the treatment hit the market.

    The drug was approved in 2011 using the agency’s accelerated-approval pathway as a treatment to reduce the risk of spontaneous preterm birth in pregnant women who had a history of the condition.

    The…

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  • Is April now the time to activate your sell-in-May-and-go-away stock-market strategy?

    Is April now the time to activate your sell-in-May-and-go-away stock-market strategy?

    Followers of the “Sell In May and Go Away” market-timing strategy may want to consider selling stocks before the end of April.

    The “Sell in May and Go Away” strategy, which also goes by the “Halloween Indicator,” calls for being in the stock market for the six months between Oct. 31 and May 1, and out of the market the other half of the year. Investors who mechanically follow this seasonal strategy therefore wait until the close of the last trading day of April to sell and to the close of the last trading day of October to…

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  • Fed’s Bullard doesn’t see a looming credit crunch that would push economy into a recession

    Fed’s Bullard doesn’t see a looming credit crunch that would push economy into a recession

    In the wake of the collapse of Silicon Valley Bank, conventional wisdom has been that banks will cut lending, known as a credit crunch, that will damage the economy.

    On Thursday, St. Louis Federal Reserve President James Bullard said he was “less enamored’ with this forecast.

    “Only about 20% of lending is going through the banking system…

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  • Jobless claims touch 228,000 and look worse after change in seasonal adjustments

    Jobless claims touch 228,000 and look worse after change in seasonal adjustments

    The numbers: The number of Americans applying for jobless benefits has topped 200,000 for nine weeks in a row and looks worse than previously reported, based on a change in how the government adjusts for seasonal swings in employment.

    The newly revised data suggest the labor market has softened more than it had appeared.

    In the seven days…

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  • Swedish prosecutor says Nord Stream blast perpetrators may never be found

    Swedish prosecutor says Nord Stream blast perpetrators may never be found

    STOCKHOLM–Confirming who was responsible for last year’s Nord Stream pipelines blasts will be difficult, a Swedish public prosecutor said Thursday.

    Mats Ljungqvist, who is in charge of investigating September’s detonations at the Nord Stream 1 and 2 pipelines that connect Europe and Russia, said in a statement that the inquiry is proving to be complex.

    Previously, the investigation found that the incident involved “gross sabotage” after traces of explosives were found on objects seized from the scene.

    “The focus for the Swedish investigation is primarily about examining if Swedish interest or Swedish security is threatened, for example if Swedish territory was used to carry out the sabotage,” Mr. Ljungqvist said Thursday.

    “Our hope is to be able to confirm who has committed this crime, but it should be noted that it likely will be difficult given the circumstances.”

    Last year, a series of underwater explosions tore apart three of the four main Nord Stream pipes built to carry natural gas from Russia to Germany, prompting investigators from Germany, Sweden and Denmark– with the help of the U.S. and other Western allies–to probe the blasts.

    Also see: Allianz won’t renew Nord Stream insurance cover

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  • Take MarketWatch’s 2023 Financial Literacy Quiz. Will you get 10/10?

    Take MarketWatch’s 2023 Financial Literacy Quiz. Will you get 10/10?

    April is National Financial Literacy Month. To mark the occasion, MarketWatch will publish a series of “Financial Fitness” articles to help readers improve their fiscal health, and offer advice on how to save, invest and spend their money wisely. Read more here.

    Do you know the difference between a stock and a bond, or a mutual fund and an exchange-traded fund? MarketWatch put together a meat and potatoes — although that’s always relative — quiz for our savvy readers. We’ve stuck to some familiar topics — taxes, stocks, interest rates, savings and inflation. There are 10 questions — with one bonus question thrown in for good measure.

    You don’t know what you don’t know until you get an incorrect answer in a financial literacy quiz. Some of the questions are tricky, but we hope they are fun and that — most importantly — readers learn something new. Financial literacy helps us to plan for the future, gives us peace of mind and brings more understanding and less fear about the complex world of investing and retirement.

    Our aim is to raise awareness of Financial Literacy Month. If you get 10/10, including the bonus question, buy yourself (and a friend) a popsicle. If you didn’t answer all the questions correctly, buy yourself a popsicle anyway. We, at MarketWatch, aim to democratize and demystify financial news, and make this sometimes intimidating subject as accessible as possible.

    If you found it useful and/or entertaining, share it with a friend.

    –Quentin Fottrell

    Question 1: What is the difference between a tax deduction and a tax credit? 

    (a) A tax deduction reduces your income taxes directly. A tax credit reduces your taxable income. 

    (b) A tax deduction reduces your taxable income. A tax credit reduces your income taxes directly.

    (c) Both reduce your income taxes directly.

    Question 2: Which way do bond prices move when interest rates rise? 

    (a) Bond-market prices fall as interest rates rise. Bond prices rise when interest rates decline.

    (b) Bond-market prices rise as interest rates rise. Bond prices fall when interest rates decline.

    (c) Bond-market prices fall as interest rates rise, but bond prices also fall when interest rates decline.

    Question 3: What has been the average annual total return, with dividends reinvested, for the S&P 500 over the past 30 years? 

    (a) 9.7%, according to FactSet.

    (b) 3%, according to FactSet.

    (c) 6.5%, according to FactSet.

    Question 4: What is compound interest and how does it work? 

    (a) Compound interest reflects the linear gain that comes from all the reinvested interest of your savings and investments, which allows your initial investment/deposit to gain value regardless of the amount of interest you pay.

    (b) Compound interest reflects the exponential gain that comes from all the reinvested interest of your savings and investments, which allows your initial investment/deposit and the additional interest to increase in value.

    (c) Compound interest reflects the amount of interest you pay every month on a loan, and the total amount of interest you have paid over the lifetime of that loan.

    Question 5: What is APR and how is it different from a regular interest rate?

    (a) APR is the annual interest on a loan calculated on the initial loan, including additional costs and fees, but not on the accumulated interest incurred on the loan. 

    (b) APR is the annual interest on a loan calculated on the initial loan and the accumulated interest over the first year.

    (c) APR is the annual interest on a loan calculated on the initial loan, including additional costs and fees, and the accumulated interest over the lifetime of the loan loan.

    Question 6: What percentage of your income should you spend on rent?

    (a) Most real-estate experts say you should spend no more than 20% of your income on housing costs, which is considered to be a tipping point for becoming “cost-burdened.”

    (b) Most real-estate experts say you should spend no more than 50% of your income on housing costs, which is considered to be a tipping point for becoming “cost-burdened.”

    (c) Most real-estate experts say you should spend no more than 30% of your income on housing costs, which is considered to be a tipping point for becoming “cost-burdened.”

    Question 7: What’s an ETF? 

    (a) ETFs, or Exchange-Traded Funds, are baskets of investments — stocks, bonds, or commodities — that investors can buy throughout the trading day like stocks. 

    (b) ETFs, or Exchange-Traded Funds, are baskets of investments — stocks, bonds, or commodities — that investors can only buy at the end of the trading day. 

    (c) ETFs, or Exchange-Traded Funds, are baskets of investments — stocks, bonds, or commodities — that investors can only buy during or at the end of the trading day.

    Question 8: What is the difference between a stock and a bond? 

    (a) A stock is a temporary investment in a company, while a bond is issued by a company to reward shareholders. 

    (b) A stock is a share in the ownership of a company, while a bond is issued by a company to finance a loan. 

    (c) A stock is a share in the ownership of a company, while a bond is issued by a company to finance the stock.

    Question 9: If you were born in 1960 or later, at what age can you receive your full Social Security in the U.S.? Bonus question: At what age can you receive your maximum Social Security benefit?

    (a) Full retirement age in the U.S. is 65 for those born in 1960 and after. While you can start collecting your Social Security retirement benefits as early as 62, your benefits are permanently reduced. Your Social Security benefits max out at age 70. By delaying until 70, your benefit is 76% higher than if you had claimed at the earliest possible age (62).

    (b) Full retirement age in the U.S. is 65 for those born in 1960 and after. While you can start collecting your Social Security retirement benefits as early as 62, your benefits are permanently reduced. Your Social Security benefits max out at age 67. By delaying until 67, your benefit is 76% higher than if you had claimed at the earliest possible age (62).

    (c) Full retirement age in the U.S. is 67 for those born in 1960 and after. While you can start collecting your Social Security retirement benefits as early as 62, your benefits are permanently reduced by a small percentage each month until you reach 67. Your Social Security benefits max out at age 70. By delaying until 70, your benefit is 76% higher than if you had claimed at the earliest possible age (62).

    Question 10: What is the Federal Reserve’s desired rate of inflation? 

    (a) 2%

    (b) 3%

    (c) 2.5%

    Bonus question! What is considered a good credit score?

    (a) 560

    (b) 680

    (c) 800

    If you get 10/10, including the bonus question, buy yourself a popsicle.


    Getty Images/iStockphoto

    Answer 1: 

    (b) A tax deduction reduces your taxable income. A tax credit reduces your income taxes directly.

    Answer 2: 

    (a) Bond-market prices fall as interest rates rise. Bond prices rise when interest rates decline. 

    Answer 3: 

    (a) 9.7%, according to FactSet. 

    Answer 4: 

    (b) Compound interest reflects the exponential gain that comes from all the reinvested interest of your savings and investments, which allows your initial investment/deposit and the additional interest to increase in value.

    Answer 5: 

    (c) APR is the annual interest on a loan calculated on the initial loan, including additional costs and fees, and the accumulated interest over the lifetime of the loan. 

    Answer 6: 

    (c) Most real-estate experts say you should spend no more than 30% of your income on housing, which is considered to be a tipping point for becoming “cost-burdened.”

    Answer 7: 

    (a) ETFs are Exchange-Traded Funds. These are baskets of investments — stocks, bonds, or commodities — that investors can buy or sell throughout the trading day.  

    Answer 8: 

    (b) A stock is a share in the ownership of a company, while a bond is issued by a company to finance a loan. 

    Answer 9: 

    (c) Full retirement age in the U.S. is 67 for those born in 1960 and after. While you can start collecting your Social Security retirement benefits as early as 62, your benefits are permanently reduced. Your Social Security benefits max out at age 70. By delaying until 70, your benefit is 76% higher than if you had claimed at the earliest possible age (62).

    Answer 10: 

    (a) 2%

    Answer for bonus question! 

    (b) 680. Although credit scores vary depending on the model, according to Experian, credit scores between 580 and 669 are considered “fair,” scores between 670 and 739 are regarded as “good”; 740 to 799 are considered “very good”; and scores of 800 and above are considered “excellent.”

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  • S&P 500 books back-to-back loss as recession worries return

    S&P 500 books back-to-back loss as recession worries return

    U.S. stocks closed mixed on Wednesday as weaker economic data weighed on equities and focus among investors returned to recession concerns. The Dow Jones Industrial Average
    DJIA,
    +0.24%
    gained about 80 points, or 0.2%, ending near 33,482, according to preliminary FactSet data, but the S&P 500 index
    SPX,
    -0.25%
    and Nasdaq Composite Index
    COMP,
    -1.07%
    fell 0.3% and 1.1%, respectively. That left the S&P 500 down for two straight days and the Nasdaq lower for a third day in a row. Investors were focused on an ADP report showing that private-sector employers added 145,000 jobs in March, well below the 210,000 expected by economists surveyed by The Wall Street Journal. Also, the bellwether Institute for Supply Management’s service sector activity index showed business conditions at U.S. companies fell to a three-month low of 51.2% in March.

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  • 14 dividend stocks yielding 4% or more that are expected to increase payouts in 2023 and 2024

    14 dividend stocks yielding 4% or more that are expected to increase payouts in 2023 and 2024

    If you invest in dividend stocks, you are probably looking for long-term growth to go with the income. Otherwise you might be content to hold one-month U.S. Treasury bills, which yield 4.5% or park your money in an online savings account for a yield close to 4%.

    Below is screen of stocks with current dividend yields ranging from 4.14% to 8.46%. What sets these apart from other stocks with high dividend yields is that their payout increases are expected to accelerate in 2023 and 2024 from those in 2022.

    On Tuesday, S&P Dow Jones Indices said in a press release that it expected dividend payments by publicly traded U.S. companies to continue to hit record levels in 2023. But Howard Silverblatt, a senior index analyst with the firm, said that the pace of dividend increases in the first quarter had slowed and that he expected this year’s increases to be “at half the pace of the double-digit 2022 growth.”

    Silverblatt also said current events in the banking industry were “expected to negatively impact future spending from both consumers and companies, which in turn may curtail corporate dividend growth.”

    For many banks, there’s another big item on the table. A focus on share buybacks in recent years is very likely to end — this is a use of cash that can raise earnings per share if the share count is reduced, but there can be consequences, especially after a year of rising interest rates that pushed down the market value of banks’ investments in bonds.

    In a note to clients on March 16, Dick Bove, a senior research analyst with Odeon Capital, predicted that stock repurchases in the banking industry would be “meaningfully cut back if not flat out eliminated.” He made three general points about buybacks in the banking industry:

    • Buybacks remove working capital that would otherwise provide returns to a bank.

    • Buybacks mean a bank’s board of directors is “in favor of flat-out giving capital away to investors that want nothing to do with the bank — they are selling its stock.”

    • Buybacks do “nothing to increase bank stock prices – many bank stocks are selling at below their prices of five years ago.”

    A company might find it much easier to curtail or stop buying back shares to preserve cash than it is to cut regular dividends. Preserving and increasing the dividend over time has been correlated with good performance for stocks over time. These articles provide examples of how dividend compounding is correlated with long-term growth as income streams build up:

    Dividend stock screen

    The S&P Dow Jones Indices report raises the question of which stocks might buck the trend.

    Starting with the S&P 500
    SPX,
    -0.50%    ,
    there are 71 companies stocks with current dividend yields of at least 4.00% indicated by annual payout rates. Among these companies, 68 increased dividends during 2022, according to data provided by FactSet.

    Then we looked at the pace of dividend increases in 2022 and the consensus estimates for dividends paid during 2023 and 2024, among analysts polled by FactSet. Among the remaining 68 companies, there are 29 for which the estimated 2023 dividend increase is higher than the 2022 dividend increase. Narrowing further, there are 14 for which the estimated 2024 dividend increases are higher than the estimated 2023 dividend increases.

    Here are the 14 stocks that passed the screen, sorted by current dividend yield:

    Company

    		 Ticker

    		 Dividend yield

    		 Dividend increase – 2022

    		 Expected dividend increase in 2023

    		 Expected dividend increase in 2024
    Altria Group Inc.

    		 MO,
    +0.27%         		8.46%

    		 4.5%

    		 4.7%

    		 4.9%
    Newell Brands Inc.

    		 NWL,
    -1.19%         		7.55%

    		 0.0%

    		 0.1%

    		 0.6%
    Boston Properties Inc.

    		 BXP,
    -0.94%         		7.42%

    		 0.0%

    		 0.7%

    		 1.0%
    KeyCorp

    		 KEY,
    -2.22%         		6.99%

    		 5.3%

    		 6.7%

    		 6.8%
    Prudential Financial Inc.

    		 PRU,
    +0.17%         		6.08%

    		 4.3%

    		 4.7%

    		 4.8%
    ONEOK Inc.

    		 OKE,
    +0.60%         		5.87%

    		 0.0%

    		 2.2%

    		 2.4%
    Healthpeak Properties Inc.

    		 PEAK,
    -0.32%         		5.54%

    		 0.0%

    		 2.1%

    		 2.2%
    Dow Inc.

    		 DOW,
    -0.53%         		5.16%

    		 0.0%

    		 1.1%

    		 2.2%
    Iron Mountain Inc.

    		 IRM,
    -1.00%         		4.70%

    		 0.0%

    		 1.8%

    		 5.4%
    NRG Energy Inc.

    		 NRG,
    +1.34%         		4.50%

    		 7.7%

    		 7.9%

    		 7.9%
    Franklin Resources Inc.

    		 BEN,
    -0.58%         		4.50%

    		 3.6%

    		 4.3%

    		 5.7%
    Federal Realty Investment Trust

    		 FRT,
    -0.53%         		4.38%

    		 0.9%

    		 1.7%

    		 2.1%
    Ventas Inc.

    		 VTR,
    -0.57%         		4.26%

    		 0.0%

    		 3.3%

    		 5.5%
    Kraft Heinz Co.

    		 KHC,
    +1.42%         		4.14%

    		 0.0%

    		 0.7%

    		 0.8%
    Source: FactSet

    Click on the ticker for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Any stock screen is limited, but can be useful as a starting point or supplement to your own research. If you see any companies of interest, do some research to form your own opinion of how likely they are to remain competitive over the next decade, at least.

    Don’t miss: This stock ETF keeps beating the S&P 500 by selecting for quality

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  • The commodity supercycle is still young, these strategists say. Here’s why.

    The commodity supercycle is still young, these strategists say. Here’s why.

    Be careful what you wish for. U.S. job openings dropped below 10 million, a symbolic sign that the Federal Reserve’s efforts to combat inflation by sapping labor-market demand was working — and U.S. stocks promptly fell. Perhaps the bigger issue is that investors were not willing to push stocks out of the 3,800 to 4,200 range the S&P 500
    SPX,
    -0.48%
    has been trading in for months.

    It might not be the most obvious time to be discussing a commodity supercycle, with recession talk growing, but then that’s what makes this call more interesting. Strategists at Wells Fargo investment Institute argue it’s year three of a commodity supercycle, which they say has plenty more room to run.

    John LaForge, head of real asset strategy, and Mason Mendez, investment strategy analyst, say commodities are like black holes, in that escaping the gravity of a supercycle is difficult for any individual commodity. They point to this chart, looking at commodity momentum since 1800, plotted in 10-year moving averages, which shows that food, energy and the commodity complex as a whole tend to follow each other around.

    Right now nearly all the signs, both technical and fundamental, point to a commodity bull market, they say. The early signs are mostly shifting prices and technical indicators, and the latter signs are more fundamental in nature, like restrained supplies. “The bottom line is that the key early technical indicators are confirming to us that a new supercycle likely began in 2020.”

    The analysts went further into depth on what they call washed-out sentiment. They say the process goes something like this: near the end of a commodity bull supercycle, prices go so high that oversupplies become rampant and need to be worked off, which results in investment stopping to flow into production. They say that in both corn
    C00,
    +0.80%
    and gold
    GC00,
    -0.17%
    — not commodities with much in common — supply growth rates have turned negative in recent years. Both showed similar conditions at the start of the last supercycle, in 1999.

    They advise using commodities as portfolio diversifiers, which certainly would have helped last year, when both stocks and bonds fell but the Bloomberg commodity index rose nearly 16%. They highlight commodity prices typically move differently than stocks or bonds over the long run. And they say that supercycles have historically lasted a decade or longer, and the shortest commodity bull market on record was nine years.

    One caveat: the speed of technology advances. Sometimes technology can help fuel demand, but conversely, to the extent technology can make commodities easier to extract, it can also buoy supplies. The obvious example here, not pointed out in the note, is the shale-oil revolution. There’s an interesting article in The Economist (subscription required), how copper has yet to be the beneficiary of a technology boost.

    The market

    U.S. stock futures
    ES00,
    -0.36%

    NQ00,
    -1.08%
    edged lower. Oil prices
    CL.1,
    -0.62%
    fell but held over $80 per barrel. The yield on the 10-year Treasury
    TMUBMUSD10Y,
    3.295%
    turned lower after the latest jobs data.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    ADP reported a slowdown in private-payrolls growth to 145,000 jobs in March, as well as a slowing pace of pay growth. Shortly after the open comes the the Institute for Supply Management’s services index. Cleveland Fed President Loretta Mester said interest rates would need to be increased “somewhat” from here.

    Overseas, New Zealand’s central bank made a larger-than-expected 50 basis point rate hike, while a joint forecast of Germany’s leading institutes upgraded its view on the eurozone’s largest economy, now expecting a 0.3% advance.

    Walmart
    WMT,
    +1.33%
    forecast earnings in a range of $5.90 to $6.05 per share for its fiscal year, below the FactSet-compiled analyst estimate of $6.11.

    Johnson & Johnson
    JNJ,
    +3.44%
    proposed to pay up to $8.9 billion over 25 years to settle claims connected with cosmetic-talc litigation.

    Alphabet’s
    GOOGL,
    -0.63%
    Google says its chips are faster and more power efficient than comparable chips from Nvidia
    NVDA,
    -3.41%    .

    Western Alliance Bancorp
    WAL,
    -16.47%
    shares fell in premarket trade after the regional lender detailed the latest losses in its portfolio of loans and securities.

    Brandon Johnson was elected mayor of Chicago, the country’s third-largest city. Former President Donald Trump was defiant in a speech to supporters after his indictment.

    Best of the web

    A popular Fed program is draining funds from the banking system.

    Instant videos could be the next leap in artificial-intelligence technology.

    OpenAI, the tech company backed by Microsoft
    MSFT,
    -1.14%    ,
    is facing what is believed to be its first defamation lawsuit over a claim by its ChatGPT chatbot that an Australian mayor served time in prison for bribery.

    Top tickers

    These were the most active stock-market tickers as of 6 a.m. Eastern.

    Ticker

    		 Security name
    TSLA,
    -3.01%         		Tesla
    AMC,
    +2.04%         		AMC Entertainment
    BBBY,
    -5.09%         		Bed Bath & Beyond
    GME,
    -3.44%         		GameStop
    BUD,
    +0.34%         		Anheuser-Busch InBev
    APE,
    -0.89%         		AMC Entertainment preferreds
    MULN,
    -4.85%         		Mullen Automotive
    NIO,
    -4.18%         		Nio
    AAPL,
    -1.13%         		Apple
    AI,
    -14.35%         		C3.ai
    The chart

    Sure, higher gasoline prices naturally drive demand for electric vehicles. But at what point do high electricity prices make it more cost-effective to buy old gas guzzlers? This chart from Barclays breaks it down — roughly, 10 cents per kilowatt hour equates to $1 per gallon. Right now it’s cheaper to fill a car at the pump than recharge at peak hours.

    Random reads

    Easter means the annual production of a 15,000-egg omelette.

    This man was successful in his marriage proposal, at the cost of a one-year ban from Dodger Stadium.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.

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  • U.S. trade deficit hits 4-month high in sign of stress on the economy

    U.S. trade deficit hits 4-month high in sign of stress on the economy

    The trade deficit widened 2.7% in February to a four-month high of $70.5 billion and pointed to more stress on the U.S. economy.

    The trade gap rose from $68.7 billion in January and was slightly above Wall Street forecasts.

    Both imports and exports fell in February, reflecting weaker growth in the U.S. and abroad.

    Key details: Imports fell 1.5% to $321.7 billion in February to extend a recent string of declines, the government’s trade report showed.

    Part of the drop reflects lower oil prices, but Americans have also trimmed spending in response to rising interest rates and a slower economy

    In February, imports of cell phones, consumer goods, clothing and drugs retreated.

    A further decline in imports would be a potential warning sign of worse to come. They have declined 8% since peaking in March 2021.

    Exports slid a sharper 2.7% to $251.2 billion and also continued a recent downtrend. Just seven months ago they touched a record high.

    A weaker global economy could further sap demand for American goods and services.

    In February, exports of industrial supplies, autos and parts, consumer goods and passenger planes all declined.

    Big picture:  The U.S. is on track to break a string of three straight years of rising and record deficits, but not for reasons conducive to a healthy economy.

    Looking ahead: “The sharp declines in both exports and imports in February add to the signs that economic growth is faltering,” said deputy chief U.S. economist Andrew Hunter of Capital Economics.

    Market reaction:  The Dow Jones Industrial Average
    DJIA,
    +0.24%
    and S&P 500
    SPX,
    -0.25%
    were set to open slightly lower in Wednesday trades.

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  • U.S. private-sector ‘pulling back’ adding 145,000 jobs in March, ADP

    U.S. private-sector ‘pulling back’ adding 145,000 jobs in March, ADP

    The numbers: U.S. private payrolls climbed by 145,000 in March, according to the ADP National Economic report released on Wednesday. 

    Economists polled by The Wall Street Journal had forecast a gain of 210,000 private sector jobs.

    The private sector added a revised 261, 000 jobs in January.

    Key details: Service sector providers added 75,000 jobs in March. Leisure and hospitality added 98,000 workers. Meanwhile, goods producers added 70,000 jobs. Manufacturing shed 30,000 jobs.

    By company size, small businesses added 101,000 private-sector jobs in March while medium businesses added 33,000. Large-sized businesses added 10,000 jobs.

    Pay growth decelerated for both job stayers and job changers, ADP said.

    For job stayers, year-over-year gains fell to 6.9% from 7.2%. For job changers, pay growth was 14.2%, down from 14.4%.

    Big picture: The job market has been strong, with jobless claims trending below 200,000. Companies seem wary of letting workers go.

    Economists are forecasting that the U.S. Labor Department’s employment report will show the economy added 238,000 jobs in March. That estimate includes government jobs. If the data comes in as expected, it could show over one million jobs created in the first three months of the year.

    What ADP said: “Our March payroll data is one of several signals that the economy is slowing,” said Nela Richardson, chief economist, ADP. “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.”

    Market reaction: Stocks
    DJIA,
    +0.24%

    SPX,
    -0.25%
    were set to open lower after the data. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.282%
    fell to 3.32% after the data was released.

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  • Nicola Sturgeon’s husband has been arrested in campaign-finance probe, reports say

    Nicola Sturgeon’s husband has been arrested in campaign-finance probe, reports say

    Peter Murrell, the husband of former Scottish First Minister Nicola Sturgeon, has been arrested over campaign-finance allegations, BBC News and other media outlets reported.

    Police Scotland said in a statement that a 58-year-old man was arrested as a suspect in connection with the ongoing investigation into the funding and finances of the Scottish National Party.

    The statement said officers are also carrying out searches at a number of addresses as part of the investigation. Murrell was the former chief executive of the Scottish National Party, quitting in March.

    Sturgeon resigned in February after eight years in power. At the time, she did not cite a specific reason for doing so.

    Last month, the governing Scottish National Party elected Humza Yousaf as its new leader. 

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  • Progressive Brandon Johnson wins tight Chicago mayoral race over moderate Democrat Paul Vallas

    Progressive Brandon Johnson wins tight Chicago mayoral race over moderate Democrat Paul Vallas

    CHICAGO — Brandon Johnson, a union organizer and former teacher, was elected as Chicago’s next mayor Tuesday in a major victory for the Democratic Party’s progressive wing as the heavily blue-leaning city grapples with high crime and financial challenges.

    Johnson, a Cook County commissioner endorsed by the Chicago Teachers Union, won a close race over former Chicago schools CEO Paul Vallas, who was backed by the police union. Johnson, 47, will succeed Lori Lightfoot, the first Black woman and first openly gay person to be the city’s mayor.

    Lightfoot became the first Chicago mayor in 40 years to lose her reelection bid when she finished third in a crowded February contest.

    Johnson’s victory in the nation’s third-largest city topped a remarkable trajectory for a candidate who was little known when he entered the race last year. He climbed to the top of the field with organizing and financial help from the politically influential Chicago Teachers Union and high-profile endorsements from progressive Sens. Bernie Sanders and Elizabeth Warren. Sanders appeared at a rally for Johnson in the final days of the race.

    Taking the stage Tuesday night for his victory speech, a jubilant Johnson thanked his supporters. He recalled growing up in a poor family, teaching at a school in Cabrini Green, a notorious former public housing complex, and shielding his kids from gunfire in their west side neighborhood.

    “Chicago, tonight is just the beginning,” Johnson told the crowd. “With our voices and our votes, we have ushered in a new chapter in the history of our city.”

    He promised that under his administration, the city would look out for everyone, regardless of how much money they have, whom they love or where they come from.

    “Tonight is the beginning of a Chicago that truly invests in all of its people,” Johnson said.

    It was a momentous win for progressive organizations such as the teachers union, with Johnson winning the highest office of any active teachers union member in recent history, leaders say. It comes as groups such as Our Revolution, a powerful progressive advocacy organization, push to win more offices in local and state office, including in upcoming mayoral elections in Philadelphia and elsewhere.

    Speaking to supporters Tuesday night, Vallas said that he had called Johnson and that he expected him to be the next mayor. Some in the crowd seemed to jeer the news, but Vallas urged them to put aside differences and support the next mayor in “the daunting work ahead.”

    “This campaign that I ran to bring the city together would not be a campaign that fulfills my ambitions if this election is going to divide us,” Vallas said.

    He added that he had offered Johnson his full support in the transition.

    The contest surfaced longstanding tensions among Democrats, with Johnson and his supporters blasting Vallas — who was endorsed by Sen. Dick Durbin of Illinois, the chamber’s second-ranking Democrat — as too conservative and a Republican in disguise.

    Johnson and Vallas were the top two vote-getters in the all-Democrat but officially nonpartisan February race, which moved to the runoff because no candidate received over 50%. Both candidates have deep roots in the Democratic Party, though with vastly different backgrounds and views.

    Johnson, who is Black, grew up poor and is now raising his children in one of Chicago’s most violent neighborhoods. After teaching middle and high school, he helped mobilize teachers, including during a historic 2012 strike through which the Chicago Teachers Union increased its organizing muscle and influence in city politics.

    Vallas, who finished first in the February contest, was the only white candidate in that nine-person field. A former Chicago budget director, he later led schools in Chicago, New Orleans, Philadelphia and Bridgeport, Connecticut. He has run unsuccessfully for office multiple times, including a 2019 bid for Chicago mayor.

    Among the biggest disputes between Johnson and Vallas was how to address crime. Like many U.S. cities, Chicago saw violent crime increase during the COVID-19 pandemic, hitting a 25-year high of 797 homicides in 2021, though the number decreased last year and the city has a lower murder rate than others in the Midwest, such as St. Louis.

    Vallas, 69, said he would hire hundreds more police officers, while Johnson said he didn’t plan to cut the number of officers, but that the current system of policing isn’t working. Johnson was forced to defend past statements expressing support for “defunding” police — something he insisted he would not do as mayor.

    But Johnson argued that instead of investing more in policing and incarceration, the city should focus on mental health treatment, affordable housing for all and jobs for youth. He has proposed a plan he says will raise $800 million by taxing “ultrarich” individuals and businesses, including a per-employee “head tax” on employers and an additional tax on hotel room stays. Vallas says that so-called “tax-the-rich” plan would be a disaster for the city’s recovering economy.

    Resident Chema Fernandez, 25, voted for Johnson as an opportunity to move on from what he described as “the politics of old.” He said he saw Vallas as being in line with previous mayors such as Rahm Emanuel, Lightfoot and Richard M. Daley, who haven’t worked out great for places like his neighborhood on the southwest side, which has seen decades of disinvestment.

    “I think we need to give the opportunity for policies that may actually change some of our conditions,” Fernandez said.

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