MARKET WRAPS

STOCKS: U.S. stocks ended slightly higher after Treasury yields retreated from multiyear highs and expectations for another rate hike this month subsided.

TREASURYS: Treasury yields fell ahead of September's U.S. jobs report, which is expected to bolster the case for a slower pace of monetary tightening.

FOREX: The dollar strengthened, jumping to its highest level since April 2025.

COMMODITIES: Oil prices extended gains on a report that the U.S. has sent another aircraft carrier to Middle East.

HEADLINES

Another Fed Official Suggests Next Rate Increase Can Wait

Federal Reserve Vice Chair Philip Jefferson said Thursday that

officials may need more time before deciding whether to raise interest

rates again, echoing signals from another Fed leader this week that cast

doubt on bets the central bank would lift rates at its meeting later this

month.

Remarks from Jefferson reinforced those of New York Fed President John

Williams, who said Tuesday there was "no need for urgency" after the

Fed's rate increase in September.

Because Jefferson and Williams support Chairman Kevin Warsh in an

informal leadership group known as the troika, their parallel messages

suggest the go-slow signal reflects the leadership's thinking rather than

a single official's preference.

Mortgage Rates Surge, Notching Largest Weekly Gain in Four Years

Mortgage rates posted their largest increase in four years this week,

one of the clearest signs of how the recent bond-market selloff is

spilling into the broader economy.

Rates for 30-year fixed-rate mortgages leapt to 7.28% from 7.03%, the

biggest jump since October of 2022, according to Freddie Mac.

Mortgage rates are rising as inflation, a surge in government debt and

heavy corporate borrowing for the build-out of AI push up bond yields,

which move in the opposite direction of bond prices. The bond-market

selloff is raising borrowing costs for home buyers and dealing blow after

blow to a limping housing market.

David Ellison Asks CNN CEO to Stay After Paramount-Warner Deal Closes

Paramount Chief Executive David Ellison has asked CNN CEO Mark

Thompson to stay at the helm of the cable news network after the

acquisition of Warner Bros. Discovery closes, people familiar with the

matter said.

Thompson and Ellison have had conversations about the CNN chief

staying in recent weeks, some of the people said. Thompson's current deal

extends into early next year, one of the people said. Ellison and

Thompson have discussed a new contract for the CEO but haven't yet

reached terms, the people familiar with the talks said.

Independence is key for Thompson and he is seeking assurances that he

will have wide-ranging autonomy for editorial operations, people close to

him said.

Barbie-Maker Mattel Draws Takeover Interest From Authentic Brands Group

Barbie-maker Mattel, dealing with a sliding stock and now a

chief-executive transition, recently attracted takeover interest from

brand-licensing giant Authentic Brands Group, according to people

familiar with the matter.

Authentic Brands Group has made an approach and been privately

discussing an offer that could value Mattel at more than $20 a share, or

around $6 billion or more, some of the people said.

Mattel shares had dropped by more than 30% this year and on Wednesday,

the toy maker named Condé Nast Chief Executive Roger Lynch its next CEO.

The shares fell again to close at $12.66, giving the company a market

value of about $3.6 billion.

OpenAI Parts Ways With Researchers Who Allegedly Shared Confidential

Information

OpenAI has parted ways with three researchers for allegedly sharing

confidential company information with a third-party AI-safety

organization, according to people familiar with the matter.

The company recently told some employees it had terminated three

researchers who worked on its safety team, one of the people said.

"We have parted ways with three individuals for violating our policies

on accessing and handling sensitive company information," said an OpenAI

spokesperson in a statement. "Our investigation confirmed that these

individuals mishandled sensitive information outside established company

procedures, violating our policies and breaking the trust essential to

our work."

McCormick Is Working to Win Over Value-Conscious Shoppers

McCormick & Co. continues to operate in a dynamic environment, Chief

Executive Brendan Foley said, as geopolitical volatility, elevated fuel

costs and persistent inflation weigh on consumer confidence and spending.

The spice maker still reported a 17% increase in sales during the

latest quarter, largely due to its acquisition of a controlling interest

in McCormick de Mexico earlier this year. On an organic basis, sales

ticked up 1.9%.

Profit fell as McCormick faced higher input and freight costs, though

productivity initiatives helped offset the pain and boost margins.

Overall, the quarterly results were better than many feared they would

be, JPMorgan analysts said in a research note.

TALKING POINT Hedge-Fund Managers Lose Out on Lucrative Tax Strategy

Hedge-fund managers are losing their main strategy for avoiding a 3.8% federal self-employment tax after an eight-year-long Internal Revenue Service campaign yielded government victories in appeals courts.

Investment firm executives had long contended that they were largely exempt from that tax. Those who used the approach included Treasury Secretary Scott Bessent, who was a fund manager before entering the government.

Fund managers and their attorneys pointed to a 1977 law that excluded limited partners from self-employment taxes. The rule, they said, was simple. If you are labeled as a limited partner, you don't pay the 3.8% portion of the tax that goes to Medicare. For people making tens of millions of dollars a year, that limited-partner designation yielded significant tax savings.

But recent opinions from the 2nd and 5th U.S. Circuit Courts of Appeals backed the government's view that the tax applies more broadly to partners who are deeply involved in their businesses' operations, regardless of formal titles. Under the 2nd Circuit's September ruling-particularly important because it includes the New York homes of many funds-limited partners who run, manage or control their businesses must pay the self-employment tax.

"The limited partner gambit," said University of Baltimore law professor Walter Schwidetzky, "is dead."

The rulings may still get appealed, but the consequences are already rippling through investment firms. Some with pending IRS cases-including New York Mets owner Steve Cohen-will likely have to pay more to the government for past years. His firm, Point72, declined to comment. Others will likely begin adjusting their future payments.

Among those on the losing end: Bessent, who ran Key Square Group before joining the government and overseeing the IRS. During his 2025 confirmation hearing, Bessent indicated he had used the strategy while disputing Democrats' contention that he saved more than $900,000.

--Richard Rubin, The Wall Street Journal

Expected Major Events for Friday 08:00/ITA: Aug Retail Sales

12:30/US: Sep U.S. Employment Report

14:00/US: Aug Manufacturers' Shipments, Inventories & Orders (M3)

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Expected Earnings for Friday Escalon Medical Corp (ESMC) is expected to report for 4Q.

Lunai Bioworks Inc (LNAI) is expected to report for 4Q.

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This article is a text version of a Wall Street Journal newsletter published earlier today.