Watch live: The Fed chair testifies before Congress as inflation continues to rise.

Jerome H. Powell acknowledged to a House committee on Wednesday that “the incoming inflation data have been higher than expected and hoped for.”

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Jerome Powell, center, has attributed rapid price gains to factors tied to the economy’s reopening from the pandemic, Credit…Luca Bruno/Associated Press

When Jerome H. Powell, the Federal Reserve chair, appears before the Senate Banking Committee on Thursday, he will be testifying at a fraught moment both politically and economically, given the recent rise in inflation.

The Consumer Price Index jumped 5.4 percent in June from a year earlier, the biggest increase since 2008 and a larger move than economists had expected. Price pressures appear poised to last longer than policymakers at the White House or Fed anticipated.

In testimony on Wednesday before the House Financial Services Committee, Mr. Powell attributed rapid price gains to factors tied to the economy’s reopening from the pandemic, and indicated in response to questioning that Fed officials expected inflation to begin calming in six months or so.

He acknowledged that “the incoming inflation data have been higher than expected and hoped for,” but he said the gains were coming from a “small group” of goods and services directly tied to reopening.

For now, he voiced comfort with the central bank’s relatively patient policy path even in light of the hotter-than-expected price data. He said that the labor market was improving but that “there is still a long way to go.”

He also said the Fed’s goal of achieving “substantial further progress” toward its economic goals before taking the first steps toward a more normal policy setting “is still a ways off.”

— The New York Times

Morgan Stanley’s second-quarter revenue was up 8 percent from the same period a year ago.Credit…Lucas Jackson/Reuters

Morgan Stanley’s deal makers are keeping busy.

Investment bankers arranging mergers, acquisitions and initial public offerings fueled an increase in the company’s revenue in the second quarter, according to the company’s earnings, which were released on Thursday. The bank its joined Wall Street peers in reporting results that mostly beat analysts’ forecasts.

Morgan Stanley’s revenue rose 8 percent to $14.8 billion from $13.7 billion a year earlier, surpassing expectations. Profit rose 9 percent to $3.5 billion, or $1.85 a share, beating analyst estimates. Investment-bank revenue jumped 16 percent as the company advised on more transactions and handled more I.P.O.s.

“Performance continued to be very strong, reflecting high levels of client activity,” Sharon Yeshaya, the company’s chief financial officer, told analysts on a conference call. Year-to-date revenue rose to a record.

Morgan Stanley’s report also reflected broader trends across Wall Street. Bond trading has slowed after a blowout 2020, when the pandemic set off a gusher of action. The bank’s revenue from fixed-income trading dropped 45 percent because of volatile markets and narrowing gaps between the prices at which clients were willing to buy and sell bonds.

— Lananh Nguyen

The nation’s biggest banks reported earnings for the second quarter this week. Although profits were up, the reports mostly got a thumbs down from investors, the DealBook newsletter reports.

Change in loans at the four biggest U.S. banks* relative to the first quarter of 2020

Citigroup, JPMorgan Chase and Wells Fargo all reported better-than-expected earnings for the second quarter. Bank of America missed expectations on Wednesday, but its bottom line still more than doubled from a year ago. Nonetheless, its shares fell, as have Citi’s and JPMorgan’s since they released their latest results.

A better economy means banks set aside less to cover future losses. They can also take back money they put away to cover loans that never went bad. Because of the government’s aggressive stimulus efforts, the economic stresses of the pandemic forced relatively few borrowers into default. That’s one factor driving bank profits, even as their core business of lending remains lackluster.

Loans rose for the first time since the start of the pandemic, but only by 1 percent versus the previous quarter. In early 2020, the bank’s collective lending recorded a 4 percent pace of growth. Their loan balance remains $245 billion lower than just before the pandemic. If things don’t speed up, it will take another year and a half to get back to where it was.

Loans are the lifeblood of an economy, and a rise in lending is typically a sign of optimism in both borrowers and lenders. Coming into this year, some economists thought the combination of lockdowns lifting and stimulus flowing would cause the economy to take off like a rocket. But as the loan data shows, the recovery has so far been more like a hot-air balloon — one that has recently looked like it could use some more heat.

Mastercard accounted for 33 percent of card payments in India. New restrictions could hamper its expansion efforts in the country.Credit…Arun Sankar/Agence France-Presse — Getty Images

NEW DELHI — India on Wednesday barred Mastercard from adding new customers in the country over claims that it had violated the country’s data storage laws, a blow to the company in a market it was investing in heavily for expansion.

The Reserve Bank of India said Mastercard had not complied with a 2018 order to store data on local transactions only in India despite “considerable time and adequate opportunities” to do so. The ban on issuing cards to new customers will go into effect on July 22, the central bank said in a statement.

Mastercard said in a statement that it was “disappointed” by the government restriction, but the move would not affect its operations. It added that it had worked closely with the authorities to “ensure we comply with the requirements” of the 2018 directive. A company representative declined to elaborate on the bank’s decision.

“Mastercard is fully committed to our legal and regulatory obligations in the markets we operate in,” the statement said. “We will continue to work with them and provide any additional details needed to resolve their concerns.”

American Express and Diners Club also faced similar restrictions this spring, but they are significantly smaller players in the Indian market.

Mastercard accounted for 33 percent of card payments in India, second only to Visa, which had a 45 percent share, according to a 2020 study by PPRO, a London-based payments start-up. In 2019, Mastercard announced that it was investing $1 billion over five years to expand its presence in India, adding to the $1 billion it had already invested from 2014 to 2019.

As part of India’s push to better protect its data, the demand that end-to-end transaction details be stored only in India has caused complications for international payment processors. But India has resisted lobbying from the financial companies, which argued that the setting up of local data processing increased costs significantly and could set a precedent for other countries to do the same and potentially affect their fraud monitoring.

“I don’t think it is a case of that they are saying that we will not do it — there might be some delay and they may be in the process of doing it,” A.P. Hota, an online payments analyst who formerly led India’s National Payment Corporation, said about the latest restriction on Mastercard.

Mr. Hota said the top 50 banks in India have relationships with Mastercard, but also with Visa and Rupay, a local payment processor. Mastercard could control the damage if the ban was brief, but the blowback of extended restrictions could be harsh in a market in which Mastercard was investing heavily.

“There will be a significant impact,” he said. “Banks who have arrangements with Mastercard in a big way will have to think about alternatives.”

Initial claims for state jobless benefits were little changed last week, the Labor Department reported Thursday.

The weekly figure, before seasonal adjustments, was about 383,000, essentially flat. New claims for Pandemic Unemployment Assistance, a federally funded program for jobless freelancers, gig workers and others who do not ordinarily qualify for state benefits, totaled 96,000, down about 4,000 from the week before. The figures are not seasonally adjusted. (On a seasonally adjusted basis, state claims totaled 360,000, a decrease of 26,000 and the lowest figure since the onset of the pandemic in March 2020.)

New state claims remain high by historical standards but are one-third the level recorded in early January. The benefit filings, something of a proxy for layoffs, have receded as businesses return to fuller operations, particularly in hard-hit industries like leisure and hospitality.

More than 20 states have recently discontinued some or all federal pandemic unemployment benefits — including a $300 supplement to other benefits — even though they are funded through September. Officials in those states said the payments were keeping people from seeking work. But judges in Maryland and Indiana have blocked the early cutoff, and legal challenges are pending in three other states.

A survey of 5,000 adults conducted June 22-25 by Morning Consult found that those whose unemployment benefits were about to expire felt more pressure to find work. But of all those on unemployment insurance, relatively few — 20 percent of those who had worked full time, and 28 percent of those who had worked part time — said the benefits were better than their previous work income in meeting basic expenses.

The Labor Department’s employment report for June showed that the economy had 6.8 million fewer jobs than before the pandemic. A separate report found 9.2 million job openings at the end of May as businesses that had closed or cut back during the pandemic raced to hire employees to meet the reviving demand.

But there is a substantial amount of turnover, with far more workers quitting their jobs than are being laid off — a sign that many are jumping to positions that pay even slightly more.

— The New York Times

China reported on Thursday that its economy grew 7.9 percent from April through June, compared with the same period last year. That pace is still stronger than in many other countries, but it is markedly slower than the 18.3 percent leap the economy made in the first three months of the year, and fell short of estimates. The rising cost of raw materials is eating into the profits of factories and retailers. People are hesitant to spend as small outbreaks of the coronavirus remind them that the pandemic is not over yet.

The Hollywood Foreign Press Association, the troubled nonprofit organization behind the big-money Golden Globe Awards, has another reform plan to consider, after swaths of the entertainment industry have deemed the “transformational” changes proposed by the group’s board as insufficient. The new proposal includes the speedy addition of 50 journalist voters, with an emphasis on diversity, to the current group of about 80 members, none of whom are Black; the creation of a spinoff, for-profit Golden Globes company that would be governed by a 15-member board; and tougher and more transparent requirements for reaccreditation as an H.F.P.A. member, which must be done annually. The H.F.P.A. is expected to vote this summer on various reform proposals. The organization requires a two-thirds majority vote to change its bylaws.

The rooftop pool at the Soho House in New York. The chain’s parent company, Membership Collective Group, will test investors’ appetite for a company built on exclusivity.Credit…Mark Mainz/Getty Images

LONDON — Since its inception, the Soho House chain of members clubs has been associated with exclusive hangouts for the jet set, where celebrities and deep-pocketed professionals shell out thousands of dollars each year to gather in sleekly designed urban redoubts.

Now its parent company, Membership Collective Group, is set to join a different sort of club — the public stock markets — when it begins trading on the New York Stock Exchange on Thursday at a roughly $2.8 billion valuation. The company has raised $420 million from its initial public offering, at the low end of its expected range, largely on the promise that it can continue to rapidly export its model across the globe.

“There’s huge global opportunity,” Nick Jones, the company’s founder and chief executive, said in an interview. “We really, really think it’s the time to do this now.”

MCG’s new life as a public company will test its proposition that a business built on exclusivity — 59,000 people were on its wait list for membership as of May 30 — can achieve ambitious growth targets.

Mr. Jones, who in 1995 created the first Soho House in a central London restaurant as a modern take on traditional gentlemen’s clubs, argued that MCG follows in the footsteps of companies like Peloton, which has parlayed the status symbol created by its pricey exercise bikes and treadmills into reliable subscriber fees.

Soho House now has roughly 119,000 members at 30 clubs around the world, drawn largely from industries like the arts and the media. Mainstays also include celebrities: British tabloids tittered for weeks over reports that Prince Harry and Meghan Markle had spent an early date at one of the Soho Houses in London.

But MCG must also prove that its business is durable.

It has lost money for its entire existence, including $235.3 million during pandemic lockdowns in 2020, nearly double what it lost the previous year. In-house sales of food and drinks, a major source of revenue, plunged 60 percent in 2020.

And the company’s balance sheet has been weighed down by debt: It carried $2.1 billion in total liabilities as of April, taken on largely as part of its expansion efforts.

MCG executives argue, however, that the worst is over for the company. Even during the pandemic last year, its retention rate was 92 percent, as members largely opted to keep paying their dues. And when clubs have been able to reopen, according to Mr. Jones, members have largely flocked back.

“We don’t have a problem with demand,” he said. (One thing that has changed, he conceded, is that members aren’t staying out quite as late as they did before the pandemic.)

That mirrors the overall arc of demand for private clubs, said Bill McMahon Sr., the chairman of the McMahon Group, a consultancy to the industry. At least in the United States, the industry as a whole has boomed, most likely thanks to the buoyant economy. The number of new clubs has risen, as has the number of applicants for them, particularly those 55 and younger, Mr. McMahon said.

“When people have more money in their pocket, they’re signing up,” he said.

MCG hopes to add three to five clubs every year across its brands, which also include the Ned and the Scorpios beach clubs, according to its prospectus.

If anything, those goals are conservative, suggested Andrew Carnie, MCG’s president. The company opened a Soho House this spring in Austin, Texas, with clubs in Paris, Tel Aviv and Rome also set to debut this year. Seven clubs are expected to open next year, including a Scorpios resort in Tulum, Mexico.

The company expects to pay down much of its debt with proceeds from its stock sale, Mr. Carnie said. And it hopes to finally turn a profit by the end of 2022.

MCG has also been expanding its offerings. Last year, it rolled out Soho Friends, which allows limited access to clubs and events for an annual fee of 100 pounds, or $138. (Traditional full-service membership costs about $3,400 a year.)

The company has also emphasized its Soho Works co-working spaces, which operate in three cities and count more than 1,000 members. It is expanding its Cities Without Houses memberships — meant for residents of cities where the company does not yet have a presence — to 80 locations by next year.

And this year, it will roll out a digital membership aimed in large part at attracting customers across Africa, Asia and South America and allowing them to connect with existing members.

Perhaps MCG’s biggest test, however, will be its effort to expand beyond the high end of the market. Last month, it acquired the Line group of hotels, with the aim of introducing memberships for slightly more downscale accommodations around the world — something that, Mr. Jones said, the company can manage alongside its traditional elite clubs.

“We want to cover every angle,” he said. “It doesn’t matter which market segment we’re going for.”

U.S. stocks fell on Thursday as investors watched a second day of congressional testimony from the Federal Reserve chair, Jerome H. Powell.

On Wednesday, Mr. Powell told House lawmakers that inflation has increased “notably” and is poised to remain higher in coming months before slowing down again. He didn’t suggest it would lead to a change in the central bank’s monetary policy stance. Mr. Powell is testifying before the Senate Banking Committee on Thursday.

On Thursday, the Labor Department reported initial claims for state jobless benefits fell to 360,000 last week, down 26,000 from the previous week.

The S&P 500 fell 0.4 percent in early trading.

The Stoxx Europe 600 fell 0.9 percent, with stocks falling across every sector.

The British pound and government bond yields rose after Michael Saunders, a Bank of England policymaker, said “it may become appropriate fairly soon to withdraw some of the current monetary stimulus” to return inflation back to its 2 percent target. The annual inflation rate rose to 2.5 percent in June, data published on Wednesday showed. One option for the central bank would be ending its bond-buying program early, Mr. Saunders said on Thursday.

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