An unusual surge of short-term lending by cash-rich companies is raising concerns on Wall Street that a period of market unrest may lie ahead.

Investors such as money-market funds and banks are parking over $1 trillion in spare cash overnight at the Federal Reserve in exchange for securities. That is the most on record since the Fed opened the facility for so-called reverse repurchase agreements in 2013.

The scale of this flood has some analysts warning that the markets for short-term funding appear to be vulnerable to disruption.

The worry isn’t new. The Fed said in its last meeting it would establish two new permanent facilities to guarantee investor access to a related market known as repo, in which financial firms borrow cash using securities such as Treasury debt as collateral. The decision aims to brace markets against volatility that could hit when the central bank begins tightening financial conditions in coming years.

Short-term debt...

A solid corporate earnings season has bolstered the case for stocks.

Recent developments have had many investors expecting rockier trading in the coming months, following an 18% advance in 2021 that has taken the S&P 500 to 44 record closes. The rapidly spreading Delta variant of the coronavirus has cast a cloud over the economic outlook, and rising prices have sparked debate over whether sustained inflation will hamper the recovery. China’s crackdown on corporations, meanwhile, has analysts considering the possibility of a drag on U.S. markets.

With these potential hurdles coming into view, investors have been heartened by a standout earnings season in which the share of big U.S. companies beating profit expectations is on pace for a record. What’s more, companies are turning more of their sales into earnings, keeping profit margins at record highs.

“The earnings coming out have definitely helped alleviate concerns of investors that maybe earnings...

The U.K. has set one of the most ambitious carbon emission-reduction targets among major economies, making the country a case study in how climate goals call for big shifts in policy, the economy and technology.

Britain is one of several heavy polluters including the U.S., China and the European Union to have unveiled emission plans in the run-up to the United Nations climate conference in Scotland this fall. Fires in North America and in Russia’s northeast, flooding in Europe and China and a severe drought in Brazil have injected additional urgency into diplomatic efforts to limit the rise in global temperatures.

In a bid to establish the U.K.’s environmental bona fides ahead of the conference, Prime Minister Boris Johnson has said the country will reduce greenhouse-gas emissions by 78% from 1990 levels by 2035. President Biden, meanwhile, aims to halve U.S. emissions by 2030 from 2005 levels. China is targeting a peak in emissions by 2030.

How...

Sometimes stock-market research reports refer to something known as “drawdowns.” But it’s not always clear what the term means, because it’s often ill-defined and it’s used in at least a couple of different ways.

In its simplest form, it’s Wall Street-speak for “You lost money.”

“It’s a fancy way of saying the market value of your account or asset declined,” says Chuck Lieberman, chief investment officer at New Jersey-based Advisors Capital Management. “Instead of saying your stock fell in value, you had a drawdown.”

The term is sometimes defined as the percentage change from the peak of an asset’s value to its trough. For instance, at the start of the Covid-19 pandemic the SPDR S&P 500 (SPY) exchange-traded fund, which tracks the S&P 500 index, saw a drawdown of around 32% between Feb. 10 and March 20, 2020. It rebounded over the rest of the year.

Investors can use information about drawdowns to help make decisions about their portfolio...

Despite being buffeted on all sides, the stock market continues to power ahead. And mutual-fund investors are benefiting.

The question is how long corporate earnings, a big driver of this resilient market, will remain solid. And of course, how will Covid-19 play out from here?

The total return of the average diversified U.S.-stock fund was 0.7% for July, according to Refinitiv Lipper data, pushing the year-to-date advance to 16.5%. International-stock funds were up 0.1% for the month, to push their year-to-date average gain to 9.2%.

Inflation, and what the Federal Reserve might do about it, remains a concern for companies and investors.

“One of the most interesting observations this earnings season is the number of references to inflation,” says Ellen Hazen, portfolio manager at F.L.Putnam Investment Management in Wellesley, Mass. Management teams of the 340 companies in the S&P 500 that have reported their earnings so far, says Ms. Hazen,...

Cigarette companies are pouring billions of dollars into nicotine products that don’t come with the lethal health warnings of traditional smokes. New taxes risk stubbing out the returns on those investments.

Global tobacco companies’ smokeless brands are booming. For the first six months of the year, British American Tobacco and Philip Morris International reported 50% and 35% on-the-year sales growth, respectively, in their noncombustible portfolios, which include everything from oral nicotine pouches to vape pens. Altria ’s Marlboro heat sticks grew 40% in the second quarter versus the comparable period last year.

To improve their standing with investors, the companies need to continue growing the share of total revenues they make from these smokeless products. Philip Morris, which makes Marlboro cigarettes outside the U.S., wants them to account for more than 50% of sales by the middle of the decade. BAT is further behind and targets roughly one-fifth in a...

Black millennials thought college would help them get ahead. Instead, it is setting them back.

The median net worth of households with Black college graduates in their 30s has plunged over the past three decades to less than one-tenth the net worth of their white counterparts, according to a Wall Street Journal analysis of Federal Reserve data. The drop is driven by skyrocketing student debt and sluggish income growth, which combine to make it difficult to build savings or buy a home. Now, the generation that hoped to close the racial wealth gap is finding it is only growing wider.

More than 84% of college-educated Black households in their 30s have student debt, up from 35% three decades ago, when many baby boomers were at the same age. The younger generation owes a median of $44,000, up from less than $6,000. By comparison, 53% of white college-educated households in their 30s have debt, up from 27% three decades earlier. The median amount rose to $35,000...

Keith Rudman used to pay hundreds of thousands of dollars annually to an adviser who charged him a fee on managed assets.

Four years ago, the 62-year-old North Carolina resident got rid of the money manager and moved his eight-figure taxable portfolio into passive investments. Mr. Rudman now uses a planning firm that charges by the hour for advice on everything from tax-loss harvesting of investments to estate planning.

“They’re providing a ton more services than my old financial advisers and they’re charging me between a 10th and a 20th as much,” he says.

Mr. Rudman is among investors who are seeking—and finding—alternatives to traditional financial advisers who charge a certain percentage of assets under management. Even as commissions on mutual funds and trading fees have dropped in recent years, the fees that registered investment advisers charge on portfolio balances have edged up. The average investor with $750,000 paid 1.04% of invested assets in...

Brian Brooks, a former top U.S. banking regulator, resigned as chief executive of cryptocurrency exchange Binance.US, just three months after taking the job.

Mr. Brooks announced his departure on Twitter, posting: “Letting you all know that I have resigned as CEO of Binance.US. Despite differences over strategic direction, I wish my former colleagues much success.”

Through a spokesman, Mr. Brooks declined to comment beyond his post.

Changpeng Zhao, the founder and CEO of crypto-exchange company Binance Holdings Ltd., confirmed the resignation on Twitter, where he said, “I remain confident in Binance.US’s business.”

The resignation is the latest blow for Binance, which has come under scrutiny from regulators in several countries this summer.

United Airlines Holdings Inc.

Vaccine mandates are coming to corporate America. United Airlines will require its 67,000 U.S. employees to be vaccinated this fall, as the Covid-19 Delta variant drives a nationwide increase in infections. Walmart Inc. and Microsoft Corp. have imposed vaccine mandates mostly on white-collar workers returning to offices, and meatpacker Tyson Foods Inc. will require all workers to get the vaccine by Nov. 1. United Airlines shares added 0.8% Friday.

Square Inc.

Warren Buffett’s Berkshire Hathaway Inc. said second-quarter net earnings rose 7%, boosted by improved results for its railroad, utilities and energy companies.

Berkshire reported second-quarter net earnings of $28.1 billion, or $18,488 per Class A share equivalent, compared with a profit of $26.3 billion, or $16,314 per Class A share equivalent, in the year-earlier period.

Operating earnings, which exclude some investment results, rose to $6.7 billion from $5.5 billion in the year prior. Profits increased within the company’s railroad, utilities and energy divisions but declined at the company’s vast insurance operations.

The company said that earnings for most of its manufacturing, service and retailing businesses declined considerably last year thanks to the coronavirus pandemic. But over the second half of 2020 and into 2021, many of its businesses have recovered and in some cases, now exceed pre-pandemic levels.

The conglomerate runs a...

JP Morgan Chase & Co. said Friday it was granted permission to take full control of a securities business in China, a first for an international firm and a continuation of financial-market liberalization by Beijing at a time of waning confidence in its markets.

After years of slow-walking promises to allow access to its financial markets by Wall Street giants, China has loosened rules to give firms more opportunity to trade securities in the country and build investor bases. More than three decades since China opened stock markets, foreign firms remain minnows compared with China’s own brokerages and banks.

The fresh market access also follows a slump in foreign investor sentiment about China’s financial markets, following regulatory pressure from Beijing on various sectors including technology and education.

The first phase of a Sino-U.S. trade deal reached in January 2020 committed Beijing to enhance market access in banking services,...

Leave it to Joe Manchin to know which way the wind is blowing.

A day before Friday’s monthly jobs report, the West Virginia senator urged the Federal Reserve to pare back stimulus to avoid overheating the economy. Variously described as the most powerful man in the Senate and even the most powerful Joe in Washington, the conservative Democrat wields unusual power in a chamber where his party controls exactly half of the seats.

His case was strengthened by the data. The U.S. added 943,000 jobs in July, about 100,000 more than economists surveyed by The Wall Street Journal had been expecting, and the unemployment rate fell to 5.4% compared with a consensus estimate of 5.7%. The prior two months saw upward revisions, adding nearly 120,000 more jobs in total.

With the Fed still committed to holding overnight interest rates near zero, where they have been since last March, and to purchasing $120 billion a month in Treasury and mortgage securities, Mr....

American International Group is looking like more than just a breakup story.

Following moves to sell a stake in its life-and-retirement business to Blackstone Group ahead of a listing, plus an accompanying sale of affordable-housing assets, AIG looks poised to add several billion dollars to its cash pile. It already has announced an increase of its share buyback authorization to $6 billion.

Shareholders might welcome lots of extra cash in their pockets after years of patience with the insurance behemoth. But AIG isn’t just a capital-return story right now—at least based on these most recent quarterly results.

In fact, now also looks to be a good time to have the capital to fund a bigger book of core property-and-casualty business. Premiums and new business are rising fast, and underwriting results are strong, particularly in commercial insurance. That dynamic suggests the potential to grow in a way that doesn’t just mean buying more risk to gain market...

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U.S. government bond yields rose Friday after Labor Department data showed the unemployment rate declined to its lowest level since the pandemic took hold.

The yield on the benchmark 10-year Treasury note recently traded at 1.291%, according to Tradeweb, up from 1.217% at Thursday’s close. The 30-year Treasury yield was trading at 1.936%, up from 1.862% Thursday.

Yields, which rise as bond prices fall, had already edged higher in early morning trading. They then extended gains after data showed that U.S. employers added a seasonally adjusted 943,000 jobs in July. That beat the 845,000 estimate by economists surveyed by The Wall Street Journal.

The U.S. unemployment rate fell to 5.4% in July, below economists’ expectations of a 5.7% rate.

Some analysts and investors said Friday’s data should ease concerns about the economic outlook. Previous jobs reports had shown U.S. employers adding a decent number of jobs, they said, but not enough to signal...

WASHINGTON--The Securities and Exchange Commission brought and settled its first case against a firm in the so-called decentralized-finance or DeFi sector, the latest sign of intensifying regulatory scrutiny for cryptocurrency markets.

The SEC said Friday it had charged two Florida men, Gregory Keough and Derek Acree, and their company, Blockchain Credit Partners, with making materially false and misleading statements in selling more than $30 million of unregistered securities using smart contracts, which are digital consent agreements, and DeFi technology.

Messrs. Keough and Acree agreed to a cease-and-desist order, which includes returning $12.85 million in profits and paying penalties of $125,000 each, the agency added. Under the terms of the settlement, they didn’t deny or admit wrongdoing. Efforts to reach the two men by phone and through the Institute for Blockchain Innovation, a think tank they co-founded, weren’t immediately successful.

The...

Actively trading securities in the run-up to a divorce can be detrimental to an individual investor’s wealth, a draft research report finds.

The paper adds to research showing how major life events can affect the investment performance of both individual and professional investors.

In the years before a divorce, individual investors who trade actively saw their investment performance drop sharply, says Avanidhar Subrahmanyam, professor of finance at UCLA Anderson School of Management and one of the report’s authors. That was particularly notable because well before that time, those same investors were earning superior returns, the paper found.

“The impending divorce has a negative impact,” says Prof. Subrahmanyam, whose co-authors included Andrew Grant and P. Joakim Westerholm, both of the University of Sydney, and Petko Kalev at La Trobe University, Australia.

The findings are similar to research published in March 2016 in the...

Bargains in real estate are exceedingly rare these days, but one corner of the market is well below its recent asking price. Shares of Zillow Group and Redfin Corp. are down an average 28% over the past six months, while shares of Opendoor are down more than 45%. Buyers should look before they leap.

Both Zillow and Redfin reported strong results on Thursday with revenue coming in above Wall Street’s forecast. Recent market dynamics have proven especially good for their so-called iBuying, or automated home flipping, businesses. Zillow showed 5% returns on a per-home basis, even after interest expense—well above its stated target returns of plus or minus 2%. The online real-estate company said it purchased a record number of homes in the quarter, while Redfin reported an 80% increase in home transactions year-over-year.

Guidance from both companies shows a strong third quarter on the horizon. The midpoint of Zillow’s revenue forecast for the current quarter came...

Budgeting. Cash flow. Yield. FICO scores. Net worth. Equity.

The proliferation of terminology—and jargon—surrounding financial literacy is enough to make your heard hurt.

So, we are here to make things a little easier, to offer just six concepts that will go a long way toward helping you understand what you need to know when it comes to personal finance. The key, says Andy Baxley, a Chicago-based senior financial planner with the Planning Center, is to focus on concepts that help those in search of financial literacy acquire not just instructions about what to do, but insight into why they should do it.

What follows is our attempt to do just that.

Fans of fund manager Cathie Wood have built websites that track her every investment move. They sell T-shirts with her picture in the style of the Barack Obama “Hope” poster and with the ticker symbol of her flagship exchange-traded fund, ARK Innovation. On social media, they call her “Mamma Cathie,” “Aunt Cathie” and, in South Korea, “Money Tree.”

Behind the adoration is her unchecked enthusiasm for a certain kind of speculative investment: companies that generate little or no profit but have what she says is the potential to change the world through “disruptive innovation.” Her asset-management firm, ARK Investment Management LLC, has bet heavily on buzzy sectors including alternative-energy businesses, space exploration and digital currencies.

Her focus on meme-worthy investments and her ubiquitous presence on Twitter and financial news channels have thrust her alongside market influencers such as Tesla Inc. Chief Executive Elon Musk, venture capitalist...

Allianz SE’s chief executive defended the German financial giant’s culture in the face of government investigations and civil lawsuits that stem from huge losses its investment funds took during the pandemic-related market panic in early 2020.

In his first public comments since the company disclosed an investigation by the U.S. Justice Department into the funds, Oliver Bäte said “the event does not have anything to do with the performance ability, culture or the ethics of Allianz Group. ”

Before you buy shares in a company expected to benefit from the post-Covid consumer boom, ask yourself a question: Will you spend the money you saved during the pandemic?

Economic figures for 2021 will be eye-popping. This past week, the eurozone reported that gross domestic product increased 13.7% in the second quarter from a year earlier. In the U.S., economic output expanded by a similar amount, due to an 11.8% annualized increase in personal consumption expenditures, which is the second-fastest rate since 1952, behind only the third quarter of last year.

Investors and policy makers alike are expecting this sudden release of “pent-up demand” to lead to a sustained period of buoyant economic growth. U.S. households’ net wealth has risen by $18 trillion during the pandemic, thanks in part to expanded unemployment insurance and stimulus checks. Researchers at the European Stability Mechanism found that eurozone households accumulated €600 billion (equivalent...

As China’s technology giants struggle, few markets are suffering like Hong Kong. A rush of new listings could eventually soften the blow.

The financial hub has courted Chinese online behemoths such as Alibaba Group Holding Ltd. in recent years, relaxing listing rules and overhauling its flagship stock index. Until recently, share sales were booming, local benchmarks were buoyant and tech euphoria had fueled a surge in trading.

A widening series of crackdowns from Beijing has helped spoil the mood. As of Thursday, the city’s Hang Seng Index was down 3.8% this year, versus a nearly 18% rise for the S&P 500. Big tech stocks have tumbled, and the uncertainty and volatility is likely to dampen issuance of new shares.

Longer term, however, many investors and bankersfigure China’s growing wariness about its companies listing abroad will be good for Hong Kong, which should benefit at the expense of U.S. exchanges.

For now, investors are worried about...

Online used-car seller Carvana has been speeding past growth expectations for some time. Now it has arrived at a critical milestone at least a year earlier than anyone expected.

Carvana said it brought in $45 million of net income in its second quarter, its first profitable one. Analysts had been expecting a net loss until at least the end of 2022. Total revenue almost tripled from a year earlier to $3.3 billion, beating Wall Street expectations by 38%. Carvana’s shares, already near a record high, surged 9% in after-hours trading following Thursday’s earnings call.

External factors helped. The shortfall in new-car production is still keeping used-car prices high and is lifting the entire industry, including rivals such as CarMax. Carvana commanded 29% higher prices per used vehicle last quarter compared with a year earlier. That helped its gross profit more than triple over the same period. Moreover, those high used-car prices led a record number of customers...