Sleepy sessions continue to snooze U.S. equities, despite plenty of market-moving headlines, including tensions with North Korea and Hurricane Harvey, which has hobbled the U.S. energy sector. As of Wednesday afternoon, just over 13B shares had been traded for the week, on track to be the lowest weekly volume since last Christmas. Seasonality is playing a big role, with many traders away from their desks ahead of Labor Day weekend.

Economy

Gasoline prices in the U.S. have hit $2 per gallon for the first time since 2015 as flooding from Harvey knocked out almost a quarter of U.S. refineries, while the storm moves inland over Louisiana. "While no two natural disasters are similar, the precedent of Rita-Katrina suggests that 10% of the currently offline capacity could remain unavailable for several months," Goldman Sachs said in a research note.

"This is our once-in-a-generation opportunity to deliver real tax reform for everyday, hard working Americans," President Trump said at a speech in Missouri, declaring that he doesn't want to be "disappointed by Congress." Trump also reiterated his longstanding call for slashing the U.S. corporate tax rate to 15% from 35%, but offered little insight into what his administration wants out of a final tax package.

While Canada hasn't been that explicit, Mexico said it will leave NAFTA negotiations if President Trump unilaterally rescinds the trade agreement. A clause, known as Article 2205, allows any country to withdraw from the pact six months after it provides notice to the other parties. The second round of NAFTA talks are set to begin tomorrow in Mexico City.

Although yesterday's strong showing of consumer spending pushed second-quarter U.S. GDP growth to the long-elusive 3% level, today's economic data should show whether that momentum continues into Q3. There is personal consumption and spending data for July expected at 8:30 a.m. ET, as well as the core PCE price index, the Fed's favorite inflation metric.

Revitalized exports and infrastructure spending boosted China's official manufacturing PMI for the month of August to 51.7, from 51.4 the month before, while the official services PMI dropped to 53.4, compared with 54.5 in July. Another set of PMI readings, that tend to focus more on small- and mid-sized manufacturers, will be published tomorrow as Caixin/Markit releases its numbers.

Mixed signals? "The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!" President Trump tweeted on Wednesday, while Defense Secretary James Mattis said the U.S. is "never out of diplomatic solutions." Secretary of State Rex Tillerson also expressed hopes last week that the U.S. would be open to "some dialogue" with Pyongyang.

The deepening tensions triggered by Saudi-led efforts to boycott Qatar have prompted Russia and the U.S. to intensify efforts to solve the Gulf crisis. Chatter that Doha wants to quit the Gulf Cooperation Council for not backing it against the embargo has stirred the pot, although Qatari officials have never publicly indicated any intention to leave the bloc.

Eurozone inflation rose to 1.5% in August, narrowly beating analyst expectations and edging slightly closer to the target of the European Central Bank. The flash estimates from Eurostat could also support the view that the ECB now has enough data to start tapering its asset purchase program early in September.

The French government is set to unveil final details of proposed labor reforms today in what is seen as a key plank of President Macron's political and economic strategy for the next five years. While employer groups are rallying around the reform agenda, France's second-largest trade union, CGT, has pledged to oppose attempts to rewrite the labor code and has called for strikes.

Stocks

Smoke and two explosions were reported overnight at the flood-hit Arkema (OTCPK:ARKAY) chemical plant in Crosby, Texas. The facility had lost power and its backup generators due to Hurricane Harvey, leaving it without refrigeration for chemicals that become volatile at increasing temperatures. Residents within a 1.5-mile radius of the damaged plant were evacuated on Tuesday.

Toshiba failed to seal a deal to sell its prized chip business by today's self-imposed deadline, raising doubts about whether it can plug a balance sheet hole in time to avoid a delisting. Toshiba (OTCPK:TOSYY) is continuing talks, but has not made any decision that would reduce the pool of candidates, including groups led by Western Digital (NYSE:WDC), Bain Capital and Foxconn (OTC:FXCOF).

Network news: Walt Disney (NYSE:DIS) is preparing significant budget cuts at its Disney/ABC Television Group with an eye to cutting expenses 10%, WSJ reports. Meanwhile, Fox Broadcasting has tapped a new head of entertainment on the eve of the 2017-18 television season: Michael Thorn, a senior development executive at Twentieth Century Fox (FOX, FOXA).

Uber's new CEO, Dara Khosrowshahi, believes the company should go public within the next 18 to 36 months, but the priority right now is to "pay the bills." UBER's Q2 net loss amounted to $645M on $1.75B in revenue with $6.6B in cash and equivalents. Who will lead Expedia (NASDAQ:EXPE)? CFO Mark Okerstrom is taking the reins from Khosrowshahi starting Tuesday.

For The Bold? Amazon's (NASDAQ:AMZN) acquisition of Whole Foods is coming at just the right time for Frito-Lay (NYSE:PEP), according to Jenny Kaplan, a consumer reporter at Bloomberg. The snack giant is aiming to break into the supermarket chain with its organic Doritos and chips line, which are marketed under the name Simply.

Apple is eliminating the concept of a home button in favor of new gesture controls on the iPhone 8, according to Bloomberg sources, which said the device will have a thin, Dock-style software bar displayed at the bottom. Three new iPhones (NASDAQ:AAPL) will debut next month, with the high-end version packing in enough changes to make it one of the biggest updates in the product's decade-long history.

Trying to take users away from Samsung's (OTC:SSNLF) Note series, LG Electronics (OTC:LGEAF) has launched its V30 at the IFA tradeshow in Berlin. The phone has a 6-inch full OLED display, face scanning technology and a dual rear camera with 16 and 13 megapixel sensors. Great timing? Both the Galaxy Note 8 and V30 will begin sales on Sept. 21 in South Korea.

It had the potential to be one of the most high-profile appearances of major tech CEOs on Capitol Hill, but a U.S. House committee has canceled a planned Sept. 7 hearing discussing the future of internet access rules. No invited company, including Alphabet (GOOG, GOOGL), Facebook (NASDAQ:FB), AT&T (NYSE:T), Verizon (NYSE:VZ), Comcast (NASDAQ:CMCSA), Netflix (NASDAQ:NFLX) and Charter Communications (NASDAQ:CHTR), had publicly committed to appearing.

Today's Markets

In Asia, Japan +0.7%. Hong Kong -0.4%. China -0.1%. India +0.3%.
In Europe, at midday, London +0.6%. Paris +0.8%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.3%. S&P +0.2%. Nasdaq +0.2%. Crude +0.5% to $46.20. Gold -0.1% to $1312.20.
Ten-year Treasury Yield flat at 2.14%

Today's Economic Calendar

Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
9:45 Chicago PMI
9:45 Bloomberg Consumer Comfort Index
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet