USA OUTLOOK OCTOBER 23 TO 27, 2023

USA OUTLOOK WEEKLY NEWSLETTER October 23 to 27

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October 23, 2023

October 24, 2023

Strikes Trim Profit at GM in an Otherwise Strong Quarter; More Losses Likely if Picketing Spreads A strike by auto workers against General Motors is expected to cut pretax earnings by $800 million this year, and another $200 million per week after that, the company's chief financial officer said. And those figures include only factories that are on strike now, so if more plants are added by the United Auto Workers union, the losses will pile up further, CFO Paul Jacobson told reporters.

Photo: CNN News

Chevron agrees to buy Hess for $53 billion Chevron announced Monday that it has agreed to buy rival Hess in yet another oil industry consolidation deal. Cash-rich oil giants are taking advantage of high prices and surging profits to snap up assets and boost returns for shareholders even as pressure builds for them to invest more in renewable energy.

Shares of General Motors Co. are down more than 13% this year, touching lows Tuesday that haven’t been seen since the pandemic when the company’s sales growth tumbled almost 11% in 2020. GM on Tuesday posted net income of more than $3 billion from July through September, down 7% from the same period last year due to lost production from the strike, and increased warranty costs, Jacobson said: The company also withdrew its previous full-year pretax earnings estimates, citing uncertainty over the length of the strike and how many factories would be shut down.

The deal, worth $53 billion plus debt, would give Chevron even greater access to US shale production in Texas’ Permian Basin, a part of the industry where Chevron (CVX) has been a leader for years. Hess (HES) also has large oil assets in Guyana, which Chevron said would help grow its production over the next decade.

Hess CEO John Hess said the combined company would be “stronger in every respect” and would deliver shareholder value. The companies said the deal would save about $1 billion in cost synergies.

Hess in 2014 sold off its retail gas station business to Marathon for $2.6 billion. But the company’s famous Hess truck toys survived. The company did not announce whether the Hess brand would live on post-merger.

Source: https://www.usnews.com/news/business/ https://edition.cnn.com/2023/10/23/investing/chevron-hess/index.html articles/2023-10-09/2-federal-reserveofficials-say-spike-in-bond-yields-mayallow-central-bank-to-leave-rates-alone

Photo: US News Source: https://www.usnews.com/news/business/articles/2023-10-24/autoworkers-strikecuts-into-gm-earnings-company-sees-further-loses-if-walkouts-linger

October 25, 2023

October 26, 2023

Tech stocks suffer two-day selloff as investors find ‘wrinkle or two’ in Alphabet, Meta earnings Alphabet’s earnings sailed past Wall Street estimates after the markets closed on Tuesday.

Meta followed suit on Wednesday, solidly topping expectations. Following better-than-expected results on the top and bottom lines from two of the most valuable tech companies in the world, the Nasdaq responded by dropping roughly 3% over two days.

Photo: CNBC

S&P 500 falls more than 1% to close below 4,200 for first time since May, Nasdaq notches worst day since February The S&P 500 closed below a key level on Wednesday after disappointing quarterly results from Googleparent Alphabet and a rebound in interest rates. The benchmark index fell 1.43% to close at 4,186.77, ending the day below the 4,200 level that was being widely watched by chart analysts. It was the first time the S&P 500 closed below this threshold since May.

Up to this point, 2023 has been a bounce-back year for mega-cap tech after a brutal 2022. Meta is the second-best performing stock in the S&P 500, behind only AI chipmaker Nvidia, up roughly 140% for the year, compared to the Nasdaq’s 21% gain.

Alphabet has jumped 39% and Amazon has gained 42%.

The U.S. economy has been resilient so far. The Commerce Department said on Thursday that gross domestic product, rose at a seasonally adjusted 4.9% annualized pace in the quarter that ended September, up from an unrevised 2.1% pace in the second quarter.

The Nasdaq Composite lost 2.43% to finish the session at 12,821.22 for its worst day since Feb. 21, when the index shed 2.5%. The Dow Jones Industrial Average fell 105.45 points, or 0.32% to 33,035.93.

“Earnings are dominating the headlines, but I can’t take my eyes off the bond market,” said Ed Moya, senior market analyst at Oanda. “We haven’t seen this skyrocketing pace in yields since 1982 and that should spell trouble for stocks.”

Tech firms IBM and Meta will post quarterly results in the afternoon. About 29% of S&P 500 companies have posted third-quarter earnings thus far. Of those companies, 78% have exceeded expectations.

Photo: CNBC Source: https://www.cnbc.com/2023/10/24/stock-market-today-live-updates.html

Source: https://www.cnbc.com/2023/10/26/tech-stocks-suffer-steep-two-day-drop-aftergoogle-meta-earnings.html

October 26, 2023

Photo: US News

U.S. GDP grew at a 4.9% annual pace in the third quarter, better than expected The U.S. economy grew even faster than expected in the third quarter, buoyed by a strong consumer despite higher interest rates, ongoing inflation pressures, and a variety of other domestic and global headwinds. Gross domestic product, a measure of all goods and services produced in the U.S., rose at a seasonally adjusted 4.9% annualized pace in the July-through-September period, up from an unrevised 2.1% pace in the second quarter, the Commerce Department reported Thursday. Economists surveyed by Dow Jones had been looking for a 4.7% acceleration in real GDP, which also is adjusted for inflation.

Consumer spending, as measured by personal consumption expenditures, increased 4% for the quarter after rising just 0.8% in Q2, and was responsible for 2.7 percentage points of the total GDP increase.

Inventories contributed 1.3 percentage points. Gross private domestic investment surged 8.4% and government spending and investment jumped 4.6%. The GDP increase marked the biggest gain since the fourth quarter of 2021.

The GDP gains also come despite the Federal Reserve not only raising rates at the fastest clip since the early 1980s but also vowing to keep rates high until inflation comes back to acceptable levels. Pri ce increases have been running well ahead of the central bank’s 2% annual target, though the rate of inflation at least has ebbed in recent months.

Source:

https://www.cnbc.com/2023/10/26/us-gdp-grew-at-a-4point9percentannual-pace-in-the-third-quarter-better-than-expected.html