Stocks reverse gains, Intel weighs on chip stocks
4Q GDP surged 6.9%
Interest rate hikes expected as soon as March
Former OMB Director Russ Vought reacts to the the Federal Reserve signaling it could 'soon' raise interest rates on 'Fox Business Tonight.'
U.S. stocks pared gains Thursday midday on weakness in technology names.
The Nasdaq Composite fell about 0.4% in part due to weakness in semiconductor names including Intel after sales grew just 3% in the last quarter and profits slipped over 21%. The supply chain crunch continues to create headwinds for the industry.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:COMP | NASDAQ COMPOSITE INDEX | 19403.947849 | +185.78 | +0.97% |
| INTC | INTEL CORP. | 23.93 | -0.12 | -0.50% |
| AMD | ADVANCED MICRO DEVICES INC. | 142.06 | +4.88 | +3.56% |
The S&P 500 also slipped, while the Dow Jones Industrial Average was little changed, giving up a 400+ point gain from earlier.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 44722.06 | -138.25 | -0.31% |
| SP500 | S&P 500 | 5998.74 | -22.89 | -0.38% |
Investors also continue to assess what may be as many as four rate hikes this year, starting in March. The Federal Reserve said monthly bond purchases that push down long-term rates by injecting money into the financial system would be phased out in March. The yield on the 10-year Treasury hovered near 1.84%.
Oil pared after hitting the $88 per barrel level.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| USO | UNITED STATES OIL FUND - USD ACC | 71.75 | +0.12 | +0.17% |
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In earnings, McDoanld's shares traded down after revenue rose 13% to $6.01 billion, which was just shy of Wall Street expectations, according to a survey of industry analysts by FactSet, with sales crimped by coronavirus restrictions in Australia and China.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| MCD | MCDONALD'S CORP. | 292.44 | -1.80 | -0.61% |
Global same-store sales __ or sales at restaurants open at least a year __ rose 12.3% in the quarter better than the 10.5% increase that Wall Street was expecting. In the U.S., same-store sales rose 7.5% as limited-time products like the McRib drew customers despite higher menu prices. McDonald's said in the fall that U.S. prices would be 6% higher in 2021 than the prior year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| F | FORD MOTOR CO. | 11.23 | +0.13 | +1.17% |
| GM | GENERAL MOTORS CO. | 56.70 | +1.20 | +2.16% |
| TM | TOYOTA MOTOR CORP. | 169.94 | +0.26 | +0.15% |
Separately, Fed Chair Powell confirmed the semiconductor shortage will likely persist into next year sharing a similar view as Ford CEO Jim Farley. Other automakers including GM and Toyota are also dealing with production issues tied to the shortage.
TESLA POSTS RECORD PROFITS, EXPECTS SUPPLY CHAIN WOES TO PERSIST
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 357.09 | +11.93 | +3.46% |
As is Tesla, which posted a record annual profit of $5.5 billion, up from the previous record of $3.47 billion in 2020, which was its first profitable year. It also had a record fourth-quarter profit of $2.32 billion in 2021 according to its earnings report.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NFLX | NETFLIX INC. | 886.81 | +9.47 | +1.08% |
Netflix announced it will be rising prices to $9.99 on February 27, 2022 with some customers receiving the update via email. Separately, activist investor Bill Ackman took a 3.1 million stake in the streaming giant. The stock, last week, had its worst one-day percentage drop since 2012.
FED SIGNALS INTEREST RATE HIKE COULD COME 'SOON' AS INFLATION RAGES
The U.S. economy grew 6.9% in the fourth quarter.
On the jobs front, the Labor Department's tally of new claims for unemployment benefits for last week were in-line with expectations at 260,000, after surging unexpectedly to a 3-month high of 286,000 the prior week. Continuing claims, which track the total number of unemployed workers collecting benefits, rose to 1.675 million, still below pre-pandemic levels.
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And new orders for manufactured big-ticket items fell a seasonally adjusted 0.9% month-over-month in December, following a larger-than-expected increase of 2.6% the prior month. If you factor out the transportation component, orders are rose 0.4% after a 0.9% pop in November. Orders for core capital goods, a closely watched proxy for business spending, were flat.
Finally, the National Association of Realtors reported sales in December fell 3.8% more than the expected 0.2%. This follows a surprise drop of 2.2% in November on low inventory.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAPL | APPLE INC. | 239.59 | +2.26 | +0.95% |
In the afternoon it’s all about Apple. The iPhone maker is expected to say fiscal 1Q earnings-per-share jumped 12% to $1.89 on a 6.5% rise in revenue to $118.66 billion, as it contends with supply chain issues and the impact of retail store closings from Omicron.
Bitcoin and other cryptocurrencies traded lower as well in response to the Fed. Bitcoin traded below $37,000
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The Associated Press contributed to this report.