F Stock – Stocks mostly slip but tech gains help offset the losses; Ga.’s Vogtle nuke plant needs another $235M injection |
Stocks mixed as markets digest Fed plans
NEW YORK — The S&P 500 barely budged June 17 after stocks sloshed around, as investors make preparations for a future where the Federal Reserve is no longer doing all it can to keep interest rates super low.
Markets around the world were mixed but mostly calm after investors in Asia and Europe got their first chance to react to the Fed’s signaling on June 16 that it may start raising short-term interest rates by late 2023. The central bank’s chair also said it began discussing the possibility of slowing its bond-buying program. Such support has been a key reason for the stock market’s resurgence to records, with the most recent coming Monday.
The S&P 500 slipped less than 0.1 percent meandering earlier from a 0.2 percent gain to a 0.7 percent loss. Most of the stocks in the index and across Wall Street were lower, but gains for Apple, Microsoft and a few other tech heavyweights helped offset the declines.
While the economy still needs support, the recovery is proving to be strong enough that the Fed does not need the same emergency measures taken at the beginning of the pandemic, said Stephanie Link, chief investment strategist and portfolio manager at Hightower.
“We are going to get a taper,” she said. “They need to, we do not need emergency stimulus at this point.”
Ga. nuke plant seeks $235M more
ATLANTA — Georgia Power Co. is asking regulators to let it raise annual rates on customers by $235 million a year as the utility seeks to pay for its share of a huge nuclear project.
The company says the proposal would raise bills for a typical residential customer by about $4 a month.
The unit of Atlanta-based Southern Co. filed the request with the Georgia Public Service Commission this week. The five-member regulatory body is scheduled to vote on the request by November.
Georgia Power owns 46 percent of two new nuclear reactors at Plant Vogtle east of Augusta. The shareholder-owned utility currently projects it will spend $8.8 billion in capital costs and $3 billion in financing on the project, numbers that could rise as construction delays continue to mount.
Georgia Power’s 2.6 million customers have already paid more than $3.5 billion toward the cost of Vogtle units 3 and 4 under an arrangement that’s supposed to hold down borrowing costs. But rates are still projected to rise more as the nuclear reactors are completed. Georgia Power projects an overall 10% increase in rates, with 3.4% already having happened. Public Service Commission staff members estimate the typical customer will pay $854 in financing costs alone by the time the Vogtle reactors are finished.
The staff has signaled it will dispute how much Georgia Power can collect, saying in recent testimony that the company should get $125 million.
Jobless claims tick up last week
WASHINGTON — The number of Americans applying for unemployment benefits rose last week for the first time since April despite widespread evidence that the economy and the job market are rebounding steadily from the pandemic recession.
The Labor Department said Thursday that jobless claims rose 37,000 from the week before to 412,000. As the job market has strengthened, the number of weekly applications for unemployment aid has fallen for most of the year. The number of jobless claims generally reflects the pace of layoffs.
Weekly applications for unemployment aid had dropped for six straight weeks, and economists had expected another dip last week. Still, the report showed the the four-week average of claims, which smooths out week-to-week ups and downs, fell by 8,000 last week to 395,000 — the lowest four-week average since the pandemic slammed the economy in March 2020.
For jobless claims to rise slightly “should not be cause for concern yet,” said AnnElizabeth Konkel, economist at the Indeed Hiring Lab.
“The big picture is that while we are not back to a ‘normal’ level yet of initial claims, they are no longer astronomically high.”
A year ago, nearly 1.5 million people had applied for unemployment benefits in one week.
Ford says outlook for 2Q is improving
DETROIT — Ford’s second-quarter outlook is improving, with large numbers of customers making reservations for four of its new vehicles.
Ford Motor Co. now anticipates its quarterly adjusted earnings before interest and taxes for the April through June quarter to top its expectations and be significantly better than the year-ago period.
Although there’s still uncertainty around semiconductor supply, Ford is seeing improvement in its automotive business due to lower-than-expected costs and favorable market factors. It’s also being helped by increased vehicle auction values.
CEO Jim Farley told investors at Deutsche Bank’s Global Auto Industry Conference on June 17 that the company is benefiting from lower costs overseas and in North America due to restructuring. It’s also seeing “pretty breathtaking” prices for its vehicles with tight inventories, and higher revenue from its credit arm, he said.
But he said Ford is still being hit harder than competitors by the global shortage of computer chips because it was more reliant on Renesas, a Japanese chip maker that had a fire at one of its factories in March.
“I would say in the second half of the year, things are going to get better for us,” Farley said. “We are learning that this is a scramble to get the (computer) modules in the vehicles in the second half, even.”
Ford is expected to announce its second-quarter results and provide an outlook for the second half of the year on July 28.
Detroit car show to return next year
DETROIT — The head of Detroit’s big international auto show says it will return to the Motor City next year, but with smaller indoor displays, and more emphasis on experiencing vehicles and technology outside.
The North American International Auto Show was canceled last year due the coronavirus pandemic and will be replaced this year by an event at a racetrack north of Detroit.
But Rod Alberts, executive director of the Detroit Auto Dealers Association, which runs the show, the event will have to change from the past, when automakers built elaborate and costly multi-story displays and unveiled their most important new models. Now companies are finding they can get good exposure and spend less by doing virtual unveilings outside of auto shows.
Alberts said Detroit and other shows have to change to appeal more to millennials, which are two generations after baby boomers and like to experience things rather than just view them. He envisions a mainly a walkable outdoor event encompassing the entire downtown, with smaller displays and maybe some electric-vehicle driving indoors.
Home loan rates in US mixed for week
WASHINGTON — Mortgage rates were mostly lower this week as the economy continued to show signs of recovery from the pandemic recession and recent bursts of inflation were deemed temporary by federal policymakers.
Mortgage buyer Freddie Mac reported June 17 that the average for the key 30-year home loan fell to 2.93 percent from 2.96 percent last week. By contrast, the rate was 3.13 percent a year ago.
The rate for a 15-year loan, a popular option among homeowners refinancing their mortgages, edged up to 2.24 percent from 2.23 percent last week..
Global web outages blamed on software bug
BOSTON — A software bug at a major network provider briefly knocked dozens of financial institutions, airlines and other companies across the globe offline during peak business hours in Asia.
Akamai, which runs one of the internet’s main content-delivery systems, said the outage June 17 was not caused by a cyberattack, but rather a software bug on a service that protects customers against denial-of-service attacks.
Many of the 500 affected Akamai customers had their traffic rerouted in minutes but it took more than four hours to fully restore the system, the Massachusetts company said. Akamai operates mirrors of customer websites in 135 countries — known as edge servers — designed to speed access to them.
The Hong Kong Stock Exchange and the four largest U.S. airlines were among those impacted. Akamai does not name its customers but says they include more than 300 of the world’s banks, more than 30 airlines, more than 200 national government agencies and 825 retailers.