Ford Slows EV Ramp-Up, Q2 Commercial Vehicle Profit Booms
July 28 (Reuters) – Ford Motor (F.N) shares dropped 3.42% on Thursday after Chief Executive Jim Farley announced a change in the automaker’s product strategy, which includes slowing the ramp-up of money-losing electric vehicles (EVs). Despite this setback, Ford reported strong commercial vehicle profit in the second quarter.
The decision to slow the EV ramp-up comes as Ford faces supply chain challenges and semiconductor shortages, which have impacted the global auto industry. Ford plans to prioritize higher-margin vehicles, such as trucks and SUVs, while scaling back on the production of electric vehicles for the time being.
On the positive side, Ford reported a booming commercial vehicle profit in the second quarter, driven by strong demand for its trucks and vans. This came as a relief to investors, as the commercial vehicle segment has been a bright spot for the company in recent years, offsetting the losses in its passenger car division. The strong performance in the commercial vehicle segment helped Ford exceed expectations for the second quarter.
Chip Stocks Climb After Intel’s Surprise Quarterly Profit
Shares of chip stocks climbed on Thursday after Intel (INTC.O) reported a surprise quarterly profit. The strong earnings from the chipmaker boosted investor sentiment in the semiconductor sector.
Intel’s results and forecast indicated an improving PC market, which helped lift shares of other chip companies. Nvidia (NVDA.O) and Marvell Technology (MRVL.O) also saw gains following Intel’s earnings announcement.
The positive news from the chip sector comes at a time when the industry is grappling with a global semiconductor shortage. The shortage has disrupted supply chains and led to production delays for a range of products, including automobiles and consumer electronics. The strong earnings from Intel and the positive outlook for the PC market suggest that the industry may be starting to recover from the shortage.
P&G Tops Estimates but Signals Slowing China Demand
Procter & Gamble (PG.N) reported better-than-expected quarterly sales on Thursday, driven by strong demand for its cleaning and personal care products. However, the consumer goods giant also signaled slowing demand in China, raising concerns about the impact of economic headwinds on its business.
P&G’s sales growth in China slowed in the fourth quarter, as consumers tightened their purse strings amid rising inflationary pressures and a slowdown in the Chinese economy. The company’s results underscore the challenges faced by multinational companies operating in China, which is grappling with a range of issues, including a property market slump and regulatory crackdowns.
Despite the concerns about China, P&G’s overall performance was strong, with the company surpassing analyst expectations for the quarter. P&G has been benefiting from increased demand for its home and personal care products during the pandemic, as consumers focus on hygiene and cleanliness.
Core June PCE at 4.1% vs Est 4.2%
U.S. annual inflation slowed slightly in June, according to data released on Friday. The core personal consumption expenditures (PCE) price index, which excludes volatile food and energy prices, rose 4.1% in June, slightly lower than the estimated 4.2%.
The data is seen as an encouraging sign that inflation may be moderating, which could ease concerns about the Federal Reserve’s monetary policy tightening. The central bank has been closely monitoring inflation trends and has indicated that it may start scaling back its asset purchases and eventually raise interest rates if inflation remains high.
The slight dip in the core PCE price index suggests that inflationary pressures may be abating. However, it is important to note that inflation remains above the Federal Reserve’s target of 2%. The central bank will continue to monitor the data closely and make policy decisions accordingly.
Indexes Up: Dow 0.5%, S&P 500 0.99%, Nasdaq 1.90%
All three major U.S. indexes ended the week with gains, buoyed by a slew of positive factors. Strong earnings from Big Tech companies, encouraging economic data, and central bank announcements contributed to investor confidence in a soft landing for the U.S. economy.
The Dow Jones Industrial Average rose 0.5%, the S&P 500 gained 0.99%, and the Nasdaq Composite added 1.9%. The gains propelled the S&P 500 to its highest close since April 2022.
Investors are optimistic about the prospects of a Goldilocks economy, with inflation showing signs of coming down and the possibility of avoiding a recession. The positive sentiment is also reflected in the strong performance of equities, with more than half of the firms listed on the S&P 500 surpassing analyst expectations for the second quarter.
Overall, the week’s developments have instilled confidence in investors, leading to inflows of $10 billion to U.S.-listed stocks. The positive momentum in the stock market is expected to continue as the U.S. economy shows signs of resilience.