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Stocks down – Oil up as Chevron doubles profits and plans $75 billion buyback – Fed poised for rate hike – GDP shows depression warning sign – Bank of America sees recession
US stock futures were down Friday morning with Dow futures dipping 26 points or -0.08%, while S&P 500 futures slid 15.75 points or -0.39%, and NASDAQ futures dropped 76.25 points or -0.63%, Yahoo Finance reported.
Asia-Pacific stocks traded higher on Friday as Tokyo’s core consumer prices for January rose 4.3% as inflation in Japan moved to a 42-year high, CNBC reported.
US treasury yields climbed higher on Friday as investors awaited key inflation figures, following Thursday’s gross domestic product (GDP) report which came in better than expected.
The yield on the benchmark 10-year Treasury was up +0.051 for a yield of 3.542% as of 8:16 AM EST. The 2-year Treasury was up +0.031 to yield up 4.209%.
In oil futures, WTI crude moved up +1.35% to trade at $82.10 a barrel, while Brent crude was up +1.05% to trade at $88.39 a barrel as of 8:20 AM ET.
Chevron was expected to report on Friday that its profits for 2022 had doubled to more than $37 billion, as well as announce that it plans a buyback package for $75 billion worth of its own shares while jacking up its quarterly shareholder dividend, CNN Business reported.
The White House criticized the move, with spokesperson Abdullah Hasan saying: “For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it.”‘
The Federal Reserve is planning to continue interest rate hikes, but will downshift to a 25-basis point rise at their upcoming interest-rate meeting, economists said, according to MarketWatch. The hike will push the Fed’s benchmark rate to a range of 4.5%-4.75%. The Fed is predicted to send a strong message that interest rate hikes are not finished. Fed Chairman Jerome Powell will hold a press conference next Wednesday at 2:30 PM Eastern after the Federal Open Market Committee announces its rate decision.
Thursday’s gross domestic product (GDP) report from the Bureau of Economic Analysis showed the U.S. economy grew by 2.9% in the fourth quarter of last year, and by 2.1% for 2022. However, a positive GDP is not necessarily a sign of prosperity. Overall, economic growth is slowing, FOXBusiness reports. Business investment grew at only 1.4% in the fourth quarter, while nonresidential investment – a key driver of future economic growth – grew by only 0.7%. Residential investment dropped by a whopping 26.7 percent as consumers are unable to afford higher home prices and interest rates amid falling incomes, as homeownership affordability has reached its lowest level in history.
But the most ominous warning sign is that real disposable income fell by over $1 trillion in 2022, the second-largest percentage drop ever behind 1932, the worst year of the Great Depression.
Bank of America is projecting that the US will lose roughly 175,000 jobs per month in the first quarter of 2023, Yahoo reported. Bank of America’s head of U.S. economics Michael Gapen said in October: “We are looking for a recession to begin in the first half of next year.”
