Stock Market News Today: Live Updates

Stock Market News Today: Live Updates

Stock Market News Today: Live Updates

The General Motors plant in Ingersoll, Ontario, is among three that will be idled temporarily.
Credit…Geoff Robins/Reuters

General Motors plans to idle three North American plants next week because of a global shortage of semiconductors that is rippling through the automotive industry.

The company said it would halt production for one week beginning Monday at its plants in Fairfax, Kan.; Ingersoll, Ontario; and San Luis Potosi, Mexico.

Ford Motor, Volkswagen and other automakers have also had to stop or slow production at various plants because of a shortage of semiconductors, or chips, used in electronics that control engines, transmissions, entertainment systems and other major components.

Last year, as many automakers closed factories to prevent the spread of the coronavirus, makers of semiconductors began making more chips for game consoles and other consumer electronics. When the car plants reopened last summer, automakers were pleasantly surprised by strong demand for new trucks and sport-utility vehicles. But chip makers have not been able to quickly restore production of the semiconductors used by the auto industry.

G.M. said it was seeking “to keep producing our most in-demand products — including full-size trucks and SUVs and Corvettes” — during the shortage.

The company’s Fairfax plant makes the Chevrolet Malibu sedan and Cadillac XT4 sport-utility vehicle. The Ingersoll plant produces the Chevy Equinox S.U.V. The plant in Mexico assembles the Equinox along with two other S.U.V.s, the GMC Terrain and Chevy Trax.

Ola Källenius, the Daimler chief executive, said the car and truck industries were both “facing major technological and structural changes.”
Credit…Ralph Orlowski/Reuters

The German vehicle maker Daimler will divide itself in two, the company said Wednesday, separating its car and truck units in a move that will help finance a shift to battery and hydrogen power and away from engines powered by fossil fuels.

The carmaker will be renamed Mercedes-Benz, its best-known brand name, while the truck maker will be called Daimler Trucks. The truck unit, which makes Freightliner trucks and Thomas Built Buses in the United States, will be listed separately on the stock market, generating cash that the company said would be used to accelerate its shift to emission-free technology.

Daimler’s move is the latest example of how technological change is causing major shifts of direction at established carmakers. Last week, General Motors made waves when it promised to end production of cars with internal combustion engines by 2035.

Investors have long clamored for Daimler to split the two businesses, which have little in common other than that they both produce forms of transportation. The dissimilarities are growing as vehicle makers respond to government pressure to eliminate emissions that cause climate change.

Passenger cars are moving toward battery power, while trucks in the future are more likely to run on hydrogen fuel cells, which are more costly to operate but offer faster refueling and lighter weight.

“Both companies operate in industries that are facing major technological and structural changes,” said Ola Källenius, the Daimler chief executive, said in a statement. “We believe they will be able to operate most effectively as independent entities, equipped with strong net liquidity and free from the constraints of a conglomerate structure.”

As separate units, Mercedes-Benz and Daimler Trucks may command more respect from investors, who tend to favor companies with a clear focus. Daimler has been investing in hydrogen fuel cell technology for decades and has hundreds of patents, but has not generated the same kind of investor interest as Tesla or other companies focused purely on emission-free transportation.

Daimler said it planned to complete the separation of the two units by the end of year and will aim for the truck unit to be listed on Germany’s blue-chip DAX index.

One in three small businesses surveyed by the Fed said that without more government help, they would be unlikely to survive until a recovery was in place.
Credit…Brittany Greeson for The New York Times

Almost nine out of 10 small businesses said that their sales remained below pre-pandemic levels, and about one in three said that without more government help, they would be unlikely to survive until a recovery was firmly in place, according to a Federal Reserve survey.

The responses were collected by the Fed in September and October, well before Congress passed the $900 billion relief package in December. But they show that many small businesses were taking on debt and scraping by even before a winter wave of coronavirus infections took hold.

Minority-owned businesses were struggling the hardest. Nearly 60 percent of all companies said their condition was “fair” or “poor,” but 79 percent of Asian-owned and 77 percent of Black-owned firms said the same.

Relief provided by the federal Paycheck Protection Program may have influenced company hiring and firing decisions, based on the survey responses. About 46 percent of firms that received the funding they requested still cut workers from their payroll; that jumped to 71 percent for the comparatively small number of companies that asked for funding but did not receive any.

Companies that received forgivable small-business loans were also more likely to try to rehire employees. About 44 percent of companies that requested but did not receive money tried to rehire workers, well below the 77 percent of companies that had received all the money they had requested.

The new data comes at a time when some economists are questioning the efficiency of the small-business loan program as a job retention tool. Most of the $325 billion in small-business assistance in the relief package approved by Congress in December is earmarked for a modified version of the Paycheck Protection Program, but future small-business relief may take a different form.

The annual Small Business Credit Survey, issued by the 12 regional Fed branches, collects information from nearly 10,000 companies with fewer than 500 employees across the country.

The Treasury secretary, Janet Yellen, wants to discuss “whether recent activities are consistent with investor protection and fair and efficient markets,” a spokeswoman said.
Credit…Jonathan Ernst/Reuters

The Treasury secretary, Janet Yellen, is expected to meet with officials from financial market regulators, including the Federal Reserve and Securities and Exchange Commission, this week to discuss the market volatility created by retail traders, the Treasury Department said, after the surge and collapse in prices of “meme stocks” such as GameStop.

The meeting will take place as early as Thursday, and is also expected to include representatives from the Commodity Futures Trading Commission and the Federal Reserve Bank of New York. The meeting was reported earlier by Reuters.

Ms. Yellen “believes the integrity of markets is important and has asked for a discussion of recent volatility in financial markets and whether recent activities are consistent with investor protection and fair and efficient markets,” a spokeswoman, Alexandra LaManna, said in an emailed statement.

The meeting is a sign of heightened scrutiny in Washington toward the frenzy in trading over the past 10 days. Shares in GameStop, a video game retailer, recorded a remarkable surge last week but have since fallen from their dizzying heights, testing the will of investors who joined in the fervor as a challenge to Wall Street investors. Since Friday, the price of GameStop stock has plummeted to $90 from $325.

The shares rose about 1 percent on Wednesday. AMC Entertainment, another company whose shares were embraced by online traders, rose about 5 percent, coming off a 41 percent drop the previous day.

The retreat on Tuesday had allayed concerns that the big hedge funds that were on the losing end of GameStop’s surge would have to sell shares of other, larger companies to make up for the losses.

Walmart and Google suspended political donations only to members of Congress who objected to certifying the presidential election results.
Credit…Sue Ogrocki/Associated Press

Many companies announced across-the-board halts in donations via political action committees after the Capitol riot on Jan. 6. These pauses were mostly meant to be temporary, so intense internal debates are now taking place across corporate America about what to do as the self-imposed deadlines approach.

Companies are separating into three main camps:

  • Impose targeted bans. After reviewing their policies, some companies said they would suspend giving only to the 147 Republican members of Congress who objected to certifying the election results. That’s what Walmart and Google have done.

  • Stop all political donations. The brokerage firm Charles Schwab decided to close its PAC, concluding that “a clear and apolitical position is in the best interest of our clients, employees, stockholders and the communities in which we operate.”

  • Pause then restart. Many companies that paused all giving have yet to announce what happens next, and one possibility is that they simply go back to what they were doing before. “If they’re doing it hoping this issue goes away, I think that’s not very smart,” said Doug Pinkham, president of the Public Affairs Council.

Companies that have yet to say what they’ll do after an initial pause in all giving include Microsoft, which set a Feb. 15 deadline to decide; American Airlines, which is taking a three-month break; BP, which is pausing for six months; and Hilton, which said it was halting all giving “indefinitely.”

Corporate advisers, lobbyists and executives say that employees are often the ones exerting the greatest pressure on directors as they consider their options. Democratic officials are criticizing businesses for “both sides-ism” and privately threatening to limit access to policymakers for companies that paused all donations. But Democratic control of Congress is narrow, and Republicans can still press their case for relevance.

Several companies are discussing governance changes and greater transparency around the actions of their corporate PACs. But consider this: Microsoft paused its PAC for a few months in 2019 in response to employee pressure, eventually making changes like adding an employee advisory council and monthly reporting on donations. It is now rethinking its approach (again) after the election challenges and storming of the Capitol.

“You spend your evenings going to these dinners, and the reason you go is because the PAC writes a check,” Brad Smith, Microsoft’s president, said in recent remarks about the political donations, referring to the work of the company’s government affairs team. But out of that effort, he added, a relationship with lawmakers “evolves and emerges and solidifies.”

An employee at a GameStop store in Manhattan in November with a Sony PS5 console. The new machines led to big profits in software and network fees for Sony.
Credit…Carlo Allegri/Reuters

The pandemic has been disastrous for the overall economy. But for companies peddling much needed entertainment for bored consumers trapped at home, it has been a bonanza.

Take Sony of Japan. On Wednesday, the company reported that its profit leapt almost 20 percent, to $3.4 billion, during the three month period that ended in December, compared with the same period a year earlier.

The windfall was largely driven by the company’s entertainment and gaming divisions. Demand for its newest game system, the PlayStation 5, helped raise sales for games and other digital content, the company said in an announcement of its quarterly financial results.

Over the last decade, Sony, once known as the world-beating, A-to-Z provider of high-end consumer electronics, has increasingly relied on its PlayStation console to fuel its results.

The release of the much-anticipated fifth iteration of the gaming system in mid-November has been a rousing success, with eager fans sometimes fighting to get their hands on one of the devices. The company had sold 4.5 million units by the end of December, Sony said.

Sony’s profit comes not from the machines themselves, but the content they power. Quarterly revenue from software and network fees increased 40 percent to $8.4 billion, the company said, powered by a 30 percent increase in total playtime on its network service compared with the same period in 2019.

The segment accounted for about one-third of the company’s profit in the first nine months of this fiscal year.

Sony also saw significant growth in profit from its music and film segments, the company said.

The windfall, which included surprise growth in sales of its consumer elections, led Sony to raise its financial forecast by about one-third to $8.5 billion for fiscal year 2020, which in Japan runs through March.

Credit…Carlo Allegri/Reuters
  • Google’s parent company, Alphabet, said on Tuesday that sales in the fourth quarter rose 23 percent from a year earlier to $56.9 billion, a record high for a quarter, and net profit rose 43 percent to $15.2 billion. Alphabet benefited from a continued rebound in its core business, advertisements on search results. Revenue from search advertising rose 17 percent to $31.9 billion in the fourth quarter, Alphabet said.

  • Amazon on Tuesday posted a record $125.6 billion in sales for the fourth quarter, while profit more than doubled to $7.2 billion from a year earlier. It was the first time the company had exceeded $100 billion in sales in a single quarter. On a call with investment analysts, Brian Olsavsky, Amazon’s finance chief, said Amazon would continue spending more on cloud computing infrastructure and groceries, and expand its logistics operations — especially its rapidly growing last-mile delivery network, which depends on half a million contract drivers to deliver packages.

  • In the worst year for the company in four decades, Exxon said it lost $22.4 billion in 2020, compared with a profit of $14.3 billion in 2019. A big chunk of the company’s losses came from $19.3 billion in write-downs in the last three months of the year as the company marked down the value of U.S. natural gas fields acquired when gas prices were far higher before fracking flooded the market a decade ago.

  • BP on Tuesday reported its first loss in at least a decade, taking a $5.7 billion loss for the year compared with a $10 billion profit for 2019. The company said it eked out a $115 million profit for the fourth quarter of 2020, representing a year-on-year decline of about 95 percent. BP blamed the decline on a host of factors, including low demand for its refined products because of the economic slowdown brought on by the pandemic, as well as low prices for oil and natural gas.

  • Comcast said on Wednesday that it had delayed new fees on heavy home internet users in more than a dozen states in the Northeast, after the Pennsylvania attorney general, Josh Shapiro, criticized the policy for disproportionately affecting low-income Americans who need to work and learn online. The fees would have applied to the heaviest internet users who use more than 1.2 terabytes of data each month. Comcast said it would suspend its data charges for six months, so customers won’t see the new fees until their August bills.

  • Stocks on Wall Street rose for a third day, following gains in most European and Asian indexes, after more strong earnings reports from the tech sector.

  • Alphabet, Google’s parent company, and Amazon both reported record sales in the past quarter. Japan’s Sony said its profit jumped 20 percent as its entertainment and gaming divisions helped alleviate the boredom of consumers stuck at home.

  • The S&P 500 was slightly higher by late morning. Alphabet jumped 7 percent, and Amazon, which had also said its founder Jeff Bezos would step down as chief executive this summer, gained about 0.6 percent.

  • The S&P 500 has gained about 3 percent this week, rebounding from a similar sized drop last week. Those gains have come in part as shares of GameStop and other stocks with social media-fueled gains retreated, allaying concerns that big hedge funds that were on the losing end of the surge would have to sell shares of other, larger companies to make up for the losses.

  • On Wednesday, GameStop rebounded slightly from its recent plunge, climbing about 1 percent. The stock had fallen 72 percent over the previous two days.

  • Treasury yields rose as Democratic lawmakers took steps to push through President Biden’s $1.9 trillion economic rescue plan without Republican support. Democrats also continue to negotiate with Republicans over a possible stimulus bill, but have said they will proceed without Republican support if needed.

  • Crude oil prices also continued their rally, reflecting optimism about the economy and after reports that stockpiles fell last week. West Texas Intermediate, a U.S. benchmark, climbed past $55 a barrel, to its highest point in over a year.

  • Italy’s stock market was the best performing in Europe, with the FTSE MIB index rising 2.6 percent on Wednesday, after Mario Draghi was tapped to be the next prime minister and form a new government. Mr. Draghi, a former head of the European Central Bank, was instrumental in steering the region out of a debt crisis just under a decade ago.

  • The Stoxx Europe 600 gained 0.6 percent, while the FTSE 100 in Britain was slightly lower.

  • The Nikkei 225 in Japan climbed 1 percent, while the Hang Seng Index in Hong Kong climbed 0.2 percent. Sony’s shares climbed 1.6 percent after its earnings report.

  • Alibaba said on Tuesday that it was conducting internal reviews of its business in response to an antitrust investigation by the Chinese government. Alibaba saw a 37 percent increase in sales in the latest quarter, with $12.2 billion in profit on $33.9 billion in revenue.


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