US stocks tepid ahead of holiday
NEW YORK — Stock indexes were mixed Nov. 24, barely budging through another bout of light but volatile trading ahead of the Thanksgiving holiday in the U.S.
Stocks in the S&P 500 index were nearly evenly split between risers and decliners for most of the session. Losses by health care companies, household goods makers and banks outweighed gains in real estate and energy stocks.
Investors kept an eye on the latest batch of quarterly report cards. Computer maker HP rose after reporting solid financial results. Autodesk slumped after the design software company warned investors the pace of its recovery is being affected by supply chain problems and pressure from inflation.
A mix of retailers that rely on consumer spending also turned choppy. Gap Inc. nosedived 23 percent after the clothing chain said supply chain problems crimped earnings and sales. Department store chain Nordstrom plunged 29 percent after reporting weak profits.
The U.S. stock market is closed Thursday. It reopens for a shortened trading session Friday.
Consumer spending up, despite inflation
WASHINGTON — U.S. consumer spending rebounded by a solid 1.3 percent in October despite inflation that over the past year has accelerated faster than it has at any point in more than three decades.
The jump last month was double the 0.6 percent gain in September, the U.S. Commerce Department reported Nov. 24.
At the same time, consumer prices rose 5 percent compared with the same period last year, the fastest 12-month gain since the same stretch ending in November 1990. The surge in prices this year did contribute to the 1.6 percent rise in spending in November, yet adjusting for inflation, spending was still up a solid 0.7 percent after a 0.3 percent inflation-adjusted gain in September.
Personal incomes, which provide the fuel for future spending increases, rose 0.5 percent in October after having fallen 1 percent in September, a reflection of a drop in government support payments.
Pay for Americans has been on the rise with companies desperate for workers, and government stimulus checks earlier this year further padded their bank accounts. That bodes well for a strong holiday season and major U.S. retailers say they're ready after some companies, like Walmart and Target, went to extreme lengths to make sure that their shelves are full despite shortages.
Analysts said the solid increase in spending in October was encouraging evidence that overall growth will post a sizable rebound in the last three months of 2021, as long as the recent rise in COVID cases and concerns about inflation don't dampen holiday shopping.
New homes sales, prices up in Oct.
WASHINGTON — U.S. sales of new homes edged up 0.4 percent last month, coming in below expectations as housing prices continued to climb.
The U.S. Commerce Department reported Nov. 24 that sales of new single-family homes rose to a seasonally adjusted annual rate of 745,000 last month from 742,000 in September. Economists had expected October new home sales to come in at a 795,000 annual pace. And the September sales rate was revised sharply lower from 800,000 in Commerce's original report.
New home sales were down 23 percent from a year earlier.
The median price of a new home, the point where half the homes sold for more and half for less, rose to a record $407,700 last month, up nearly 18 percent from a year earlier.
New home sales rose 11 percent from September to October in the Midwest and 0.2 percent in the South. They fell 11.8 percent in the Northeast and 1.1 percent in the West.
Economy slowed, big rebound expected
WASHINGTON — The U.S. economy slowed to a modest annual rate of 2.1 percent in the July-September quarter according to the government's second read of the data, slightly better than its first estimate. But economists are predicting a solid rebound in the current quarter as long as rising inflation and a recent uptick in COVID cases do not derail activity.
The increase in the gross domestic product, or the total output of goods and services, is up from an initial estimate of 2 percent for the third quarter, the U.S. Commerce Department reported Nov. 24. But the revision was still well below the solid gains of 6.3 percent in the first quarter this year and 6.7 percent in the second.
The small increase from the initial GDP estimate a month ago reflected a slightly better performance for consumer spending, which grew at a still lackluster 1.7 percent rate in the third quarter, compared to a 12 percent surge in the April-June quarter. The contribution to GDP from business inventory restocking was also revised up.
The economy's weak summer performance reflected a big slowdown in consumer spending as a spike in COVID-19 cases from the delta variant caused consumers to grow more cautious and snarled supply chains made items such as new cars hard to get and also contributed to a burst of inflation to levels not seen in three decades.
While COVID cases in recent weeks have started to rise again in many parts of the country, economists do not think the latest increase will be enough to dampen consumer spending, which accounts for 70% of economic activity.
The expectation is that the economy in the current October-December quarter could grow at the strongest pace this year, with some economists forecast GDP could surge to an 8 percent rate in the last three months of the year.
"After experiencing one of the most severe economic shocks of the past century in 2020, the U.S. economy has displayed one of the most rapid recoveries in modern history in 2021," wrote Gregory Daco, chief U.S. economist for Oxford Economics, who predicted GDP in the current quarter will grow 5.6 percent.
US jobless claims hit 52-year low
WASHINGTON — The number of Americans applying for unemployment benefits plummeted last week to the lowest level in more than half a century, another sign that the U.S. job market is rebounding rapidly from last year's coronavirus recession.
Jobless claims dropped by 71,000 to 199,000, the lowest since mid-November 1969. But seasonal adjustments around the Thanksgiving holiday contributed significantly to the bigger-than-expected drop. Unadjusted, claims actually ticked up by more than 18,000 to nearly 259,000.
The four-week average of claims, which smooths out weekly ups and downs, also dropped — by 21,000 to just over 252,000, the lowest since mid-March 2020 when the pandemic slammed the economy.
Since topping 900,000 in early January, the applications have fallen steadily toward and now fallen below their prepandemic level of around 220,000 a week. Claims for jobless aid are a proxy for layoffs.
About 2 million Americans were collecting traditional unemployment checks the week that ended Nov. 13, down slightly from the week before.
"Overall, expect continued volatility in the headline figures, but the trend remains very slowly lower," Contingent Macro Advisors wrote in a research note.
Ga. seeks $3M in ship pollution case
ATLANTA — Environmental regulators are proposing a $3 million fine for the Hyundai Glovis Co. logistics and shipping firm after a cargo ship carrying vehicles capsized and polluted ocean waters off the Georgia coast.
In an order posted Nov. 23, the state's Environmental Protection Division said that pollutants, petroleum products and debris from the South Korean freighter Golden Ray were discharged into the water.
The ship capsized on Sept. 8, 2019, shortly after departing the Port of Brunswick. But oil leaks continued several months later as workers cut the boat into chunks for removal from the ocean.
Last summer, oil gushed from the wreckage and washed onto the beaches and marsh grasses of St. Simons Island, a popular tourist area.
The South Korea-based firm will have a year to either pay the penalty or submit a plan for a proposed "supplemental environmental project" and obtain a reduced penalty, the agency said. Company representatives did not immediately return messages seeking comment.
Deere profit up 69% despite snarls
CHICAGO — Deere & Co. said its fiscal fourth-quarter profit jumped 69 percent to $1.28 billion on strong sales of its agricultural and construction equipment despite a monthlong strike that began near the end of the period as well as ongoing supply chain problems.
The results topped Wall Street expectations.
The agricultural equipment manufacturer said its revenue grew 16 percent to $11.33 billion in the period. Its adjusted revenue was $10.28 billion, which missed forecasts.
"Our results reflect strong end-market demand and our ability to continue serving customers while managing supply-chain issues and conducting contract negotiations with our largest union," Deere CEO John May said.
More than 10,000 Deere workers were on strike at plants in Iowa, Illinois and Kansas from mid-October until last week when the United Auto Workers union accepted the company's third offer that included 10 percent immediate raises and an $8,500 ratification bonus.
Deere estimated the new contract will increase its pretax costs by up to $300 million a year, but that won't put a significant dent in its profits.
Mortgage rates slightly mixed for week
WASHINGTON — U.S. mortgage rates were mixed this week.
The average rate on the benchmark 30-year, fixed rate home loan was unchanged from last week at 3.1 percent A year ago, it stood at 2.72 percent.
Fifteen-year, fixed rate mortgage rates blipped up to 2.42 percent from 2.39 percent last week. It was 2.28 percent a year ago.
The U.S. housing market has been hot, helped by low borrowing costs, a limited supply of available homes and pent-up demand.
Many economists expect interest rates to rise in coming months as the Federal Reserve moves away from the easy money policies it adopted last year when the coronavirus slammed the U.S. economy.
"Looking ahead, homebuyers can expect a continued gradual rise in mortgage rates punctuated by occasional dips," said Danielle Hale, chief economist at Realtor.com.
JPMorgan CEO regrets joke about China
NEW YORK — JPMorgan Chase CEO Jamie Dimon said Nov. 24 that "he truly regrets" a quip he made this week about JPMorgan outlasting the Chinese Communist Party.
Dimon was speaking at an event in Boston where he said, "I was just in Hong Kong and I made a joke that the Communist Party is celebrating its 100th year. So is JPMorgan."
"I'd make you a bet we last longer," he said, adding that he couldn't likely make those comments in China itself.
Many large U.S. banks have operations in China, and their ability to do business there and how successful they are is often at the whim of the Chinese government.
Dimon traveled to Hong Kong just last week as part of a tour of JPMorgan's operation in Asia, his first trip there since the pandemic. Dimon got a special Hong Kong government waiver to COVID-19 quarantine protocols as part of his trip.
A JPMorgan spokeswoman said that the bank remains committed to doing business in China.
Dimon is known for speaking his mind, with few filters in between. But he said he regretted the comments he made about China.
"It's never right to joke about or denigrate any group of people, whether it's a country, its leadership, or any part of a society and culture," he said in a statement.
"I was trying to emphasize the strength and longevity of our company," he added in a separate statement.
German businesses still feeling dour
BERLIN — German business confidence has dropped for the fifth consecutive month amid persistent supply-chain bottlenecks and a resurgence of coronavirus infections in Europe's biggest economy, a closely watched survey showed Wednesday.
The Ifo institute said its monthly confidence index dropped to 96.5 in November from 97.7 last month. Companies' assessment of both their current situation and their outlook for the next six months worsened. It was the lowest figure since February.
"Supply bottlenecks and the fourth wave of the coronavirus are challenging German companies," Ifo said in a statement. It said that while manufacturers' future outlook brightened somewhat, that of firms in the service sector deteriorated, with the steep rise in COVID-19 infections to a string of new records leading to a plunge in expectations in the tourism and hospitality industries.
The Ifo survey is based on responses from about 9,000 companies in various business sectors in Germany, which is one of South Carolina's largest global trading partners.