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Meta/Facebook is the worst company of the year: Yahoo Finance readers

Meta/Facebook is the worst company of the year: Yahoo Finance readers

Each individual December, Yahoo Finance selects a Enterprise of the Calendar year, based on its market place effectiveness and its achievements that individual 12 months. In 2021, Microsoft (MSFT) took dwelling the crown, smashing via the $2 trillion market place capitalization mark and seeing a 53{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} surge in its stock price as of Dec. 16, yr-to-day.

Nevertheless, the spirit of Festivus has taught us we can master just as substantially from the negative as the excellent by airing our grievances. That’s why Yahoo Finance also selects a Worst Business of the Calendar year, polling our viewers as to which corporation upset them the most.

Our survey’s 1,541 respondents have been mad about a great deal this yr, from the Robinhood (HOOD) buying and selling freezes very last winter season to electric truck startup Nikola continue to not possessing its act collectively. But a person enterprise irked them the most — Facebook (FB). The survey’s results lose extra light-weight on why the business resolved to rebrand this year to a new name: Meta Platforms.

The open-ended study was posted on Yahoo Finance on Dec. 4 and Dec. 5, and dozens of names had been submitted. Fb received 8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of the publish-in vote.

Facebook has experienced its share of controversies this yr. It’s been under the antitrust microscope and confronted a flurry of allegations from a whistleblower claiming Fb dismissed protection problems for the sake of expansion. Congress is continuously demanding answers from the organization on each fronts. At the identical time, some critics, like conservatives, say Facebook above-policed the platform’s speech and stifled their voices. Other critics, which includes those people on the still left aspect of the aisle, declare Fb enables the unfold of misinformation.

US whistleblower and former Facebook engineer Frances Haugen gives a testimony on the negative impact of big tech companies products on users, at the European Parliament in Brussels, on November 8, 2021. - Facebook whistleblower Frances Haugen urged the EU to remain steadfast against big tech on November 8, boosting European efforts for new laws against US giants. The former Facebook engineer leaked a trove of internal documents that have sparked weeks of criticism of the social media giant. She met with key lawmakers in Brussels responsible for pushing through major legislation that could force the world's biggest tech firms to rethink the way they do business. (Photo by JOHN THYS / AFP) (Photo by JOHN THYS/AFP via Getty Images)

US whistleblower and previous Facebook engineer Frances Haugen offers a testimony on the unfavorable effect of significant tech organizations items on users, at the European Parliament in Brussels, on November 8, 2021.(Photograph by JOHN THYS / AFP) (Image by JOHN THYS/AFP via Getty Photographs)

What is in particular appealing about the Organization Previously Recognised as Fb is just how quite a few and diversified the motives persons dislike it. It acquired 50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} a lot more votes than the second-position finisher, Chinese e-commerce huge Alibaba, not for 1 singular offense but for a litany of grievances from teams of individuals that might have very little else to agree about.

There were considerable issues of censorship, predominantly of the appropriate and conservative voices that felt that the “free-speech police” was getting unfair and they had been owed the correct to say whichever they needed to on the platform.

On the other facet, individuals hectored the platform for failing to law enforcement sizeable misinformation that in the perspective of critics contributed to individuals not getting the pandemic’s possible for loss of life very seriously (797,877 official deaths in the U.S. and counting). Fb was also blamed for the rise of far-right extremism and “undermining democracy globally,” as one particular respondent put it.

Outdoors of the political discussion, quite a few respondents were upset with the company’s outcomes on little ones and young persons, citing its picture-sharing web-site Instagram and its consequences on mental well being, immediately after inside paperwork disclosed the corporation realized Instagram designed teenage ladies experience worse about physique image problems but didn’t handle the problem.

Fb/Meta Platforms did not respond to a ask for for comment.

Can the organization redeem itself?

Around 30{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of Yahoo Finance audience who responded to the survey reported that Facebook or Meta could redeem by itself.

A single respondent claimed Facebook could redeem by itself by acknowledging and apologizing for what it did and donating a “sizable quantity” of its profits for a foundation to assistance reverse its harm. Though some men and women noticed the Meta rebrand as a cynical attempt to improve the conversation, subsequent Don Draper’s information in scandal, other people were being energized by the probable of a new path that could a) be appealing and b) some thing different from the getting older social media product.

A sizeable volume of responses centered on executives and founder and CEO Mark Zuckerberg. Zuckerberg has certainly hardly ever been Mr. Well-known, which Aaron Sorkin and David Fincher decided was the reason he established “The Fb,” in the movie “The Social Network.” But he has lengthy been found as a visionary with an uncanny knack at predicting (or manifesting) the future, making it unlikely he departs from the business he launched, shaped, and pivoted.

A person way it could redeem itself, for the offended traders in the study, would be to mature its inventory rate, evidently. The inventory is up 22{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} year-to-day — robust, but lagging the S&P 500— but down about 13{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} from its September substantial.

Zuckerberg and co. have their problems minimize out for them in 2022. Fortunately for them, they’re currently reinventing the corporation.

The (dis)honorable mentions

The yearly airing of grievances noticed a number of organizations get distinctive point out from Yahoo Finance viewers.

  • Alibaba’s (BABA) virtually 50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} drop year-to-day attained it the number two spot. Buyers are upset at owning lost income.

  • AT&T’s (T) loss of 24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} yr-to-day as the S&P 500 observed a 24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} improve. Like Alibaba, this is a story of share value dissatisfaction.

  • Nikola (NKLA) and its a lot of concerns past yr, with a small seller declaring it was a fraud.

  • Tesla (TSLA) stock has soared, but people are furious with the business rolling out solutions prior to they are prepared, sexual harrassment scandals, and the basic cult of temperament bordering 2021’s Time Particular person of the Year.

  • Sector-maker Citadel Securities and retail trading platform Robinhood (HOOD) experienced their time in the doghouse all through the Gamestock hubbub nearly a year back, and quite a few have not forgotten — and carry on to see these gamers as icing out standard retail investors they purport to help.

This was an open-ended study performed on Study Monkey via the Yahoo Finance home page from Dec. 4 to Dec,. 5. 1,541 persons responded.

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Ethan Wolff-Mann is a Senior Author and Main of Employees at Yahoo Finance. When he is reporting, he focuses on investing, purchaser problems, and particular finance. Observe him on Twitter @ewolffmann.

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Stock futures steady after sell-off in tech shares

Stock futures steady after sell-off in tech shares

Stock futures opened slightly higher Thursday evening after a rout in technology stocks earlier during the regular trading day, as investors turned away from growth stocks in anticipation of tighter monetary policy next year.

Contracts on the S&P 500 ticked up. Earlier, the index closed lower, with the tech-heavy information technology and consumer discretionary sectors leading the way lower. The Nasdaq underperformed to drop 2.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to give back all gain after a rally on Wednesday. The Dow ended just slightly in the red. 

Shares of FedEx (FDX) jumped in late trading after the shipping giant raised its full-year earnings forecast, delivered better-than-expected fiscal second-quarter results and authorized a new $5 billion stock buyback program. Rivian (RIVN), meanwhile, saw shares sink during the after-hours session following its first quarterly report since its IPO last month. The electric-vehicle maker said in its shareholder letter it expected to be “a few hundred vehicles short” of its prior target of producing 1,200 units by the end of this year. 

Investors’ main focus this week has remained fixed on the Federal Reserve’s updated outlook on monetary policy for next year, with the central bank’s projections delivered mid-week suggesting the Fed could hike interest rates three times next year.

The specter of higher rates – and a lower-liquidity environment as the central bank also speeds up the tapering process of its asset purchases — has continued to weigh heavily on longer-duration technology and growth stocks valued heavily on future earnings potential. Even with Wednesday’s bounce, the Nasdaq Composite was off 5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} over the past month. And shares of some notable technology stocks sank deeply on Thursday, with Apple (AAPL) shares dropping by nearly 4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, and Adobe’s (ADBE) stock sliding by more than 10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, after the software giant delivered a full-year sales forecast that suggested slowing growth for its services during the reopening.

On the other hand, cyclical stocks in the energy and financials sectors outperformed on Thursday, with the prospects of higher interest rates and stronger growth seen as benefitting these sectors. 

“The thing investors have to understand is, we’re going through a major transition in monetary policy,” Troy Gayeski, FS Investments chief market strategist, told Yahoo Finance Live on Thursday. “The Fed has been running emergency policies arguably far longer than they should have been, and as that money supply growth slows down as they ease off the balance sheet expansion and ultimately hike next year, one would at least expect more volatility in markets. And that’s really what we’ve been seeing the last month.” 

“The biggest difference between now and six months ago, or even more a year ago, is you could pretty much go long anything and you were confident it was going to go up. The economy was booming, we had a lot of fiscal stimulus, we still had unprecedented monetary policy stimulus,” he added. “And it’s a very different environment in 2022 where you’re going to have to pick and choose much more carefully.” 

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6:01 p.m. ET Thursday: Stock futures steady after tech sell-off

Here were the main moves in markets as the overnight session kicked off on Thursday: 

  • S&P 500 futures (ES=F): +5.25 points (+0.11{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,674.00

  • Dow futures (YM=F): +52 points (+0.14{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,954.00

  • Nasdaq futures (NQ=F): +6 points (+0.04{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,876.50

NEW YORK, NEW YORK - DECEMBER 13: Traders work on the floor of the New York Stock Exchange (NYSE) on December 13, 2021 in New York City. As investors are still concerned about rising prices due to inflation, the Dow Jones Industrial Average dropped 175 points in Monday morning trading. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – DECEMBER 13: Traders work on the floor of the New York Stock Exchange (NYSE) on December 13, 2021 in New York City. As investors are still concerned about rising prices due to inflation, the Dow Jones Industrial Average dropped 175 points in Monday morning trading. (Photo by Spencer Platt/Getty Images)

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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Stock market news live updates: Tech stocks lead indexes higher following Fed decision: S&P 500 gains 1.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Stock market news live updates: Tech stocks lead indexes higher following Fed decision: S&P 500 gains 1.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Stocks ended sharply higher Wednesday afternoon as investors mulled the Federal Reserve’s final monetary policy decision of 2021, which came against a backdrop of persistent inflationary pressures. 

The S&P 500 and Dow turned positive after spending much of the trading day earlier in the red. The Nasdaq outperformed to add more than 2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. Bond yields rose, and the benchmark 10-year Treasury yield added more than 3 basis points to rise rise above 1.47{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} immediately following the Fed’s 2 p.m. monetary policy decision.

All eyes on Wednesday were on the Federal Reserve’s monetary policy statement. In this, the Fed announced it was speeding the withdrawal of its crisis-era stimulus programs. The Fed ramped up the rate of tapering of its asset purchasing program to $30 billion per month. 

Previously, the Fed’s asset purchasing program took place at a rate of $120 billion per month in combined Treasuries and agency mortgage-backed securities from the start of the pandemic through November. Last month, the Fed began dialing back these purchases by $15 billion, and announced another $15 billion reduction for December.

The Federal Reserve’s updated Summary of Economic Projections, or so-called “dot plot,” also showed the likelihood of several interest rate hikes next year. The updated projections showed the median member of the Federal Open Market Committee expected three rate hikes in 2022, followed by as many as four hikes in 2023 and as many as two in 2024. This charted out a quicker cadence of rate hikes than projected in the Fed’s September dot plot. 

The firming economic recovery and soaring inflation has given the central bank room for a more hawkish tilt to policy. Last week’s Consumer Price Index showed the fastest surge in U.S. consumer prices since 1982 on a year-over-year basis in November. And on Tuesday, the U.S. Producer Price Index jumped by the most on record at a 9.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} year-over-year increase for last month. 

The Federal Reserve’s latest statement suggested officials were taking note of the rising prices.

“Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation,” according to the statement.

A number of strategists noted the trading activity in recent sessions and weeks reflected the market already pricing in a more hawkish Fed. Software and other growth names were some of the biggest laggards in the major indexes during Tuesday’s session, and the Nasdaq dropped more than 1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} during the trading day.

“When you have an anticipation of higher interest rates, growth stocks or long-duration growth stocks certainly get hit the hardest,” Art Hogan, national chief market strategist, told Yahoo Finance Live on Tuesday. “When you do that net present value calculation with a higher interest rate, that implied multiple or ascribed multiple to growth names comes in. So a lot of that’s been priced in. When you think about some of those real growth-y names and momentum names and risk assets, they’ve seen a lot of carnage.”

“What the market is trying to tell us here is that when you set your asset allocation plan for next year, you want to have a barbell approach with growth on one side — you want to have those growth names that are actually valued at a multiple to earnings, not a multiple to revenues or a multiple to cash flows or a multiple to sales,” he added. “We anticipate 2022 is going to be very much like 2021, where you really want to have a balance between growth and value.”

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4:03 p.m. ET: Tech stocks lead indexes higher following Fed decision: S&P 500 gains 1.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, Dow adds 383 points, or 1.1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

Here were the main moves in markets as of 4:03 p.m. ET:

  • S&P 500 (^GSPC): +75.77 (+1.64{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,709.86

  • Dow (^DJI): +383.38 (+1.08{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,927.56

  • Nasdaq (^IXIC): +327.94 (+2.15{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,565.58

  • Crude (CL=F): +$0.86 (+1.22{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $71.59 a barrel

  • Gold (GC=F): +$7.10 (+0.40{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,779.40 per ounce

  • 10-year Treasury (^TNX): +2.5 bps to yield 1.4630{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

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2:13 p.m. ET: Stocks trade higher as investors consider Fed decision 

Here’s a snapshot of how markets were trading Wednesday afternoon following the Federal Reserve’s latest monetary policy statement and projection materials. 

  • S&P 500 (^GSPC): +21.61 (+0.47{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,655.70

  • Dow (^DJI): +142.76 (+0.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,686.94

  • Nasdaq (^IXIC): +58.47 (+0.38{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,295.27

  • Crude (CL=F): -$0.25 (-0.35{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $70.48 a barrel

  • Gold (GC=F): -$10.00 (-0.56{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,762.30 per ounce

  • 10-year Treasury (^TNX): +2.3 bps to yield 1.462{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

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11:51 a.m. ET: Pfizer shares set record high as company awaits COVID-19 pill authorization 

Shares of Pfizer (PFE) jumped to a fresh record intraday high on Wednesday amid optimism over the company’s COVID-19 pill, called Paxlovid. President Joe Biden said Tuesday that the White House had ordered enough of the antiviral pills to treat 10 million Americans, and that he was “encouraged by the promising data” that the drug-maker released on the pill. Pfizer’s data showed earlier this week that the drug decreased the risk of hospitalization or death by 89{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for high-risk adults. 

Pfizer’s stock was up more than 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to trade above $57 per share Wednesday afternoon, and paced toward a fifth straight day of gains. The stock has risen 56{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for the year-to-date. 

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11:10 a.m. ET: Amazon Web Services sees connectivity issues, impacting Twitch, other platforms

Amazon’s web hosting platform Amazon Web Services (AWS) experienced connectivity issues Wednesday morning, triggering outages at platforms from Zoom Video Communications to Amazon-owned Twitch and other online services. 

As of 10:42 a.m. ET, more than 20,000 outages were reported on DownDetector. Amazon Web Services said on its status page Wednesday that it was still investigating connection issues in Northern California and Oregon as of late morning Eastern Time. 

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9:30 a.m. ET: Stocks open flat 

Here’s where markets were trading as of 9:30 a.m. ET: 

  • S&P 500 (^GSPC): +4.04 (+0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,638.13

  • Dow (^DJI): +1.87 (+0.01{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,546.05

  • Nasdaq (^IXIC): -5.75 (-0.04{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,919.00

  • Crude (CL=F): -$0.54 (-0.76{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $70.19 a barrel

  • Gold (GC=F): -$1.60 (-0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,770.70 per ounce

  • 10-year Treasury (^TNX): +3.8 bps to yield 1.467{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

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8:30 a.m. ET: Retail sales rose 0.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in November, missing estimates

U.S. retail sales rose at a slower-than-expected rate in November after a jump in October, as electronics and department store retailers’ sales especially dropped during the month. 

Retail sales were up 0.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in November compared to October, the Commerce Department said on Wednesday. This came in below the 0.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} monthly increase consensus economists were expecting, according to Bloomberg-compiled data. In October, retail sales rose 1.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was upwardly revised from the 1.7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} increase previously expected. 

By category, department stores saw one of the biggest sales drops during the month with a decline of 5.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. General merchandise store sales more broadly declined 1.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. Electronics and appliance store sales fell by 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, and health and personal care store sales were down 0.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. 

“I see this more as a sign that Americans started their holiday shopping early, as opposed to bad news for retailers,” Ted Rossman, senior industry analyst at CreditCards.com, wrote in an email Wednesday morning. He noted that on a year-over-year basis, retail sales were still up 18.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. 

“That year-over-year comparison is more significant, and it illustrates robust expansion,” he added. 

—

7:26 a.m. ET Wednesday: Stock futures drift

Here’s where markets were trading ahead of the opening bell on Wednesday: 

  • S&P 500 futures (ES=F): +0.25 points (+0.01{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,637.25

  • Dow futures (YM=F): +12 points (+0.03{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,564.00

  • Nasdaq futures (NQ=F): -11.5 points (-0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,913.25

  • Crude (CL=F): -$0.87 (-1.23{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $69.86 a barrel

  • Gold (GC=F): -$2.00 (-0.11{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,770.30 per ounce

  • 10-year Treasury (^TNX): +0.9 bps to yield 1.448{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

—

6:24 p.m. ET Tuesday: Stock futures edge up ahead of Fed decision

Here were the main moves in markets as the overnight session kicked off on Tuesday: 

  • S&P 500 futures (ES=F): +2.25 points (+0.05{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,639.25

  • Dow futures (YM=F): +25 points (+0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,577.00

  • Nasdaq futures (NQ=F): +12.25 points (+0.08{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,937.00

NEW YORK, NEW YORK - DECEMBER 13: Traders work on the floor of the New York Stock Exchange (NYSE) on December 13, 2021 in New York City. As investors are still concerned about rising prices due to inflation, the Dow Jones Industrial Average dropped 175 points in Monday morning trading. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – DECEMBER 13: Traders work on the floor of the New York Stock Exchange (NYSE) on December 13, 2021 in New York City. As investors are still concerned about rising prices due to inflation, the Dow Jones Industrial Average dropped 175 points in Monday morning trading. (Photo by Spencer Platt/Getty Images)

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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We need to talk about 2023 (yes, already): Morning Brief

We need to talk about 2023 (yes, already): Morning Brief

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Tuesday, December 14, 2021

With taper, rate hikes baked into 2022, the chickens may come home to roost in 2023

Buy the taper, sell the fact?

Stocks, which mostly rallied as Federal Reserve officials dropped hints that crisis-era monetary accommodation is nearing an end, are clearly showing signs of wear.

With the Omicron variant of COVID-19 becoming less of a factor for asset markets, signs are emerging that the Fed’s deliberative moves to pull back on purchasing bonds — and then begin a rate hike campaign sometime next year — are starting to worry investors. Seemingly runaway inflation is making both consumers and policymakers alike nervous, and complicating the Fed’s task of engineering a soft landing for the economy.

On Wednesday, markets will get more clarity about the Fed’s plans to taper bond purchases, and where it sees rates going in 2022. But the Morning Brief is here to give our readers the unvarnished truth, straight no chaser — and as ever, there’s both good and bad news.

Barring unforeseen circumstances, i.e. the appearance of a new variant or a global conflagration, for example, investors can probably relax about what 2022 has in store. 

Famous last words, perhaps, but we know the Fed is all but certain to tighten monetary policy and growth is likely to slow from current levels — but not to such an extent that’ll cause a downturn. Meanwhile, impossibly tight labor conditions will probably keep unemployment low and available jobs high, for most if not all of next year.

According to Sam Stovall, chief investment strategist at CFRA Research, gross domestic product in 2022 “should remain above average not only for the U.S., but also for the globe,” with headline inflation peaking in the first quarter before tumbling by over half by Q4, he wrote on Monday.

Currently, most Wall Street economists expect the Fed to mete out just one to two rate hikes next year, but they may be forced to get more aggressive if inflation stays at current levels. And the picture could easily get more complicated once the calendar flips to January 2023.

A hawkish Fed, bond yields gyrations and a strong dollar have the potential to sow chaos in markets and the economy in 2023. That combination is something strategists at Deutsche Bank referred to as “late-cycle dynamics” that could put downward pressure on prices, but leave a “behind the curve” Fed with “a lot of catching up to do” after a prolonged period of easy money.

In fact, Deutsche’s chief economist Jim Reid noted on Monday that “a common pattern seen across hiking cycles is that growth tends to slow in the year after the hikes have commenced but not the one it takes place in.” The bank’s data found 13 different rate hike cycles in which a recession arrived 3 to 3.5 years later, on average.

Accounting for the lag between growth and changes to monetary policy, “on average, real GDP growth in the first year of the hiking cycle was +4.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, but that slowed to +2.7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in the second year, and +2.1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in the third year,” Reid said.

“Given the earliest that it took for a recession to materialize after a rate hike is 11 months, then statistically it does appear that 2022 has a very low probability of negative growth,” the economist said. “However the probabilities will build from 2023 onwards if history is to be believed.”

That timetable is consistent with a Bank of America forecast. The bank expects 2022 growth to decelerate from the current year, but check in at a still robust 3.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} annualized rate. Yet in 2023, the bank sees a markedly lower GDP print of 2.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, and an even less impressive 2.0{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in 2024, as the wages of the Fed’s rate hike campaign catch up with the economy.

Arguably worse news is that based on Fed “dot plot” projections, the central bank is still expected to hike rates in 2023 and 2024 — part of the catch up work it needs to do to tame prices — even as the economy slows.

By Javier E. David, editor at Yahoo Finance. Follow him at @Teflongeek

Yahoo Finance Highlights

5 giant stocks are driving the S&P 500 to records: Goldman Sachs

‘Misery Index’ at recession-like level despite high growth: Oxford Economics

Why Build Back Better is so unloved

—

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Stock market news live updates: December 14, 2021

Stock market news live updates: December 14, 2021

Stock futures were up on Monday following declines during the earlier trading session for all three major U.S. indexes as investors set their sights on a prolific week in Washington that includes the Federal Reserve’s final policy-setting meeting of 2021 and the release of new prints on retail sales, housing starts and other economic data.

Contracts on the S&P 500 edged higher, turning positive after the blue-chip index retreated from a rally last week that helped the index post its sharpest gains since February. Research from Goldman Sachs showed the S&P 500 is powered by five stocks that have accounted for 51{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of its return since the end of April. Microsoft, Google, Apple, Nvidia and Tesla account for more than one-third of the S&P 500’s 26{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} return this year, according to Goldman.

Futures for the Dow and Nasdaq were also up. 

Traders are awaiting a decision from the Fed on how quickly the central bank will tighten monetary policy amid a backdrop of fresh inflation numbers that reflected the fastest annual increase in nearly four decades. The Labor Department’s Consumer Price Index (CPI) soared 6.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in November compared to last year, according to figures published last week.

The Federal Open Market Committee (FOMC) is scheduled to hold its two-day policy-setting meeting starting on Tuesday, followed by the release of the monetary policy statement and remarks from Federal Reserve Chair Jerome Powell Wednesday. An updated Summary of Economic Projections outlining individual members’ outlooks for economic conditions and interest rates is set to accompany the statement.

The Fed has been under pressure to control rising inflation levels, as investors watch for clues of a faster taper that could set the stage for earlier rate hikes.

“Because inflation expectations do appear to be adaptive, our view is that the longer inflation stays elevated, the greater the risk that consumers adjust their behaviors in a way that contributes to persistently elevated inflation” wrote PIMCO economist Tiffany Wilding in a recent note to clients.

“We believe the Fed will want to manage this risk by shortening the time over which it winds down its purchases of U.S. Treasuries and agency mortgage-backed securities (MBS), aiming to end the program in March 2022, while also signaling a June rate hike is likely,” said Wilding.

PIMCO managing director and portfolio manager Sonali Pier also separately told Yahoo Finance Live that the firm expects to see two hikes in 2022, three hikes in 2023, and potentially four in 2024, with the Fed trying to bring the policy rate to neutral.

“Amid proliferating signs of solid growth and a robust job market, various measures depict a deeply troubled economy,” wrote Oxford Economics senior economist Bob Schwartz in a new report. “Households are downbeat, according to sentiment surveys, and the so-called ‘misery index‘ that adds together inflation and unemployment hovers around recession levels.”

Markets await a trove of fresh economic data this week. November retail sales, out on Wednesday, are expected to rise by 0.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, according to Bloomberg consensus estimates. And November housing starts are forecasted to see a month-over-month increase of 3.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

Meanwhile, Morgan Stanley projects the U.S. unemployment rate will drop to 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in 2022.

“It’s stunning to see how much the rate has fallen in the last five months,” Morgan chief U.S. economist Michael Feroli told Yahoo Finance Live. “We expect that pace of decline to slow, but it doesn’t take much to get below 4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, even with a tick up in the labor participation rate which has been depressed over the last year and a half.”

6:00 p.m. Monday ET: Stock futures edge higher

Here were the main moves in markets in late trading on Monday:

  • S&P 500 futures (ES=F): +5.50 points (0.12{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,674.25

  • Dow futures (YM=F): +46.00 points (0.13{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,691

  • Nasdaq futures (NQ=F): +10.75 points (0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 16,092.75

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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A Quiet Economic Calendar Leaves Omicron News and Sentiment Towards the FED in Focus

A Quiet Economic Calendar Leaves Omicron News and Sentiment Towards the FED in Focus

Tuesday, 14th December

Eurozone Industrial Production (MoM) (Oct)

Wednesday, 15th December

French CPI (MoM) (Nov) Final

French HICP (MoM) (Nov) Final

Spanish CPI (YoY) (Nov) Final

Spanish HICP (YoY) (Nov) Final

Italian CPI (MoM) (Nov) Final

Thursday, 16th December

French Manufacturing PMI (Dec) Prelim

French Services PMI (Dec) Prelim

German Manufacturing PMI (Dec) Prelim

German Services PMI (Dec) Prelim

Eurozone Private Sector PMIs (Dec) Prelim

Eurozone Wages / Trade Data

ECB Policy Decision and Press Conference

Friday, 17th December

German PPI (MoM) (Nov)

German Ifo Business Climate Index (Dec)

Eurozone Inflation (Nov) Final

The Majors

It was a bearish end to the week for the European majors on Friday.

The DAX30 slipped by 0.10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with the CAC40 and EuroStoxx600 ending the day down by 0.24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.30{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

Finalized inflation figures from Germany had a muted impact on the majors, with the markets focused on U.S inflation on the day.

Later in the European session, another pickup in inflationary pressure supported a more hawkish set of interest rate projections next week. What remains unclear, however, is how the FED sees inflation and the new Omicron strain impacting growth.

Away from the economic calendar, news updates from labs across the world remained a key area of interest. While early tests showed that vaccine efficacy was materially lower, there were also indications that the new strain was a milder form.

The Stats

It was a quiet day on the Eurozone economic calendar. Finalized German inflation figures were in focus going into the European open.

In November, German consumer prices fell by 0.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was in line with prelim figures. Consumer prices had risen by 0.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in October.

Germany’s annual rate of inflation accelerated from 4.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 5.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was also in line with prelim figures.

According to Destatis,

  • The inflation rate increased for the 6th time in a row, reaching the highest level recorded in 2021.

  • A higher inflation rate was last recorded in Jun-1992, when the rate of inflation was 5.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

  • Compared with Nov-2020, energy prices were up 22.1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with prices for food up 4.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

  • Excluding energy, Germany’s annual rate of inflation stood at 3.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

  • Prices for services increased by 2.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} compared with the same month a year earlier.

From the U.S

Inflation and consumer sentiment figures were in focus late in the European session.

In November, the U.S core annual rate of inflation picked up from 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 4.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was in line with forecasts. For the month of November, core consumer prices rose by 0.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with consumer prices up 0.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

In spite of the pickup in inflation, consumer sentiment unexpectedly improved in December.

According to prelim figures, the Michigan Consumer Sentiment Index climbed from 67.4 to 70.4 versus a forecasted fall to 67.1. Hopes of a pickup in wage growth amidst rising prices supported improved sentiment.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental rose by 1.10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to buck the trend.

Daimler tumbled by 13.82{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, however, with Volkswagen and BMW ending the day down by 1.00{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.73{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

It was also a mixed day for the banks. Deutsche Bank fell by 0.82{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, while Commerzbank rose by 0.17{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

From the CAC, it was a bearish day for the banks. Soc Gen and Credit Agricole fell by 0.50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.65{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively, with BNP Paribas declining by 1.24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

The French auto sector had a mixed session, however. Stellantis NV rose by 0.26{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, while Renault ended the day down by 0.45{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

Air France-KLM and Airbus SE avoided the red, rising by 0.43{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.08{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

On the VIX Index

It was back into the red for the VIX on Friday, marking a 4th day in the red for the week.

Reversing an 8.44{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} rise on Thursday, the VIX slid by 13.39{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to end the day at 18.69.

The Dow ended the day up by 0.60{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with the NASDAQ and the S&P500 gaining 0.73{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.95{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

The Day Ahead

It’s a quiet day ahead on the Eurozone’s economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.

From the U.S, there are also no stats to consider, leaving the majors in the hands of OPEC’s monthly report and Omicron news updates.

With the FED in action on Wednesday and the ECB in focus on Thursday, it could be a testy start to the week.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 31 points.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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