Amid an essential week of earnings reports, Federal Reserve Chairman Jerome Powell headed a press conference yesterday that addressed the state of the economic recovery. What did Fed officials have to say?
From the tech sector, Facebook (FB) reported quarterly earnings Wednesday that handily beat expectations, despite recent pressure. What could this mean for investors and the future of FB?
Ford Motor (F) was also a noteworthy market mover yesterday. Although its revenue came in a bit shy of projections, it reported a much welcome second-quarter profit and a positive outlook for the rest of the year. What does this mean for the automaker and its investors?
Get the necessary details on these eventful stories from Wall Street and the Federal Reserve in the full article below.
Although Facebook’s earnings report exceeded forecasts, the corporation warns of a substantial slowdown in growth.
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The business of Facebook is booming, but the good times may not continue. Facebook (FB) reported revenue of over $29.1 billion for the three months ending June 30th, up 56% from the same time last year, when online advertising was hammered by the pandemic and companies struggled. In addition, FB‘s quarterly earnings leaped to over $10.4 billion, well above analysts’ expectations of $8.7 billion. However, CFO David Wehner warned in a statement with the earnings announcement that the forecast for the rest of 2021 may not be so bright.
Wehner cautioned that “regulatory and platform changes” might hinder sales growth, citing Apple’s latest app monitoring regulations as an example. These adjustments, which took effect in April, would have a more significant impact on FB‘s operations in the third quarter than in the second. Following the announcement, Facebook’s shares dropped roughly 4% in the after-hours trade. FB is also being scrutinized by regulators. House legislators proposed a slew of new antitrust bills last month targeting the firm and other internet behemoths.
Economists are still mostly giving FB’s stock a buy recommendation, and CEO Mark Zuckerberg has an interestingly positive outlook for the business. On a conference call with investors Wednesday, Zuckerberg lauded the company’s achievements in important areas like creators and e-commerce. He was also teasing a new area of concentration that he believes would transform Facebook. He said, “In the coming years, I expect people will transition from seeing us primarily as a social media company to seeing us as a metaverse company.” In the so-called “metaverse,” individuals would be able to engage in 3D virtual worlds through the internet. According to Zuckerberg, the business is investing in building new hardware and software experiences for metaverse users. The metaverse, however, according to Zuckerberg, may take some time to pay off for Facebook.
The Fed believes the pandemic won’t derail the U.S. economic recovery. Normal may still be a long way off, however.
Inflation and employment in the United States were the topics of discussion among Federal Reserve policymakers on Wednesday. The central bank determined that interest rates will not be raised from near zero, nor will the speed at which government bonds are purchased each month be altered. As pandemic-related worries still loom, investors are paying particular attention to how Chairman Jerome Powell portrays the economic picture.
During a press conference, Powell stated that the US economy is still a long way from achieving “substantial further progress” toward the Federal Reserve’s dual goals of price stability and maximum employment. He went on to state, “I’d say we have some ground to cover on the labor market side,” and “I think we’re some way away from having had substantial further progress toward the maximum employment goal.” The central bank also stated that “the economy’s path continues to be determined by the virus’s course.” While immunizations assist in limiting the virus’s impact on the economy, the risk to the economy’s future persists.
Despite the problematic chip shortage, Ford (F) reports an unexpected profit and an excellent outlook for the rest of 2021.
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After reporting a surprising profit in its second-quarter earnings report, Ford Motors (F) lifted its earnings outlook for the year, citing increased demand for profitable new vehicles such as the Ford Bronco SUV. Due to the ongoing global shortage of semiconductor chips, which continues to hamper the automaker’s manufacturing, revenue fell slightly short of forecasts. Ford said on Wednesday that crucial part supplies are improving but that it was down in production by 700,000 cars in the second quarter.
F’s adjusted EPS came in at 13 cents per share, compared to the loss of 3 cents per share projected by polled analysts. Auto revenue was slightly down to $24.13 billion vs. $24.25 billion expected. However, the company is looking forward with optimism. F increased its full-year adjusted pretax earnings forecast by roughly $3.5 billion, to somewhere between $9 billion and $10 billion. According to Ford, sales volume is projected to grow by approximately 30% from the first to the second half of the year, owing to improved market conditions.
The results were per Ford’s most recent guidance. The business had previously stated that its adjusted pretax earnings for the second quarter would exceed forecasts and be “significantly better than a year earlier.” Still, net income would be “substantially lower” than in the prior year’s period. Wall Street analysts will be anticipating upcoming news on CEO Jim Farley’s “Ford+ turnaround” plan, the semiconductor chip scarcity, and new product introductions in addition to Ford’s results and any changes to projections. F‘s stock has more than doubled since Jim Farley took over as CEO in October, with a more than 50% increase so far this year.
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