Marketbites: Ford's Historically Bad Day
Updated: Sep 27, 2022
Portfolio Manager Commentary:
The major indices all closed about 1% lower Tuesday as yields rose ahead of the Fed's interest rate decision today. The Fed is expected to announce a 75 basis points rate hike, while a 100 basis points increase is still not out of the question. The S&P dropped 1.13%, the Nasdaq fell 0.95%, and the Dow lost 1.01%. Yields continued to see new highs as the 2-year treasury note jumped as high as 3.99%, a level not seen since 2007.
Ford shares slumped 12.32% after announcing supply chain issues would cost an extra $1 billion in the third quarter. Ford said their supply chain issues have affected roughly 40,000 to 45,000 vehicles, mainly the trucks and SUVs that carry high margins. The decline marked the Detroit automaker's worst single trading session since 2011.
August housing starts data, released yesterday, showed a surprising jump. At the same time, building permits saw their biggest decline since April 2020.
Chart of the Day:
The easing inflation in August (8.3% CPI) was due to prices declining for items such as gasoline, airfares, and used cars. In other areas, like groceries, prices have seen increases at a slower rate. However, housing was an outlier, with shelter costs rising at an accelerating pace. Housing price increases were large enough to reflect 25% of August’s rate.