The daily business briefing: July 1, 2021
Grand jury indicts Trump Organization and its CFO, Ford cuts production due to ongoing semiconductor chip shortage, and more
Grand jury indicts Trump Organization and its CFO
A New York grand jury has indicted the Trump Organization and its chief financial officer, Allen Weisselberg, on tax-related criminal charges, The Wall Street Journal reported Wednesday, citing people familiar with the matter. The charges, expected to be revealed in court Thursday, would mark the first against former President Donald Trump's company since prosecutors three years ago started looking into suspicions that Trump's business undervalued its properties to reduce its taxes. The allegations are not expected to implicate Trump, who has denied wrongdoing and called the investigations by the Manhattan prosecutor and the state attorney general, both Democrats, politically motivated. He said earlier this week the case involved "things that are standard practice throughout the U.S. business community, and in no way a crime."
Ford cuts July production due to semiconductor shortage
Ford Motor said Wednesday it would reduce vehicle production at eight North American plants in July because of an ongoing semiconductor chip shortage. "The global semiconductor shortage continues to affect global automakers and other industries in all parts of the world," John Savona, Ford vice president of manufacturing and labor affairs, wrote in a letter to employees. The cuts will affect vehicles including F-150 pickups, Bronco Sports, Mustangs, and Explorers. Earlier this year Ford said it expected the chip issue to cut its second quarter vehicle production by about 50 percent, contributing to a loss of $2.5 billion in earnings this year.
Pending home sales jump unexpectedly in May
The National Association of Realtors' index of pending home sales jumped by 8 percent in May, marking an unexpected rebound after a months-long slowdown in the pandemic-era housing market boom. The index came in at 114.7 in May, the highest level for the month since 2005 and an increase from 106.2 in April. Demand remains strong, but many potential buyers have dropped out because of a shortage of properties for sale. Strong demand and limited supply have combined to send the median price of a new home sold in May to $374,400, an increase of 18.1 percent over a year ago. The median sale price of an existing home surpassed $350,000 in May, a record high.
Stock futures rise after S&P 500 finishes 1st half of 2021 with record
U.S. stock futures rose early Thursday after the main U.S. indexes closed out the first half of the year with double-digit gains. Futures for the Dow Jones Industrial Average and the S&P 500 were up by 0.1 percent several hours before the opening bell. Futures tied to the Nasdaq were down by 0.1 percent. The Dow and the S&P 500 closed up by 0.6 percent and 0.1 percent, respectively, on Wednesday. The tech-heavy Nasdaq fell by 0.2 percent as Facebook, Amazon, Netflix, and Google-parent Alphabet all fell. As the second half of the year kicks off, the Dow is up 12.7 percent on the year. The S&P 500, which reached its 34th all-time high of the year on Wednesday, gained 14.4 percent in the first half. The Nasdaq rose by 12.5 percent.
Lumber prices fall 40 percent in June
Lumber prices plunged by more than 40 percent in June after an unprecedented springtime surge. The June decline was the biggest on record. Lumber prices peaked with a record-high close on May 7 at $1,670.50 per thousand board feet, six times higher than their pandemic-era low in April 2020. The piercing of the 2021 lumber bubble came as coronavirus restrictions eased and the economy reopened, making it possible for more Americans to head out on summer vacations rather than stay home and spend on home-improvement projects. "This drop suggests that the cause of that inflation — the mismatch of supply and demand — will not last forever," said Brad McMillan, CIO at Commonwealth Financial Network. "As suppliers across industries get their acts together, those shortages will fade, along with the inflation."