The daily business briefing: October 27, 2022
Meta shares plunge after quarterly revenue drops, mortgage rates rise above 7 percent, and more
Meta shares plunge as revenue drops
Meta shares fell 19 percent in after-hours trading after the Facebook and Instagram parent company reported Wednesday that its quarterly revenue dropped 4 percent compared to a year earlier. Meta's revenue of $27.7 billion was in line with analysts' predictions, although earnings fell short of expectations. Meta said the decline came as companies cut back on digital advertising amid high inflation, a trend reflected in disappointing earnings from Google parent company Alphabet and software maker Microsoft a day earlier. Another reason for the ad slump was a new privacy rule by Apple requiring apps to ask user permission to track their data, making it harder to target users with personalized ads.
Mortgage rates rise above 7 percent for 1st time in decades
A popular U.S. mortgage rates surged to 7.16 percent last week, the first time the 30-year fixed-rate loan has risen above 7 percent in more than 20 years, according to Mortgage Bankers Association data released Wednesday. The 22-basis-point jump was the 10th straight weekly increase for the 30-year mortgage. With loan costs rising and housing prices still high, applications to buy or refinance a home fell by 1.7 percent to their lowest point since 1997, the mortgage association's data showed. The housing market has been struggling as the Federal Reserve pushes up rates to cool the economy and fight high inflation. Data released Tuesday showed that home prices fell 1.3 percent in August from July, the biggest month-to-month decline since March 2009.
Mercedes-Benz becomes latest company to exit Russia
German luxury car maker Mercedes-Benz on Wednesday became the latest Western company to commit to pulling out of Russia following Moscow's invasion of Ukraine. A Mercedes spokesperson told CBS News the company intends "to withdraw from the Russian market and to sell its shares in its subsidiaries to a local investor," which Forbes identified as Russian auto dealership chain Avtodom. Mercedes-Benz stopped manufacturing vehicles in Russia in March, shortly after Russian troops invaded Ukraine, but was one of a few car companies that continued selling vehicles there. Ford said it, too, had completed its Russia exit by selling its 49 percent stake in the Sollers Ford Joint Venture, with an option to buy the shares back within five years if the situation changes.
U.S. stock futures mixed after disappointing tech earnings
U.S. stock futures were mixed early Thursday as investors reacted to disappointing tech earnings. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.3 percent and 0.1 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were down 0.4 percent following a worse-than-expected earnings forecast from Facebook parent company Meta that sent the company's shares plummeting. The tech-heavy Nasdaq fell 2 percent on Wednesday after disappointing quarterly results from Google parent company Alphabet and software giant Microsoft. The S&P 500 fell 0.7 percent and the Dow was flat. Investors "want clarity" about how economic headwinds are affecting earnings, and how high the Federal Reserve will raise interest rates to fight inflation, said Adam Sarhan, CEO of 50 Park Investments.
Clorox recalls 37 million bottles of Pine-Sol
Cleaning product company Clorox has voluntarily recalled about 37 million bottles of scented Pine-Sol disinfectant due to a potentially harmful bacteria, the Consumer Product Safety Commission said Wednesday. No injuries have been reported. The company said it issued the recall out of an "abundance of caution." The affected products may contain a bacteria known as "Pseudomonas aeruginosa," which poses a danger to immunocompromised individuals and those with external medical devices. It is not a risk to most people, according to The New York Times. The eight recalled varieties include: Pine-Sol scented multi-surface cleaners (lavender clean, sparkling wave, and lemon fresh scents), CloroxPro Pine-Sol all-purpose cleaners (lavender clean, sparkling wave, lemon fresh, and orange energy scents), and Clorox Professional Pine-Sol lemon fresh cleaner.