The daily business briefing: February 1, 2023
Exxon reports record profit, wages increased at a slower pace in the fourth quarter of 2022, and more
Exxon Mobil reports record annual profit
Exxon Mobil on Tuesday reported a record $55.7 billion in annual profit in 2022. Among corporations that have reported fourth quarter results so far, only Apple and Microsoft have raked in more, according to The Wall Street Journal. Exxon and other oil companies got a boost from surging oil and gasoline prices last year, after Russia's invasion of Ukraine disrupted the market, and the reopening of businesses in China boosted demand. Exxon posted its first annual loss in four decades in 2020, losing more than $22 billion when the oil market plummeted early in the coronavirus pandemic. The White House said it was "outrageous" for Exxon to post such massive profits in 2022, after Americans had to "pay such high prices at the pump."
Wages increased by 1 percent in 4th quarter
Employers raised wages in the fourth quarter by 1 percent in December, slightly below the 1.1 percent economists had expected, CNN reported Tuesday. Wages were up by 5.1 percent for the year ending in December. The hikes came as companies continued to push to recruit and retain staff in a tight labor market, although the raises marked a slowdown from the previous quarter's 1.3 percent increase. The slowdown is unlikely to change the Federal Reserve's decision Wednesday on continuing its campaign to raise interest rates to fight high inflation, which drives up wages. Labor costs are still increasing about a percentage point above the level that would "be consistent with the Fed's 2 percent inflation target," CNN reported, citing Wells Fargo.
McDonald's gets sales boost from inflation-burdened diners
McDonald's on Tuesday reported that its sales increased in the fourth quarter of 2022, boosted by high menu prices and demand for what customers call "adult Happy Meals." McDonald's posted net income of $1.9 billion, up 16 percent from the same period a year earlier. Adjusted earnings per share came in at $2.59, beating the $2.45 forecast by analysts polled by FactSet. Along with higher menu prices and the Cactus Plant Flea Market Box (popularly known as the "adult Happy Meal"), the limited-time McRib promotion helped drive up profit, the fast-food chain said. McDonald's executives warned that inflation could hurt the company's bottom line in 2023, although it helped spur a traffic increase in 2022 as many diners visited fast food restaurants instead full-service restaurants.
Adani share sale goes through despite short-seller fraud allegations
A $2.5 billion share sale by India's Adani Group went off as planned Tuesday and was fully subscribed, despite a report last week by short-seller Hindenburg Research that accused the conglomerate of stock manipulation and fraud. The Hindenburg report caused the conglomerate's shares to plummet, but the Tuesday share sale by its flagship Adani Enterprises drew nearly 51 million bids for the 45.5 million shares offered to the public, The Associated Press reported, citing the Bombay Stock Exchange. The share sale was considered a key test of investor confidence in Adani after it lost tens of billions in value, causing its chair, Gautam Adani, to drop from the world's third richest person to the 11th on Bloomberg's Billionaire Index.
Stock futures slip ahead of Fed decision
U.S. stock index futures fell slightly early Wednesday ahead of the Federal Reserve's decision on its next interest-rate hike. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.4 percent and 0.3 percent, respectively, at 6:45 a.m. ET. Nasdaq futures were down 0.2 percent. The Fed is expected to announce at 2 p.m., after a two-day policy meeting, that it will raise its benchmark short-term interest rate by a quarter point, or 0.25 percent, marking a slowdown in its aggressive campaign to raise rates to cool the economy and fight high inflation. The latest data has shown that inflation is coming down, but analysts note that it remains far higher than the central bank's 2 percent target.