The daily business briefing: October 26, 2023

The UAW and Ford reach a tentative deal on ending strike, the Nasdaq falls into correction territory, and more

UAW reaches deal with Ford
UAW reaches tentative deal with Ford
(Image credit: Scott Olson / Getty Images)

1. UAW reaches tentative deal with Ford to end strike

The United Auto Workers reached a tentative deal with Ford on Wednesday night to end the union's targeted six-week strike against the automaker, although it was still negotiating with General Motors and Chrysler-owner Stellantis. The agreement, which must still be ratified by union members, includes a 25% wage hike over the course of a four-year contract that will bring the top pay for assembly workers to $40 an hour. Ford, Stellantis and General Motors — Detroit's Big Three automakers — previously offered 23%. The agreement was expected to increase the odds of ending the UAW's unprecedented simultaneous partial strikes at all three automakers. The Wall Street Journal, The Associated Press

2. Nasdaq drops into correction territory

The Nasdaq on Wednesday fell into correction territory, down 10.7% since a July high, as the tech-heavy index suffered its biggest daily drop since February. The losses were fueled by Google-parent Alphabet's nearly 10% plunge following its release of disappointing quarterly results. Bond yields hovering near recent highs also spooked investors in technology companies that depend on growth and take a big hit when borrowing costs rise. The Nasdaq tumbled 2.4% Wednesday. The S&P 500 and the Dow Jones Industrial Average dropped 1.4% and 0.3%, respectively. Stock futures continued to struggle early Thursday. The Nasdaq was down 0.8% at 6:30 a.m. ET. The S&P 500 and the Dow were down 0.5% and 0.2%, respectively. Morningstar

3. Meta shares struggle on warning of 'softening' ad market

Meta reported better-than-expected third-quarter earnings on Wednesday, but the social media giant's shares fell in pre-market trading early Thursday after it issued a conservative fourth-quarter guidance. Shares of Meta, which owns Facebook and Instagram, jumped 4% in after-hours trading on Wednesday as the results fueled investor optimism, then reversed course after Meta CFO Susan Li warned that geopolitical unrest, including the Middle East conflict, was causing a "softening" of the ad market. The shares were down 3% in pre-market trading Thursday. Meta is seeing accelerating growth in its core digital ads business "as clients rebound from a tough 2022, when revenue dropped for three straight quarters," CNBC reported. Yahoo Finance, CNBC

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4. Mercedes warns price cuts, supply problems making EV market 'brutal'

Mercedes-Benz on Thursday reported a drop in third-quarter earnings and warned that the price cuts and supply chain clogs of a "brutal" electric vehicle market would drag the adjusted return on car sales to the lower end of its 12% to 14% range. Mercedes said it was sticking with its commitment to meet EV delivery targets and could boost returns from its traditional combustion-engine models if EV margins fell short of expectations. The EV market has become "a pretty brutal space" as weak demand forces some automakers to slash prices of battery-powered cars below those of gas-powered models, CFO Harald Wilhelm said. Reuters, Bloomberg

5. Economists expect 3rd quarter GDP report to show strong growth

The Commerce Department is expected to report Thursday morning that the U.S. economy grew at a 4.7% annual rate in the third quarter, according to a Dow Jones consensus estimate. If that projection proves accurate, it will be the fastest jump in output since the nearly 7% growth in the fourth quarter of 2021. But Federal Reserve policymakers are expected to focus more on forecasts for coming quarters as they decide when they can stop raising interest rates to curb inflation. "GDP doesn't tell us where we’re going. We can feel all warm and fuzzy about a good number," said Joseph LaVorgna, chief economist at SMBC Nikko Securities America. "But the real problem is what's next." CNBC

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