Stocks were mixed on Friday and fall this week as the Fed steps up the pace of asset reduction


Shares were mixed on Friday and down on the week as investors digested a newly hawkish Federal Reserve and an increase in Covid cases due to omicron.

Rivian (RIVN) disappointed investors in the electric vehicle maker’s first-ever earnings report. In the report, Rivian lowered its production estimates, saying it would miss a few hundred deliveries from its goal of delivering 1,200 vehicles. Rivian attributed the shortfall to supply chain issues and challenges in ramping up production of batteries for electric vehicles.

Demand for Rivian vehicles increased during the quarter. Rivian’s pre-orders dropped from 48,000 to 71,000 at the end of September, which was more than expected. This postponed the wait for delivery until 2023.

In addition, Rivian has confirmed that he is building a $ 5 billion plant in Georgia that is slated to go into operation in 2024. This could be crucial for Tesla‘s rival, as Cyber ​​Trucks is (supposedly) set to start. delivery in 2022, which could be a problem. for Rivian given that RIVN’s products – electric trucks and SUVs – are not currently part of the Tesla product line. If Cyber ​​Tucks starts shipping soon and Rivian continues to have issues scaling up, Tesla could start to benefit from Rivian’s growing order book.

Regardless, FedEx (FDX) also released an interesting earnings report, and this one was far from a disappointment. FedEx has beaten earnings and revenue estimates and provided rising earnings and revenue forecasts.

The company said it hired 60,000 workers during the quarter and said it plans to keep them after the holidays. This is at least partially responsible for a 5.05% drop in profit margin. FedEx said it expects an increase of about $ 470 million in annual costs due to staff increases and other issues.

The fact that the company was able to hire 60,000 workers (of which 111,000 applied last week) while many other companies complain about labor shortages suggests that FedEx may have found the answer to attract these “missing” workers on the sidelines.

Economic summary

Throughout the week, just about one economic event went as planned and it came to us thanks to the Federal Reserve’s Open Market Committee, so we’ll start there.

Shares hit session highs on Wednesday when Federal Reserve Chairman Jerome Powell spoke. In response to still high inflation, the Fed decided to stop buying bonds faster than when the “tap” was announced. At the new rate, which is subject to further revision, the central bank will stop buying bonds in March.

Perhaps an even bigger shift has taken place in projections for future policy, which now call for three rate hikes in 2022, down from one in the previous forecast.

Powell recognized the Omicron variant as a risk to future growth, but said it likely would have no effect on the pace of the decline. The Fed chief said the impact of omicron will depend on “how well it suppresses demand as opposed to suppressing supply”, which appears to imply that he thinks the danger is more than the people stop going out again, which would slow growth, rather than people facing a new wave of lockdowns that are severely hampering business activity.

Prior to the Fed news, producer prices were warmer than expected for November, with the overall figure hitting 0.8% and the core numbers hitting a 0.7% pace.

This has pushed up wholesale prices 9.6% over the past twelve months. Demand for goods continued to be the main driver behind the rise in producer prices, increasing 1.2% following a 1.3% increase in October.

At the same time, final demand services accelerated, advancing 0.7% after rising 0.2% in October. This could mean that price increases spread, as price increases on the services side have lagged goods throughout the recovery.

All told, stocks and cryptos fell across the board. The S&P 500 lost 1.94% this week, while the Dow Jones lost 1.68%. The Nasdaq underperformed, falling 2.95%, while the Russell 2000 fell at a slower pace from a loss of 1.71%. Meanwhile, Bitcoin fell 3.54%, Ethereum fell 3.78%, and Binance Coin plunged 7.88%.


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