U.S. stocks were set to open slightly lower Thursday morning.
At around 1:44 a.m. ET, Dow futures fell 50 points, indicating a negative open of more than 53 points. Futures on the S&P and Nasdaq were also trading lower.
Wall Street ended Wednesday's session little changed after the Federal Reserve did not match market expectations of further rate cuts this year. The central bank cut the overnight rate by 25 basis points on Wednesday. This is the second time this year the Fed has lowered rates.
Money managers are following a new round of face-to-face talks between Chinese and American officials, starting in Washington later Thursday.
In terms of data, there will be jobless claims and current account numbers due at 08:30 a.m. ET, and existing home sales due at 10:00 a.m. ET.
On the earnings front, Darden Restaurants, Scholastic and Steelcase will be reporting.
The Insurance Institute for Highway Safety has announced that the Tesla Model 3 has won its highest safety award, Top Safety Pick+, after achieving “good” ratings across the board in all of their test categories. The Model 3 is the second battery electric vehicle to win the award, after the Audi e-tron won it last month.
IIHS’ “Top Safety Pick” award requires vehicles to earn “good” ratings in the driver-side small overlap front, moderate overlap front, side, roof strength and head restraint tests, and a good or acceptable rating in the passenger-side small overlap test. Vehicles also must have a front crash prevention system with an advanced or superior rating and good- or acceptable-rated headlights.
The highest-tier award, “Top Safety Pick+,” further requires “good” ratings in the passenger-side small overlap test and the headlight evaluation.
The Model 3 managed to achieve “good” ratings in headlights and all categories for crash safety, along with a “superior” rating for front crash prevention. The only injury risk recorded in IIHS tests was a moderate risk of leg injury in driver-side small overlap front crash tests.
In the same release, IIHS stated that the Chevy Bolt narrowly missed out on a Top Safety Pick award due to “poor” headlight performance and an “acceptable” passenger-side small overlap rating.
The Model S previously missed a Top Safety Pick award for the same reason – “poor” headlight performance.
Here’s a video from IIHS announcing the awards, with photos and video from the testing procedures. Tesla fans, if you’re squeamish, you may not want to watch this one:
IIHS Chief Research Officer David Zuby was quoted in the release, stating that “vehicles with alternative powertrains have come into their own. There’s no need to trade away safety for a lower carbon footprint when choosing a vehicle.” The Hyundai Nexo, a fuel cell vehicle, has also earned a Top Safety Pick+ award.
Tesla responded to this news with a blog post touting the award, stating:
We engineer our cars to be the best in the world – in every category. Model 3, our most affordable car yet, is no exception. From the start, we designed it to be among the safest cars ever built, with the goal of getting as many Model 3s on the road as possible to further our mission.
The safety of our customers is what matters most, which is why our active safety features and passive safety equipment come standard on all of our cars. We’re also committed to making our cars even safer over time via over-the-air updates, helping us ensure that all Tesla drivers have access to the best safety features available for their cars.
Tesla was particularly proud of the strength of the Model 3’s all-glass roof, which resisted 20,000 pounds of force during testing – more than the weight of five Model 3s stacked on top of each other.
We’ve heard a lot of nonsense lately from people trying to suggest that electric cars aren’t as safe as ICE cars – as if having a giant tank of flammable fluid which is constantly being combusted at a rate of thousands of times per minute is somehow supposed to make a car safer.
One reason among many that EVs can be made safer than gas cars is because EVs can have larger front crumple zones. Since there’s no engine under the hood, crash energy can be dissipated over a longer area, which slows the car down more gradually and thus reduces the amount of crash energy transferred to the driver. In this way, when a car crumples in a crash, it helps to make the occupants safer. Crumple zones have been used in cars since the 1950s.
So it’s nice to have yet another confirmation, and a timely one at that, that the current best-selling EV is indeed not only “safe enough,” but safer than almost all other vehicles on the road.
The strike against General Motors is now into a fourth day.
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Tensions are rising as a United Auto Workers official says about seven to nine union picketers were arrested for blocking a roadway at a GM plant in Tennessee.
The arrests came Wednesday at the Spring Hill plant, according to Local UAW Chairman Mike Herron.
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Authorities asked the protesters multiple times to get out of the road. Herron said he believes the protesters were afraid trucks might get into the plant.
Herron said at a news conference that police and the sheriff's department have done a fantastic job and have been supportive during the ongoing strike.
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He said arrests take the union off its message.
Meanwhile, the strike by 49,000 United Auto Workers is starting to affect production in other countries.
Company spokesman Dan Flores confirms that the strike has forced GM to place about 1,200 workers on temporary layoff at a Canadian factory that makes pickup trucks.
The plant in Oshawa, Ontario, near Toronto makes the previous generation Chevrolet Silverado and GMC Sierra full-size pickups.
The Silverado is GM's top-selling vehicle in the U.S.
The plant also makes the Chevrolet Impala large car, and that production has not been affected.
Flores says production continues at two other Canadian plants which make engines and the Chevrolet Equinox SUV.
US stocks are set to open slightly lower, with stock futures trading in the red.
Futures for the Dow are down 36 points, or 0.1%, while those for the S&P 500 are down 0.2%. Nasdaq Composite futures are off by 0.2%.
Stocks edged higher Tuesday as investors were digesting the latest developments in commodities markets. Attacks on Saudi Arabian oil production facilities over the weekend sent oil prices soaring more than 14% on Monday. But amid hopes that Saudi production would be up and running again in a matter of weeks, prices came down again Tuesday.
US oil futures are continuing on that path Wednesday, down nearly 1% at $58.77 a barrel.
Brent crude, the international benchmark, is down 0.5% at $64.24 a barrel.
In an internal webcast hours after the shared-workspace provider delayed its stock-market listing, Neumann said he had lessons to learn about running a public company, according to the Financial Times. He also voiced regret over how the listing process was handled, the newspaper said, citing people who saw the presentation.
Neumann's larger-than-life personality played a "huge role" in the listing's failure, the Financial Times reported, citing someone who worked closely with him. Fears of emulating the disappointing public debuts of Uber, Lyft, and other disruptive businesses this year factored into Neumann's decision to postpone WeWork's IPO, people close to the cofounder told the newspaper.
Neumann and two other WeWork executives vowed to employees the IPO would go through later this year, but the company could be forced to delay its public debut until next year, people briefed on the matter told the Financial Times. WeWork was expected to drum up interest in its shares during an investor roadshow this week, before listing them on the Nasdaq index next week.
Investors grew disillusioned with WeWork's unclear path to profitability, business model, complex structure, hefty valuation, and controversial governance. The group slashed its targeted public valuation to below $20 billion — less than half the $47 billion private valuation it secured in January — and introduced new limits on Neumann's control of the company, stock sales, real-estate deals, and succession plans, but failed to win enough support.
WeWork hopes a fresh set of quarterly financials for the three months to September will help it to revive its IPO next month, according to Reuters, citing people familiar with the company's thinking. However, investor demand could prove lackluster as fund managers become more conservative and look to protect their gains in the fourth quarter, Reuters said.
WeWork must raise at least $3 billion through an IPO this year, or it will lose out on a $6 billion credit line tied to that milestone, forcing it to seek alternative financing.
President Donald Trump has called Federal Reserve Chairman Jerome Powell 'clueless.' | Drew Angerer/Getty Images
President Donald Trump has taken over Jerome Powell’s life.
The Federal Reserve’s expected decision on Wednesday to cut interest rates again will spark new questions about whether Powell, its chairman, is caving to intense public pressure by Trump. While Powell strongly rejects that notion, the president’s policies have clearly forced the central bank’s hand.
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The Fed, which last December was considering hiking interest rates at least twice this year, has done a head-spinning turn since then in response to weakening business investment, a contraction in manufacturing and a global slowdown — all fueled by Trump’s trade wars.
And the president’s abrupt decision last year to pull out of the Iran nuclear accord arguably set off a steady deterioration in relations that today has made Middle East tensions another threat to economic growth that the Fed must take into account.
Trump is forcing still more dramatic policy options into the limelight — including his latest call on the Fed to cut rates below zero, an idea that the central bank has long resisted as an avenue for fighting recessions.
“I’ve always thought the Fed has been a little bit slow to control the narrative about monetary policy,” said Seth Carpenter, chief U.S. economist at Swiss bank UBS and a former Fed official. “Throw Trump into the mix, and you’re in a completely different circumstance where he does like to drive the narrative.
“You just end up being dragged around,” he said.
The Fed has repeatedly pointed to trade tensions, slowing global growth and muted inflation as its main reasons for lowering rates, a move intended to support the economy as recession fears have begun to creep into the Treasury bond market.
But the economy is still growing, with consumer spending powering it forward and the labor market continuing to add jobs, suggesting some room for optimism about the future of the expansion, the longest in U.S. history.
The Fed has remained reticent to share details about its plans as it closely monitors the complicated economic picture. After the central bank lowered rates in July — its first cut in more than a decade — Powell suggested that the Fed wasn’t yet embarking on a full-blown cutting cycle. But markets are expecting several more reductions between now and early next year and will be watching the chairman closely for signals on that front.
But those decisions will be driven, at least in part, by the outcome of the U.S.-China trade war, meaning the Fed, like the rest of Washington, will continue to keep an eye on Trump’s Twitter storms.
Against that backdrop, Trump tweets, often daily, that the Fed is clueless and that if it would only slash rates by a large amount, the economy would take off like a “rocket ship.”
“The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries,” the president tweeted on Monday. “They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue,” he added, calling for a “Big Interest Rate Drop.”
His recent attempt to push the Fed to pursue negative interest rates — a move tried in Europe and Japan with unclear results — demonstrates the shift in who is controlling the narrative around the Fed.
A decade ago, the central bank pursued a range of new and untested policies to jump-start the economy — such as purchasing trillions of dollars in government bonds — and faced challenges in getting the public on board. Now, while the pursuit of negative rates in the U.S. would still be highly controversial, Trump is the one driving the conversation toward unconventional policies.
“There’s no escaping the president’s bully pulpit, no matter what it is he’s talking about, not the least when it comes in the form of a tweet where it gets promoted and dissected,” said Sarah Binder, a political science professor at George Washington University. “It focuses media attention. It focuses public attention.”
Trump has also urged the Fed to help him more directly fight his trade wars, focusing much of his frustration on the heft of the dollar, whose strength makes U.S. exports more expensive.
He has gone from suggesting the central bank cut its main borrowing rate by a whole percentage point — the equivalent of four standard cuts — to now calling for rates of “ZERO, or less,” which would mean lowering rates by at least 2 percentage points.
“He certainly is the big elephant in the room,” Binder said.
“If part of [Fed] communications is telling markets and the public and businesses where you’re headed, and if people wonder where they’re headed because the president has now injected himself into the debate … then that kind of undermines the whole use of communications as the central tool” of monetary policy, she added.
As for the Fed’s ultimate decisions on rates, Carpenter said he believes central bank officials when they insist that they do not discuss the political implications of their decisions at their policy meetings. But, he said, the pressure likely makes them more cautious.
“Their lives are just made that much more complicated by having to second-guess themselves, and saying, ‘OK, now we’ve made a decision, let’s ask ourselves one more time, are we sure we’re doing this for the right reasons?‘”
