Stock Market News: GM, Exxon, McDonald’s earnings, home prices dip, Powerball climbs

The dollar gave up gains made earlier on Tuesday after data showed U.S. labor costs increased less than expected in the fourth quarter, and before the Federal Reserve is expected to hike rates by 25 basis points on Wednesday.

The Employment Cost Index, the broadest measure of labor costs, rose 1.0% last quarter after increasing 1.2% in the July-September period, the Labor Department said on Tuesday.

Still, it is not seen as likely to sway the U.S. central bank from hiking rates further.

Fed funds futures traders are pricing for the Fed’s benchmark rate to peak at 4.93% in June, up from 4.33% now.

But investors are also bearish on the U.S. economy and see the Fed as having to cut rates back to 4.48% by December. This is despite Fed officials stressing they will need to keep rates in restrictive territory for a period of time in order to bring down inflation.

United Parcel Service Inc on Tuesday beat expectations for quarterly adjusted profit, as it prioritized lucrative shipments and kept a tight lid on costs as global recession threatens and inflation deflates e-commerce demand.

UPS also raised its quarterly dividend by 6.6% and announced a new $5 billion share repurchase plan.

Executives at the Atlanta-based company said they are paring costs to match a decelerating transportation market that has translated into softer demand for UPS air shipments and home deliveries, while also investing in future growth.

UPS Chief Executive Officer Carol Tomé described the outlook for economic growth in 2023 as “cloudy.”

UPS Chief Financial Officer Brian Newman elaborated on the economic risks, citing decades-high inflation, rising interest rates, recession risks, war in Eastern Europe and COVID-related disruptions in China.

UPS forecast 2023 revenue between $97.0 billion and $99.4 billion, below analysts’ average target of $99.98 billion, according to Refinitiv data.

Tesla Inc disclosed on Tuesday it had received requests from the U.S. Justice Department for documents related to its Full Self-Driving and Autopilot driver-assistance systems as regulatory scrutiny intensifies.

Reuters reported in October Tesla is under criminal investigation over claims that the company’s electric vehicles could drive themselves.

The U.S. Justice Department launched the previously undisclosed probe in 2021 following more than a dozen crashes, some of them fatal, involving Tesla’s driver assistance system Autopilot, the people said.

Chief Executive Officer Elon Musk has championed the systems as innovations that will both improve road safety and position the company as a technology leader.

Regulators are examining if Autopilot’s design and claims about its capabilities provide users a false sense of security, leading to complacency behind the wheel with possibly fatal results.

McDonald’s Corp on Tuesday beat Wall Street estimates for quarterly profit on higher menu prices, even as it warned short-term inflationary pressures would persist in 2023.

Investors are watching bellwethers like McDonald’s for any sign consumers are cutting spending to help determine whether the Federal Reserve’s monetary tightening will help cool the U.S. economy without causing a recession.

The Big Mac maker also expects its accelerated plan to build more new restaurants will boost business, contributing nearly 1.5% to its 2023 systemwide sales growth in constant currencies.

Like other fast-food chains, Chicago-based McDonald’s raised prices of its burgers and fries last year to keep up with surging commodity and labor costs and it forecast margin growth this year.

Chief Executive officer Chris Kempczinski told investors those short-term inflationary pressures will persist in 2023.

Even so, traffic rose 5% for full-year 2022, McDonald’s disclosed on Tuesday, as its meals remained less expensive than many competitors, drawing low-income consumers.

Pfizer Inc on Tuesday forecast a bigger-than-expected drop in sales of its COVID-19 vaccine and treatment in 2023, intensifying investor concerns over demand for the products as governments cut orders and work through inventories.

Chief Executive Albert Bourla said that 2023 should be a “transition year” for Pfizer’s COVID products, before potentially returning to growth in 2024.

Pfizer’s total annual sales crossed the $100 billion mark for the first time in 2022, driven by the more than $56 billion in sales of the COVID-19 vaccine and Paxlovid antiviral. In 2023, it expects revenue to be $67 billion to $71 billion.

Pfizer has turned to acquisitions such as its $5.4 billion buyout of Global Blood Therapeutics Inc and its $11.6 billion purchase of migraine drugmaker Biohaven to bolster its pipeline of future products. It launched five new products last year and hopes to introduce as many as 14 more over the next year and a half, including a vaccine for respiratory syncytial virus (RSV) as well as an mRNA vaccine for influenza.

Excluding the COVID-19 drugs, Pfizer expects 2023 revenue to grow 7% to 9%.

Pfizer developed its COVID-19 vaccine with German partner BioNTech, and the companies split the profits. The U.S. drugmaker forecast 2023 sales of $13.5 billion from the shot, below Refinitiv estimates of $14.39 billion, and projected $8 billion in sales of Paxlovid, short of analysts’ expectation of $10.33 billion.

Exxon Mobil Corp posted a $56 billion profit for 2022, the company said on Tuesday, taking home about $6.3 million per hour last year, and setting not only a company record but a historic high for the Western oil industry.

Oil majors are expected to break their own annual records on high prices and soaring demand, pushing their combined take to near $200 billion. The scale has renewed criticism of the oil industry and sparked calls for more countries to levy windfall profit taxes on the companies.

Exxon’s results far exceeded the then-record $45.2 billion net profit it reported in 2008, when oil hit $142 per barrel, 30% above last year’s average price. Deep cost cuts during the pandemic helped supercharge last year’s earnings.

Excluding charges, profit for the full year was $59.1 billion.

Production was up by about 100,000 barrels of oil and gas per day over a year ago to 3.8 million bpd.

Adjusted per share profit of $3.40 beat consensus of $3.29 per share, according to Refinitiv data.

General Motors pulled in a solid quarter, despite inflation and what may be a deepening recession.

Case-Shiller Home Prices slipped 0.8% in November vs. October. Still, prices rose 8.6% annually in November, the lowest since September 2020.

Annually, home prices rose 6.8% down from 8.6% in October as measured by the 20-city index, matching the Refinitiv estimate. That’s down 7 months in a row from a record 21.3% annual gain in April.

U.S. stocks struggled for direction on Tuesday as investors digested a basket of earnings from bellwethers including Exxon Mobil, GM and McDonald’s. In commodities, oil hovered at the $77 per barrel level.

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Advanced Micro Devices will report their fiscal fourth quarter and full year 2022 financial results at 5 p.m. ET.The tech company’s earnings report comes ahead of Alphabet, Amazon and Apple reporting on Thursday.The company’s third quarter earnings showed 5.6 billion in revenue to notch a 29% increase from the year prior. In 2023, the stock has rallied to recover some of the losses made in 2022, rising approximately 12% after losing roughly 40% the last year. Over the last five days, shares are about 3% beneath the redline.