Tag: Updated

U.S. weekly jobless claims increase, labor market still tight

Post author By reuters
Post date February 9, 2023

FILE PHOTO: A sign advertising job openings is seen outside of a Starbucks in Manhattan, New York City, New York

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at levels consistent with a tight labor market.

Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 196,000 for the week ended Feb. 4, the Labor Department said on Thursday. Economists polled by Reuters had forecast 190,000 claims for the latest week.

Claims have remained low despite high-profile layoffs in the technology industry as well as the interest rate-sensitive finance and housing sectors. There is anecdotal evidence that companies are generally reluctant to lay off workers after experiencing difficulties recruiting during the pandemic.

Workers remain scarce in some industries. There were 1.9 job openings for every unemployed person in December, government data showed last week. According to an Institute for Supply Management survey last Friday, some services businesses in January reported they were “unable to hire qualified labor,” saying that “supply is thin.”

Economists speculate that severance packages were delaying the filing of unemployment benefits claims while the abundance of job openings made it easier for laid off workers to find new jobs. They also believed that seasonal factors, the model the government uses to strip out seasonal fluctuations from the data, were keeping claims lower.

“We do, however, expect the reported level of claims to be revised up when the annual seasonal factor revisions are published this spring,” said Lou Crandall, chief economist at Wrightson ICAP.

The claims report also showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 38,000 to 1.688 million during the week ending Jan. 28.

Lower layoffs have been a major contributor to strong job gains. The government reported last Friday that nonfarm payrolls surged by 517,000 jobs in January, the most in six months, after rising 260,000 in December. The unemployment rate fell to more than a 53-1/2 year low of 3.4% from 3.5% in December.

Federal Reserve Chair Jerome Powell said on Tuesday that the U.S. central bank’s fight to tame inflation could last “quite a bit of time,” in a nod to January’s blowout job gains. Since March, the Fed has hiked its policy rate by 450 basis points from near zero to a 4.50%-to-4.75% range.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

Tags Updated

Business Europe Latest Market News Other News Science Technology Top News UK US

Alphabet shares dive after Google AI chatbot Bard flubs answer in ad

Post author By reuters
Post date February 9, 2023

Google tweets about its AI chatbot Bard in this screenshot

By Martin Coulter and Greg Bensinger

LONDON (Reuters) – Alphabet Inc lost $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video and a company event failed to dazzle, feeding worries that the Google parent is losing ground to rival Microsoft Corp.

Alphabet shares slid as much as 9% during regular trading with volumes nearly three times the 50-day moving average. They pared losses after hours and were roughly flat. The stock had lost 40% of its value last year but rallied 15% since the beginning of this year, excluding Wednesday’s losses.

Reuters was first to point out an error in Google’s advertisement for chatbot Bard, which debuted on Monday, about which satellite first took pictures of a planet outside the Earth’s solar system.

Google has been on its heels after OpenAI, a startup Microsoft is backing with around $10 billion, introduced software in November that has wowed consumers and become a fixation in Silicon Valley circles for its surprisingly accurate and well-written answers to simple prompts.

Google’s live-streamed presentation on Wednesday morning did not include details about how and when it would integrate Bard into its core search function. A day earlier, Microsoft held an event touting that it had already released to the public a version of its Bing search with ChatGPT functions integrated.

Bard’s error was discovered just before the presentation by Google, based in Mountain View, California.

“While Google has been a leader in AI innovation over the last several years, they seemed to have fallen asleep on implementing this technology into their search product,” said Gil Luria, senior software analyst at D.A. Davidson. “Google has been scrambling over the last few weeks to catch up on Search and that caused the announcement yesterday (Tuesday) to be rushed and the embarrassing mess up of posting a wrong answer during their demo.”

Microsoft shares rose around 3% on Wednesday, and were flat in post-market trading.

Alphabet posted a short GIF video of Bard in action via Twitter, promising it would help simplify complex topics, but it instead delivered an inaccurate answer.

In the advertisement, Bard is given the prompt: “What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year old about?” Bard responds with a number of answers, including one suggesting the JWST was used to take the very first pictures of a planet outside the Earth’s solar system, or exoplanets. The first pictures of exoplanets were, however, taken by the European Southern Observatory’s Very Large Telescope (VLT) in 2004, as confirmed by NASA.

“This highlights the importance of a rigorous testing process, something that we’re kicking off this week with our Trusted Tester program,” a Google spokesperson said. “We’ll combine external feedback with our own internal testing to make sure Bard’s responses meet a high bar for quality, safety and groundedness in real-world information.”

FORMIDABLE COMPETITOR

Alphabet is coming off a disappointing fourth quarter as advertisers cut spending.

The search and advertising giant is moving quickly to keep pace with OpenAI and rivals, reportedly bringing in founders Sergey Brin and Larry Page to accelerate its efforts.

“People are starting to question is Microsoft going to be a formidable competitor now against Google’s really bread-and-butter business,” said King Lip, chief strategist at Baker Avenue Wealth Management, which owns Alphabet and Microsoft shares.

Lip cautioned, though, that concerns about Alphabet may be overblown, saying: “I think still Bing is a far, far cry away from Google’s search capabilities.”

The new ChatGPT software has injected excitement into technology firms after tens of thousands of job cuts in recent weeks and executive pledges to pare back on so-called moonshot projects. AI has become a fixation for tech executives who have mentioned it as much as six times more often on recent earnings calls than in prior quarters, Reuters found.

The appeal of AI-driven search is that it could spit out results in plain language, rather than in a list of links, which could make browsing faster and more efficient. It remains unclear what impact that might have on targeted advertising, the backbone of search engines like Google.

Chatbot AI systems also carry risks for corporations because of inherent biases in their algorithms that can skew results, sexualize images or even plagiarize, as consumers testing the service have discovered. Microsoft, for instance, released a chatbot on Twitter in 2016 that quickly began generating racist content before being shut down. And an AI used by news site CNET was found to produce factually incorrect or plagiarized stories.

At the time of writing, the Bard ad had been viewed on Twitter more than a million times.

(Reporting by Martin Coulter; Additional reporting by Johann Cherian, Eva Mathews, Lewis Krauskopf; Editing by David Gregorio and Christopher Cushing)

Tags Updated

Business Economy Latest Market News Top News

Global airline traffic last year rebounds to over half of pre-pandemic levels

Post author By reuters
Post date February 6, 2023

FILE PHOTO: Travellers head to the United States as restrictions are lifted

By Joanna Plucinska

LONDON (Reuters) -Global airline traffic recovered to 68.5% of pre-pandemic levels last year and surged 64.4% from 2021, according to figures published by global aviation body IATA on Monday.

Airlines lost tens of billions of dollars in 2020 and 2021 due to the COVID-19 pandemic and saw the first signs of relief as travel started to return in 2022, particularly during the summer months.

With China’s recent reopening, that recovery is set to go on, the head of IATA said.

“This momentum is expected to continue in the new year, despite some governments’ overreactions to China’s reopening,” said Willie Walsh, IATA’s director-general.

China previously said it would resume overseas group tours organized by tour agencies and online travel companies for Chinese citizens starting from Monday.

European carriers saw full-year traffic jump 132.2% compared to 2021, while North American airlines saw a 130.2% rise year-on-year, according to the data.

But analysts and executives have long said that recovery to full pre-pandemic levels depends on how quickly travel to and from China can bounce back.

“It is vital that governments learn the lesson that travel restrictions and border closures have little positive impact in terms of slowing the spread of infectious diseases in our globally inter-connected world,” Walsh added.

Many countries, like France, introduced mandatory COVID testing for those flying from China, sparking protests from the aviation sector.

TENTATIVE RECOVERY

Current schedules show there could still be substantially fewer flights between Asia and Europe in 2023 compared to 2019, data from Cirium showed, but more routes are being announced.

Some airline groups have said they would reopen some routes to China in the coming months, but with flights being less frequent than prior to the pandemic.

Air France-KLM <AIRF.PA> said earlier this month it would start running daily flights to Hong Kong, Shanghai and Beijing starting in July while British Airways <ICAG.L> said it would start flights between London and Shanghai from April 23.

Growth in flights from other regions might have to pick up more to compensate for a lag in Chinese flights in order for full global traffic recovery to 2019 levels, some analysts have said.

“I don’t think that China’s recovery will probably get back to 2019 levels until next or the following year to Europe,” James Halstead, managing partner at consultancy Aviation Strategy said.

“For short-haul flights, you’ll probably see better recovery, but it’s still going to be tentative and it’ll depend on border controls within Asia.”

(Reporting by Joanna Plucinska, Additional reporting by Jamie Freed, Ilona WissenbachEditing by David Goodman and Bernadette Baum)

Tags Updated

Business Economy US

Recession fears pose challenge to energy shares after stellar year

Post author By reuters
Post date January 28, 2023

Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City

By Lewis Krauskopf

NEW YORK (Reuters) -A potential U.S. recession and tough comparisons to a stellar 2022 are weighing on the prospects of energy stocks delivering an encore to last year’s stunning run, despite valuations that are seen as still comparatively cheap.

The S&P 500 energy sector is up 4.2% year-to-date, slightly lagging the rise for the broader index. The sector logged a 59% jump in 2022, an otherwise brutal year for stocks that saw the S&P 500 drop 19.4%.

Energy bulls argue the sector’s valuations bolster the case for a third-straight year of gains, which would be the first such feat for the group since 2013. Goldman Sachs, RBC Capital Markets and UBS Global Wealth Management are among the Wall Street firms recommending energy stocks.

Despite last year’s run, the sector trades at a 10 times forward price-to-earnings ratio, compared to 17 times for the broad market, and many of its stocks offer robust dividend yields. The potential returns for shareholders were highlighted this week when Chevron shares rose almost 5% after announcing plans to buy $75 billion worth of its stock.

Some investors worry, however, that energy companies may find it hard to increase profits after huge jumps in 2022, especially if a widely expected U.S. economic downturn hits commodity prices.

“The group appears to be holding up well, but there is some trepidation due to the fact that investors are concerned about an economic slowdown and what that will do to demand,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

He said he is slightly overweight the energy sector, including shares of Chevron and Pioneer Natural Resources.

Economists and analysts in a Reuters survey forecast U.S. crude would average $84.84 per barrel in 2023, compared to an average price of $94.33 last year, citing expectations of global economic weakness. U.S. crude prices recently stood at around $80 per barrel.

At the same time, many investors beefed up their holdings of energy stocks in 2022 after years of avoiding the sector, which had often underperformed the broader market amid concerns such as poor capital allocation by companies and uncertainties over the future of fossil fuel. The sector’s weight in the S&P 500 roughly doubled last year to 5.2%.

However, that dynamic may be petering out, said Aaron Dunn, co-head of the value equity team at Eaton Vance.

“People have come back to energy in a big way,” he said. “We had that tailwind the last couple of years, which was that everyone was under-invested in energy. I don’t think that’s the case anymore.”

And while energy companies are expected to deliver strong quarterly reports over the coming weeks after a roaring 2022, those numbers may have set a high bar for this year.

With 30% of the sector’s 23 companies reported so far, energy’s fourth-quarter earnings are expected to have climbed 60% from a year earlier, and 155% for full-year 2022, according to Refintiv IBES. But earnings are expected to decline 15% this year, the biggest drop among the 11 S&P 500 sectors.

Exxon Mobil and ConocoPhillips are among the reports due next week, when investors also will focus on the Federal Reserve’s latest policy meeting.

“Last year was a banner year,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management. “Now they have got to try to beat that to show growth, and I think that is going to be a challenge.”

In the meantime, bullish investors point to shareholder-friendly uses of cash by the companies.

The energy sector’s 3.43% dividend yield as of year-end 2022 was nearly twice the level of the index overall, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Energy companies executed $22 billion in share buybacks in the third quarter, just over 10% of all S&P 500 buybacks.

“From a total return perspective, that is where I think energy can still continue to differentiate itself versus the broader market,” said Noah Barrett, energy and utilities sector research lead at Janus Henderson Investors.

Others, however, believe more value may exist in areas of the market that were beaten down last year. Dunn, of Eaton Vance, said stocks in areas such as consumer discretionary and industrials may appear more attractive.

“Energy probably does OK this year, but I think you have got a lot of areas in the market that have done extremely poorly where we’re finding excellent opportunity,” he said.

(Reporting by Lewis Krauskopf; Editing by Ira Iosebashvili)

Tags Updated

Business

Boeing pleads not guilty to fraud charge in 737 MAX arraignment

Post author By reuters
Post date January 26, 2023

An aerial photo shows Boeing 737 MAX airplanes parked at the Boeing Factory in Renton

By Sheila Dang and David Shepardson

FORT WORTH, Texas/WASHINGTON (Reuters) -Boeing Co pleaded not guilty on Thursday to a 737 MAX fraud conspiracy felony charge after families objected to a 2021 Justice Department agreement to resolve the investigation into the plane’s flawed design.

Boeing’s chief safety officer, Mike Delaney, entered the not-guilty plea on behalf of the planemaker at a three-hour hearing. A not-guilty plea is standard in deferred prosecution agreements.

U.S. District Judge Reed O’Connor last week ordered Boeing to appear to be arraigned after he ruled that people killed in the two Boeing 737 MAX crashes in 2018 and 2019 are legally considered “crime victims.”

The crashes in Indonesia and Ethiopia killed 346 people. They cost Boeing more than $20 billion, led to a 20-month grounding of the best-selling plane and prompted lawmakers to pass sweeping legislation reforming airplane certification.

Boeing in a statement said it had “made broad and deep changes across our company, and made changes to the design of the 737 MAX to ensure that accidents like these never happen again. We also are committed to continuing to comply scrupulously with all of our obligations under the agreement we entered into with the Justice Department two years ago.”

O’Connor imposed a standard condition that Boeing commit no new crimes but did not rule on other conditions sought by the victims, including a request he name an independent monitor to oversee Boeing’s compliance and disclose publicly as much as possible of the substance of Boeing’s corporate compliance efforts adopted since 2021.

O’Connor asked the Justice Department to follow up with an answer to his question about whether there were instances of the government pushing back on something Boeing did that “wasn’t up to snuff.”

The Justice Department in 2021 agreed to seek dismissal of the charge after the three-year agreement if Boeing complies with all terms. Boeing admitted in court documents that two of its technical pilots deceived U.S. regulators about a key flight control system linked to both fatal crashes.

Relatives of people who were killed in the crashes spoke on Thursday at the arraignment.

Naoise Connolly Ryan, who lost her husband in the Ethiopia crash, said she wanted justice for her children who had lost their father. “The deal between Boeing and the Department of Justice is not justice,” she said.

The relatives said in a filing that Boeing had “committed the deadliest corporate crime in U.S. history.”

Boeing and the Justice Department oppose reopening the $2.5 billion agreement, which included $500 million in victim compensation, a $243.6 million fine and $1.7 billion in compensation to airlines.

(Reporting by Sheila Dang and David Shepardson; Editing by Jonathan Oatis and Bernadette Baum)

Tags Updated