Stock futures edged lower on Wednesday, after tech-led stocks rose in the previous session. The U.S. Justice Department is weighing a potential breakup of search titan Google (NASDAQ:GOOGL) in a federal court filing. Rio Tinto (NYSE:RIO) agrees to buy U.S. peer Arcadium Lithium for $6.7 billion, signaling the miner’s bid to strengthen its position in the face of an expected surge in demand for electric vehicles.
- Futures are sinking
U.S. stock futures edged lower on Wednesday after a positive session on Wall Street.
By 03:30 Greek time (07:30 Greek time), Dow futures were trading down 94 points, or 0.2%, S&P 500 futures were down 18 points, or 0.3%, and Nasdaq 100 futures were down 87 points, or 0.4%.
Key indexes closed higher on Tuesday, boosted by hopes that the U.S. Federal Reserve is on track to create a so-called “soft landing” for the U.S. economy, in which price pressures are dampened without causing a sharp decline in labor demand or the wider activity. Investors will have a chance to study the new inflation data later in the week.
Technology stocks did most of the “heavy lifting” for the gains, analysts at Vital Knowledge said in a note to clients. In particular, artificial intelligence maker Nvidia (NASDAQ:NVDA) added 4%, while peer Broadcom (NASDAQ:AVGO) rose 3%.
- The US Department of Justice is considering breaking up Google
The US Justice Department is considering possible sanctions against Alphabet-owned Google, including breaking up the search giant, after a landmark antitrust case found the group guilty of abusing its dominant market position.
The Justice Department is “considering behavioral and structural remedies” that would prevent Google from using products such as its web browser, app store or operating system to gain an advantage in the search business over its competitors, according to a filing in federal court on Tuesday. The officials also suggested that Amit Mehta, the US judge presiding over the case, could force Google to reveal the underlying data used to build its search engine and artificial intelligence products.
“For more than a decade, Google has controlled the most popular distribution channels, leaving rivals with little or no incentive to compete for users,” the Justice Department added.
Google responded in a blog post, warning that the proposal could have detrimental effects on both “American innovation and American consumers.”
The DOJ filing comes after Mehta said in August that the tech giant is a “monopoly,” arguing that it paid companies like phone makers and web browser operators billions of dollars to make Google the default search option.
- Rio Tinto agrees to $6.7 billion takeover of Arcadium Lithium
Global miner Rio Tinto has agreed to buy US peer Arcadium Lithium in a $6.7 billion cash deal, it said in an announcement on Wednesday.
Rio Tinto said the deal would see it buy Pennsylvania-based Arcadium for $5.85 a share, representing a 90% premium to Arcadium’s closing price on Oct. 4.
The move will bring Arcadium’s lithium unit into Rio Tinto’s portfolio, strengthening its position ahead of an expected wave of demand for electric vehicles. Lithium, which Rio does not currently produce, plays a key role in making electric vehicles.
“The acquisition of Arcadium Lithium is an important step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminum and copper operations to supply materials needed for the energy transition,” said Rio Tinto CEO Jakob Stausholm.
The acquisition, which has been approved by the boards of directors of both Rio Tinto and Arcadium, is expected to close in mid-2025, pending the support of at least 75% of Arcadium’s shareholders.
- Boeing withdraws its offer to striking workers
Boeing (NYSE:BA) withdrew its offer to about 33,000 striking engineers and suspended negotiations with the union that represents them.
In a letter to workers published on Tuesday, the aircraft industry said the International Union of Aerospace Engineers and Workers had made “non-negotiable” demands and that further talks did not “make sense at this point”. The company had previously offered a 30% pay rise and improved pension benefits.
The break in talks came after two days of negotiations with a federal mediator, reducing the chances of an immediate end to the nearly months-long work stoppage affecting Boeing’s operations in the US Pacific Northwest.
Boeing is reportedly hemorrhaging cash because of the strike, piling further problems on a company already facing intense scrutiny over its safety record.
Meanwhile, S&P Global Ratings said on Monday it placed Boeing’s credit rating and senior unsecured debt rating on negative credit watch, adding that the possibility of a downgrade to junk status could increase if the strike continues towards the end of year.
- Oil is recovering
Oil prices rose on Wednesday, recouping some of the previous session’s steep losses, although a sign of a big rise in US inventories capped gains.
By 03:31 Greek time, Brent was up 0.8% at $77.83 a barrel, while U.S. crude futures (WTI) were trading 0.8% higher at $74.12 a barrel.
Both contracts fell more than 4 percent on Tuesday on disappointment over the lack of new fiscal stimulus measures from top oil importer China. Reports that the Lebanese military group Hezbollah is seeking a truce with Israel also hinted at a possible de-escalation of tensions in the Middle East.
Elsewhere, American Petroleum Institute data released on Tuesday showed that US oil inventories rose by 10.9 million barrels last week, well above expectations for a 1.95 million barrel increase.
Official data from the Energy Information Administration is due later in the session and could stoke concerns that U.S. fuel demand is cooling, especially as the south of the country struggles with a series of devastating hurricanes.
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Reference;
Kanowsky, S. (2024) Futures dip, DOJ mulls Google break-up, Rio-Arcadium deal – what’s moving markets By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/economy/futures-dip-doj-mulls-google-breakup-rioarcadium-deal–whats-moving-markets-3654663 (Accessed: 9 October 2024).
