The New York Fed on Thursday played down the importance of President John Williams' speech earlier in the day that was interpreted by the market as an endorsement of a half-point interest rate cut at the end of the month. "This was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting," a New York Fed spokesman said. In his remarks, Williams said his research showed that, when interest rates are near zero, a central bank should "act quickly to lower rates at the first sign of economic distress." After his remarks, traders priced in a slightly greater than 50% chance of a half-point rate cut on July 31, up from 34% one day ago.
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Shares of Red Robin Gourmet Burgers jumped 17% in extended trading Thursday after it confirmed it has received an unsolicited proposal from private-equity firm Vintage Capital Management LLC to acquire all of the outstanding common shares of Red Robin for $40 per share in cash. Last month, Red Robin turned down a request for a special meeting with stockholders initiated by Vintage, which already owns a piece of the restaurant chain.
The Securities and Exchange Commission imposed an emergency assets freeze on Thursday related to charges that two individuals are running an alleged pump-and-dump scheme targeting elderly retail investors. According to the SEC's complaint, Florida resident Garrett M. O'Rourke and Maryland resident Michael J. Black allegedly worked together between 2016 and 2018 to sell shares in several microcap companies to investors, including elderly retail investors, using high-pressure stock promotional campaigns. The SEC alleges that, as part of the scheme, O'Rourke aggressively touted the companies to prospective investors through unsolicited cold calls during which he repeatedly lied about his association with legitimate financial institutions and the prospects of the microcap companies. John T. Dugan, Associate Director of Enforcement in the SEC's Boston Regional Office, said: "Investors should beware of parties using the types of sales techniques alleged in our complaint, including unsolicited calls and high-pressure sales tactics."
Boeing to take $4.9 billion charge in Q2 on 737 Max grounding
Boeing Co. said late Thursday it will record an after-tax charge of $4.9 billion, or $8.74 a share, in connection with the 737 Max groundings. The charge will result in a $5.6 billion dent in revenue and pre-tax earnings in the quarter, Boeing said. Boeing also warned that the estimated costs to produce the aircraft increased by $1.7 billion in the second quarter, primarily due to higher costs associated with a longer-than-expected reduction in the production rate. The increased 737 costs will reduce the margin of the 737 program in the second quarter and in future quarters. The 737 Max family has been grounded worldwide since March after a second fatal crash in less than five months. Preliminary reports found connections between the crashes, related to an anti-stall feature, and Boeing has been working on a software fix. Shares of Boeing rose 0.7% in the extended session after ending the regular trading day down 2.3%.
Stocks snap losing skid as Fed official hints that central bank may lower rates aggressively
U.S. equity benchmarks finished the session mostly higher Thursday after Federal Reserve Bank of New York President John Williams said the central bank needs to act quickly to quash signs of economic weakness. His comments, made late in the afternoon at a research conference in New York, helped to deliver a jolt to equity markets and drive bond yields and the dollar firmly lower. The Dow Jones Industrial Average , however lagged behind its peers, weighed by declines in UnitedHealth Group Inc. and Boeing Co. . The blue-chip index closed virtually unchanged on the day at 27,222, while the S&P 500 index climbed 0.4% to end at 2,995, and the Nasdaq Composite Index closed 0.3% higher at 8,207. in a world where interest rates are lower than they have been historically, central banks must confront any sign of weakness quickly and aggressively.