Apple to Cut 600 Jobs in California. Why It’s a Wake-Up Call.
April 05, 2024, 5:07 am EDT
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North American Morning Briefing: Investors on Edge as High-Stakes Jobs Report Awaited
OPENING CALL
Stock futures pointed to a slight rebound on Friday ahead of the jobs report for March.
The stakes are high for a stock-market rally that's faltered this week as investors assess the likelihood of rate cuts by the Federal Reserve later this year.
Economists surveyed by the Wall Street Journal, on average, look for nonfarm payrolls to show a rise of 200,000 in March, with the unemployment rate expected to tick down from 3.9% to 3.8%. Growth in hourly wages is expected to slow to a year-over-year rate of 4.1%, from 4.3% in February.
While either a "too hot" or "too cold" jobs figure is often sufficient to spark a market selloff, the biggest danger on Friday is firmly tilted toward a stronger-than-expected reading, Sevens Report Research said.
"Investors are on edge the Fed may delay rate cuts from June until later in the summer [or late in 2024] if we get another hot employment report, " it said.
"If that occurs, expect a partial repeat of Tuesday."
Premarket Movers
Apple will be laying off more than 600 workers following the tech giant's decision to cancel its electric-car project. Shares rose 0.2%.
HubSpot was up 1.4% after the stock jumped 5% on Thursday following a report from Reuters that said Alphabet has been talking to its advisers about making an offer for the marketing software company.
Tesla was up 0.5%. Shares rose to as high as $177.19 on Thursday, recouping losses that hit the stock following the first-quarter delivery report.
Post Close Movers
Bio-Path Holdings said in a filing it had reached a deal for an at-the-market share offering. Shares were down 6.3%.
Kura Sushi's sales rose sharply in the fiscal second quarter, topping analysts' estimates. Shares rose 7.1%.
Watch For:
Employment Report for March; Canada Labour Force Survey for March; Chevron investor day
Today's Headlines/Must Reads:
- China Shock 2.0 Sparks Global Backlash Against Flood of Cheap Goods
- The Hot Sale Going on at Department Stores: Their Shares
- California Businesses Take On Gavin Newsom Over Tax Hikes
MARKET WRAPS
Forex:
The dollar was firmer on concerns that the Israel-Hamas war could spread to Iran-and a consequent rise in oil prices-and after Federal Reserve officials cast doubt on rate-cut prospects.
In particular, Neel Kashkari said if inflation continued to move sideways he could question whether rate cuts were needed at all. This comment was notable given the latest oil-price rise, Deutsche Bank said.
Focus turns to U.S. jobs data which could add to the rate-cut debate, although "substantial surprises" may be needed to impact Fed policy, Deutsche Bank said.
The euro could extend its gains against the dollar if U.S. payrolls data show a rise of below 200,000, ING said.
This would add to recent signs that the U.S. jobs market is softening, leaving the Federal Reserve "in a comfortable position to start cutting [interest rates] in the summer."
A sub-200k U.S. payrolls print should pave the way for the euro to rise back towards the 100-day moving average around $1.0875, ING said.
Bonds:
SEB Research said 10-year Treasury yields are expected to trade rangebound at 4%-4.5% in the second quarter with focus on the upper half of the range unless softer signals emerge from the Federal Reserve. The 10-year Bund yield, meanwhile, is expected to trade in a 2.2%-2.5% range, it said.
For the 10-year Bund yield to decline towards 2%, European Central Bank expectations would need to soften dramatically, "which we regard with 170bp of rate cuts already discounted for the coming two years."
Energy:
Brent crude hit $91 a barrel as worries of a wider regional conflict in the Middle East and intensifying attacks against energy facilities in Russia and Ukraine have raised concerns over global supplies, at a time when the physical market is already showing signs of tightness.
Metals:
Base metals and gold were weaker as the market mood sours ahead of U.S. jobs data, with Swissquote Bank saying higher-than-expected nonfarm payrolls and hotter-than-expected wages growth could potentially delay the Federal Reserve's plan for interest-rate cuts.
- Companies must file a report to the state agency for each California address that includes employees affected by a lay-off.
- At least 87 of the people worked at an address corresponding to a secret Apple facility for its next-generation screen development, while the others were located at buildings related to the car project.
At the end of February, Apple began to wind down both initiatives, which were seen as major moonshot efforts to advance the company’s technologies or enter sizeable new areas. The car project was cancelled amid indecision among executives about its direction and cost concerns. The display program was shuttered due to engineering, supplier and cost challenges.
According to the reports, 371 employees were released at Apple’s main car-related office in Santa Clara, California, while dozens more at multiple satellite offices were also impacted. In some cases, members of the Apple car group were relocated to other teams, such as for artificial intelligence or work on personal robotics.
An Apple spokeswoman declined to comment on the number of employees affected by the job cuts..."
Job cuts jump to highest level since January 2023
That is according to a new report published Thursday by Challenger, Gray & Christmas, which found that companies planned 90,309 job cuts in March, a 7% increase from the previous month and a 0.7% increase from the same time last year.
It marked the highest monthly layoff total since January 2023. . .
The top reason cited for job cuts last month was cost-cutting, which accounted for 66,302 of the layoffs during the first quarter.
- Companies also blamed restructuring, stores closing, poor market conditions and bankruptcy.
On the other end of the spectrum, companies planned to add just 36,795 positions during the first quarter, a 48% drop from the same period last year. It is the lowest number of announced hiring plans since 2016.
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