Markets reward stocks of companies that cut jobs. They anticipate higher profits and smaller expenses ahead. Lately, job cuts did not act as a positive catalyst for lifting a stock price. Tesla (TSLA) cut over 10% of its staff. Days later, shares continued to drift lower.
After trading near all-time highs, Google (GOOG) cut staff. Alphabet, its parent, indicated that it would move a very small percentage of staff. This has an impact on its India, Dublin, Chicago, and Atlanta locations. Google said that the reduced layers will increase worker productivity and efficiency.
Markets continued to reset valuations. The fantasy of an interest rate cut faded in the last two weeks. A strong job market, persistent inflation, and strong Q4/2023 GDP negate a need to stimulate the already hot economy. With that negative backdrop, Prologis (PLD), the biggest REIT, lost over 7% on Wednesday. The firm blamed high interest rates for lowering its guidance.
Abbot Laboratories (ABT) posted good quarterly results. However, it issued a disappointing annual forecast. It expects GAAP earnings of $3.25 to $3.40. Sales will grow by 8.5% to 10.0%.
Markets need any positive news today. The S&P 500 (SPY) recorded four straight days of losses. This is the longest streak in around four months.
