1. Google Cloud Disappoints, Stock Plunges 9%
2. Hertz Fleet Depreciation Soars, Shares Drop
3. Turkish Central Bank Raises Rates to 35%
4. Meta’s Unclear Outlook Pushes Stock Lower
5. U.S. Student Housing Rents Near Record Highs
6. U.S. GDP Grew 4.9% in Q3
7. Ford Agrees to 25% Wage Hike for UAW Workers
1. Google Cloud Disappoints, Stock Plunges 9%
Alphabet’s latest earnings report revealed its cloud business brought in $266 million in operating income—well below analysts’ expectations of $434 million.
As investors look for Google to diversify its revenue beyond search, the cloud segment’s weak performance caused shares to plunge 9.5%, the steepest drop since March 2020.
Google has long lagged behind Amazon and Microsoft in cloud computing. Although Google Cloud reported its first profit last year and gained traction among AI startups, growth momentum has now slowed noticeably, sparking concern about widening gaps with competitors.
Despite a 57% gain this year, tech stocks like Google are seen by some as overvalued in the current macroeconomic climate.
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2. Hertz Fleet Depreciation Soars, Shares Drop
Car rental giant Hertz Holdings reported 8% revenue growth in Q3 to $2.7 billion. However, earnings per share came in at $0.70—short of the expected $0.77.
The used car market has normalized since its 2022 peak, and rental companies are now contending with high interest rates.
Hertz said its vehicle depreciation costs rose 52% year-over-year, with each car losing $282 in value monthly on average.
Shares dropped 8.6% in early trading and are down by one-third year-to-date.
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3. Turkish Central Bank Raises Rates to 35%
The Central Bank of Turkey raised its benchmark interest rate by 5 percentage points to 35%, in line with economist forecasts. This marks the fifth rate hike since June in an effort to combat soaring inflation.
Turkey’s inflation rate is currently around 60%. New central bank governor Hafize Gaye Erkan has pledged to maintain tight monetary policy until inflation is under control.
Since June, Turkey’s base interest rate has more than quadrupled.
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4. Meta’s Unclear Outlook Pushes Stock Lower
Meta’s Q3 earnings beat expectations with $34.2 billion in revenue, showing signs of a rebound in its core advertising business.
However, CFO Susan Li warned during the earnings call that macroeconomic volatility makes 2024 revenue prospects uncertain.
Shares initially rose 5% following the report but then fell 4% in premarket trading. Meta’s stock has already surged 150% this year.
The company plans to maintain its ad business while investing more in AI and virtual reality.
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5. U.S. Student Housing Rents Near Record Highs
Data from commercial real estate firm Yardi Matrix shows that off-campus student housing rents are approaching an average of $846 per month—a year-over-year increase of more than 6% and close to record highs.
The report analyzed 900,000 privately developed student housing units near over 200 U.S. universities, excluding school-operated dorms.
In 33 markets, rents have risen over 10%, including near Purdue, Arizona State, and the University of Georgia.
Student housing has outperformed other commercial real estate categories.
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6. U.S. GDP Grew 4.9% in Q3
According to preliminary government estimates, U.S. GDP grew at an annualized rate of 4.9% in Q3—the fastest pace in nearly two years.
Consumer spending, the largest component of GDP, rose 4%, the strongest since 2021.
America’s economy continues to defy recession fears, driven by a strong labor market that supports household spending.
Economists expect growth to slow in Q4 due to resumed student loan repayments and the effects of high interest rates.
If Q4 growth remains strong, the Fed may be forced to continue tightening policy.
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7. Ford Agrees to 25% Wage Hike for UAW Workers
Ford and the United Auto Workers (UAW) union reached a tentative agreement that includes a record 25% wage increase over the life of the new contract.
The UAW said top-tier workers will earn over $40 an hour. Union leadership will vote on the deal October 29, and approval from 57,000 hourly workers is required.
UAW president Shawn Fain said the union achieved “the impossible,” with Ford boosting its initial wage offer by 50%.
President Biden praised the agreement and emphasized the importance and strength of American workers.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.