SAN FRANCISCO Jan 20 (Reuters) – Elon Musk, Tesla Inc’s (TSLA.O) chief executive, is likely to be called to testify on Friday in a jury trial over his 2018 Twitter post that he had “funding secured” to take the electric carmaker private, which shareholders allege cost them millions in trading losses.
The class action trial in San Francisco federal court resumed with investor Timothy Fries telling the jury how he lost $5,000 buying Tesla stock after Musk sent the tweet at the center of the lawsuit.
Musk, known for combative testimony, is expected to address why he has insisted he had Saudi investor backing for the deal, which never came together, and whether he knowingly made a materially misleading statement with his tweet.
The case is a rare securities class action trial and the plaintiffs have already cleared high legal hurdles, with U.S. Judge Edward Chen ruling last year that Musk’s post was untruthful and reckless.
Shareholders alleged that Musk lied when he sent the tweet, costing investors.
Fries told the jury that funding secured meant to him that “there had been some vetting, some critical review of those funding sources.”
Musk’s attorney, Alex Spiro, told the jury in his opening statement Wednesday that Musk believed he had financing from Saudi backers and was taking steps to make the deal happen. Fearing leaks to the media, Musk tried to protect the “everyday shareholder” by sending the tweet, which contained “technical inaccuracies,” Spiro said.
Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s behavior in 2018 lacked the hallmarks of traditional corporate dealmaking by tweeting his interest in Tesla without proper financial or legal analysis.
“Compared to the standard template it’s an extreme outlier,” said Subramanian, who called Musk’s approach “unprecedented” and “incoherent.”
A jury of nine will decide whether the tweet artificially inflated Tesla’s share price by playing up the status of funding for the deal, and if so, by how much.
The defendants include current and former Tesla directors, whom Spiro said had “pure” motives in their response to Musk’s plan.
Reporting by Tom Hals in Wilmington, Del., and Jody Godoy in San Francisco; Editing by Noeleen Walder, Peter Henderson, Matthew Lewis and Daniel Wallis
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Jody Godoy
Thomson Reuters
Jody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com
Jan 18 (Reuters) – Wall Street’s main indexes fell on Wednesday after weak economic data and hawkish comments from Federal Reserve officials sparked worries that the central bank may not pause interest rate hikes any time soon.
Before the market opened, U.S. economic data showed retail sales and producer prices declined more than expected in December. Also production at U.S. factories fell more than expected in December and output in the prior month was weaker than previously thought.
With Wall Street’s major averages showing gains so far for 2023, Sam Stovall, chief investment strategist at CFRA research, said some investors saw the week data as an opportunity to take profits while others worried about the prospects for a recession.
“The market was overbought. Today’s economic data served as a trigger to initiate a profit taking spell and the groups with most profits to take have been the ones that have done best last year,” said Stovall.
By 2:14PM ET, the Dow Jones Industrial Average (.DJI) fell 434.27 points, or 1.28%, to 33,476.58, the S&P 500 (.SPX) lost 42.57 points, or 1.07%, to 3,948.4 and the Nasdaq Composite (.IXIC) dropped 87.02 points, or 0.78%, to 11,008.10.
The weakest sectors on the day are the defensive consumer staples (.SPLRCD), down more than 2%, and utilities (.SPLRCU), which was last down 1.8%.
The benchmark S&P and the blue-chip Dow were both on track for their second straight day of losses, while the Nasdaq, if it ends lower, would snap a seven-day winning streak.
U.S. stocks had started 2023 on a strong footing, with the S&P having closed up almost 4% year-to-date on Tuesday, on hopes that a moderation in inflationary pressures could give the Fed cover to dial down the size of its interest rate hikes.
Roughly halfway through January, the S&P was up 2.7% for the month so far while the Nasdaq was up more than 5% and the Dow, the best performer of the three for 2022, was up 0.9%.
Earlier, St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester stressed on the need to raise rates beyond 5% to bring inflation to heel.
The Fed commentary also highlighted the disparity between the U.S. central bank’s estimate of its terminal rate and market expectations, which were of the rate peaking at 4.88% by June. Traders are now betting on a 25-basis point rate hike in February.
“This market is very hopeful that we’re going to get a soft landing and every time you have hawkish comments from the Fed, it feels you’re not going to get that,” Dennis Dick, trader at Triple D Trading.
Investors are also focused on the fourth-quarter earnings season as a window into how corporate America is doing against the backdrop of higher interest rates.
Analysts now expect year-over-year earnings from S&P 500 companies to decline 2.6% for the quarter, according to Refinitiv data, compared with a 1.6% decline in the beginning of the year.
IBM Corp (IBM.N) was down 2.6% after Morgan Stanley downgraded the company’s shares to “equal weight” from “overweight”.
Early gainers Microsoft Corp (MSFT.O) and Tesla Inc (TSLA.O) erased gains by late afternoon trading with Microsoft down 1.2% and Tesla off 2.7%.
Moderna Inc (MRNA.O) rose 3.6% after reporting data which demonstrated the effectiveness of its respiratory syncytial virus (RSV) vaccine.
PNC Financial Services Group Inc (PNC.N) was down 5.4% after the company missed estimates for fourth-quarter profit.
Declining issues outnumbered advancing ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.66-to-1 ratio favored decliners.
The S&P 500 posted 9 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 71 new highs and 14 new lows.
Reporting by Sinéad Carew in New York, Shreyashi Sanyal and Amruta Khandekar in Bengaluru; Additional reporting by Shubham Batra; Editing by Shounak Dasgupta and David Gregorio
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Jan 17 (Reuters) – A 2016 video that Tesla (TSLA.O) used to promote its self-driving technology was staged to show capabilities like stopping at a red light and accelerating at a green light that the system did not have, according to testimony by a senior engineer.
The video, which remains archived on Tesla’s website, was released in October 2016 and promoted on Twitter by Chief Executive Elon Musk as evidence that “Tesla drives itself.”
But the Model X was not driving itself with technology Tesla had deployed, Ashok Elluswamy, director of Autopilot software at Tesla, said in the transcript of a July deposition taken as evidence in a lawsuit against Tesla for a 2018 fatal crash involving a former Apple (AAPL.O) engineer.
The previously unreported testimony by Elluswamy represents the first time a Tesla employee has confirmed and detailed how the video was produced.
The video carries a tagline saying: “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”
Elluswamy said Tesla’s Autopilot team set out to engineer and record a “demonstration of the system’s capabilities” at the request of Musk.
Elluswamy, Musk and Tesla did not respond to a request for comment. However, the company has warned drivers that they must keep their hands on the wheel and maintain control of their vehicles while using Autopilot.
The Tesla technology is designed to assist with steering, braking, speed and lane changes but its features “do not make the vehicle autonomous,” the company says on its website.
To create the video, the Tesla used 3D mapping on a predetermined route from a house in Menlo Park, California, to Tesla’s then-headquarters in Palo Alto, he said.
Drivers intervened to take control in test runs, he said. When trying to show the Model X could park itself with no driver, a test car crashed into a fence in Tesla’s parking lot, he said.
“The intent of the video was not to accurately portray what was available for customers in 2016. It was to portray what was possible to build into the system,” Elluswamy said, according to a transcript of his testimony seen by Reuters.
When Tesla released the video, Musk tweeted, “Tesla drives itself (no human input at all) thru urban streets to highway to streets, then finds a parking spot.”
Tesla faces lawsuits and regulatory scrutiny over its driver assistance systems.
The U.S. Department of Justice began a criminal investigation into Tesla’s claims that its electric vehicles can drive themselves in 2021, after a number of crashes, some of them fatal, involving Autopilot, Reuters has reported.
The New York Times reported in 2021 that Tesla engineers had created the 2016 video to promote Autopilot without disclosing that the route had been mapped in advance or that a car had crashed in trying to complete the shoot, citing anonymous sources.
When asked if the 2016 video showed the performance of the Tesla Autopilot system available in a production car at the time, Elluswamy said, “It does not.”
Elluswamy was deposed in a lawsuit against Tesla over a 2018 crash in Mountain View, California, that killed Apple engineer Walter Huang.
Andrew McDevitt, the lawyer who represents Huang’s wife and who questioned Elluswamy’s in July, told Reuters it was “obviously misleading to feature that video without any disclaimer or asterisk.”
The National Transportation Safety Board concluded in 2020 that Huang’s fatal crash was likely caused by his distraction and the limitations of Autopilot. It said Tesla’s “ineffective monitoring of driver engagement” had contributed to the crash.
Elluswamy said drivers could “fool the system,” making a Tesla system believe that they were paying attention based on feedback from the steering wheel when they were not. But he said he saw no safety issue with Autopilot if drivers were paying attention.
Reporting by Hyunjoo Jin; Editing by Kevin Krolicki and Lisa Shumaker
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U.S. consumers’ inflation expectations ease – survey
Tesla falls after price cuts on electric vehicles
Indexes: Dow up 0.3%, S&P 500 up 0.4%, Nasdaq up 0.7%
NEW YORK, Jan 13 (Reuters) – The S&P 500 and Nasdaq finished at their highest levels in a month on Friday, with shares of JPMorgan Chase and other banks rising following their quarterly results, which kicked off the earnings season.
All three major indexes also registered strong gains for the week, leaving the S&P 500 up 4.2% so far in 2023, and the Cboe Volatility index (.VIX) – Wall Street’s fear gauge – closed at a one-year low.
On Friday, financials (.SPSY) were among sectors that gave the S&P 500 the most support.
JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) beat quarterly earnings estimates, while Wells Fargo & Co (WFC.N) and Citigroup Inc (C.N) fell short of quarterly profit estimates.
But shares of all four firms rose, along with the S&P 500 banks index (.SPXBK), which ended up 1.6%. JPMorgan shares climbed 2.5%.
Still, Wall Street’s biggest banks stockpiled more rainy-day funds to prepare for a possible recession and reported weak investment banking results while showing caution about forecasting income growth. They said higher rates helped to boost profits.
Strategists said investors will be watching for further guidance from company executives in the coming weeks.
“This has shifted the focus back to earnings,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
“Even though the earnings were basically OK, people are just kind of stepping back, and you’re going to see a wait-and-see attitude with stocks” as investors hear more from company executives.
Year-over-year earnings from S&P 500 companies are expected to have declined 2.2% for the quarter, according to Refinitiv data.
Also giving some support to the market Friday, the University of Michigan’s survey showed an improvement in U.S. consumer sentiment, with the one-year inflation outlook falling in January to the lowest level since the spring of 2021.
The Dow Jones Industrial Average (.DJI) rose 112.64 points, or 0.33%, to 34,302.61, the S&P 500 (.SPX) gained 15.92 points, or 0.40%, to 3,999.09 and the Nasdaq Composite (.IXIC) added 78.05 points, or 0.71%, to 11,079.16.
The S&P 500 closed at its highest level since Dec. 13, while the Nasdaq closed at its highest level since Dec. 14.
For the week, the S&P 500 gained 2.7% and the Dow rose 2%. The Nasdaq increased 4.8% in its biggest weekly percentage gain since Nov. 11.
The U.S. stock market will be closed Monday for the Martin Luther King Jr. Day holiday.
Thursday’s Consumer Price Index and other recent data have bolstered hopes that a sustained downward trend in inflation could give the Federal Reserve room to dial back on its interest rate hikes.
Money market participants now see a 91.6% chance the Fed will hike the benchmark rate by 25 basis points in February.
Among the day’s decliners, Tesla (TSLA.O) shares fell 0.9% after it slashed prices on its electric vehicles in the United States and Europe by as much as 20% after missing 2022 deliveries estimates.
In other earnings news, UnitedHealth Group Inc (UNH.N) shares rose after it beat Wall Street expectations for fourth-quarter profit but the stock ended down on the day.
Shares of Delta Air Lines Inc (DAL.N) dropped 3.5% as the company forecast first-quarter profit below expectations.
Volume on U.S. exchanges was 10.77 billion shares, compared with the 10.81 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 1.79-to-1 ratio; on Nasdaq, a 1.78-to-1 ratio favored advancers.
The S&P 500 posted 12 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 105 new highs and 8 new lows.
Additional reporting by Shubham Batra, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Subhranshu Sahu, Shounak Dasgupta and Grant McCool
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Model 3 price in Germany in line with Volkswagen’s ID.3
Jan 13 (Reuters) – Tesla (TSLA.O) has slashed prices on its electric vehicles in the United States and Europe by as much as 20%, extending a strategy of aggressive discounting after missing Wall Street estimates for 2022 deliveries.
The move, which prompted a 3.8% fall in Tesla’s shares in Frankfurt, came after CEO Elon Musk warned that the prospect of recession and higher interest rates meant it could lower vehicle pricing to sustain volume growth at the expense of profit.
The lower pricing across Tesla’s major markets marks a reversal from the strategy the automaker had pursued through much of 2021 and 2022 when orders for new vehicles exceeded supply. Musk acknowledged last year that prices had become “embarrassingly high” and could hurt demand.
The U.S. price cuts, announced late Thursday in U.S. time on the Model 3 sedan and Model Y crossover SUV, ranged between 6% and 20% compared with prices before the discount, according to Reuters calculations.
That is before an up to $7,500 federal tax credit that took effect for many electric vehicle models at the start of January.
Following is a table of the price cuts by model in Germany and the United States:
Reuters Graphics
Tesla also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States.
In Germany, it cut prices on the Model 3 and the Model Y – its global top-sellers – by between about 1% and almost 17% depending on the configuration. It also cut prices in Austria, Switzerland and France.
For a U.S. buyer of the long-range Model Y, the new Tesla price combined with the U.S. subsidy that took effect this month amounts to a discount of 31%. In addition, the Tesla move broadened the vehicles in its line-up eligible for the Biden administration tax credit.
Before the price cut, the five-seat version of the Model Y had been ineligible for that credit, a designation Musk had called “messed up”. After the price cut, the long-range version of the Model Y will qualify for the $7,500 federal credit.
“This should really boost 2023 (Tesla) volumes,” Gary Black, a Tesla investor who has remained bullish on the company and its prospects through the recent, sharp share price decline, said in a tweet. “It’s the right move.”
Still, some users on Tesla fan forums online complained the price cuts disadvantaged customers who had recently bought their vehicle, leaving them with a lower-valued item on the second-hand car market.
“I’m not very pleased with these huge price sways. Just reducing 10,000 euros like that – definitely makes you feel that you just paid far too much,” one user wrote on a ‘Tesla Drivers and Friends’ forum on Friday.
In China, where Tesla cut prices last week by 6-13.5%, owners protested at delivery centres across the country, pressing Tesla for compensation.
Before the price cut, Tesla inventory in the United States, as tracked by the models its website shows as immediately available, had been trending higher. Prices on used Tesla models had also been declining, increasing the pressure on it to adjust new-car sticker prices.
For 2021, the United States and China combined had accounted for about 75% of Tesla sales, although the automaker has been growing sales in Europe, where its Berlin factory has been ramping up production.
Reuters Graphics
NEW SALES LEADERSHIP
The shift is the first major move by Tesla since appointing its lead executive for China and Asia, Tom Zhu, to oversee U.S. output and sales.
Tesla cut prices in China and other Asian markets last week. Along with previous price cuts announced in October and recent incentives, the Chinese price for a Model 3 or Model Y was down 13% to 24% from September after the recent move, Reuters calculations showed.
Tesla has also cut prices in South Korea, Japan, Australia and Singapore.
Analysts had said the Chinese price cuts would boost demand and increase pressure on its rivals there, including BYD (002594.SZ), to follow suit in what could become a price war in the largest single market for electric vehicles.
That pressure could be building in Europe as well.
Tesla’s Model 3 was the best-selling electric vehicle in Germany last month, followed by the Model Y, beating Volkswagen’s (VOWG_p.DE) all-electric ID.4. Volkswagen recently raised the price of its entry-level ID.3, putting it at parity with the now-discounted Model 3.
Tesla missed Wall Street estimates for fourth quarter deliveries. Full year growth in deliveries was 40% – also short of Musk’s own forecast of 50%.
Tesla shares under pressure
Reporting by Zhang Yan in Shanghai, Hyunjoo Jin in Seoul, Victoria Waldersee in Berlin; Writing by Kevin Krolicki in Singapore; Editing by Lincoln Feast, Kenneth Maxwell, Mark Potter and Alexander Smith
Our Standards: The Thomson Reuters Trust Principles.
Jan 11 (Reuters) – U.S. clean energy companies are offering better wages and benefits, flying in trainers from overseas, and contemplating ideas like buying roofing and electric repair shops just to hire their workers as firms try to overcome a labor shortage that threatens to derail President Joe Biden’s climate change agenda.
The Inflation Reduction Act, signed into law last year, provides for an estimated $370 billion in solar, wind and electric vehicle subsidies, according to the White House. Starting Jan. 1, American consumers can take advantage of those tax credits to upgrade home heating systems or put solar panels on their roofs. Those investments will create nearly 537,000 jobs a year for a decade, according to an analysis by BW Research commissioned by The Nature Conservancy.
Reuters Graphics Reuters Graphics
But with the U.S. unemployment rate at an historic low of 3.5%, companies say they fear they will struggle to fill those jobs, and that plans to transition away from fossil fuels could stall out. Despite layoff announcements and signs of a slowdown elsewhere in the economy, the labor market for clean energy jobs remains tight.
“It feels like a big risk for this expansion. Where are we going to find all the people?” said Abigail Ross Hopper, president of the Solar Energy Industries Association trade group.
The shortage is anticipated to hit especially hard in electric vehicle and battery production and solar panel and home efficiency installations, forcing some of the companies into bold new approaches to find workers.
Korea’s SK Innovation Co Ltd, which makes batteries for Ford Motor Co’s (F.N) F-150 Lightning all-electric pickup truck in Commerce, Georgia, has pumped up pay and benefits as it ramps up its U.S. workforce to 20,000 people by 2025 from 4,000 today.
The battery maker is advertising pay between $20 and $34 an hour, above Georgia’s median hourly wage of $18.43, according to the U.S. Bureau of Labor Statistics. It is also covering 100% life insurance costs and matching retirement plan contributions up to 6.5%, above the national average of 5.6%, according to the Plan Sponsor Council of America. And the company is providing free food on the job.
“Georgia’s talent pool is not really massive. But we are trying to improve some of our policies to better source and retain workers,” said an SK official who declined to be named, citing the sensitivity of the matter.
Georgia state officials said SK’s hiring has been a success considering how quickly production had to ramp up to meet the company’s obligations to automakers.
While national residential solar installer SunPower Corp (SPWR.O) is recruiting aggressively, Chief Executive Peter Faricy said the company is also looking at what he called “crazy ideas” to secure labor – including buying up companies just for their workers.
“I’m not suggesting we will do this, but I want to give you an order of magnitude of what we’re considering. Like, should we acquire a roofing company and make them all solar installers? Do we go buy an electrical company and acquire 100 electricians?” he said.
SunPower also held talks within the last year with panel manufacturer First Solar Inc (FSLR.O) about developing a solar panel that would be easier to install, enabling crews to outfit two homes a day instead of just one, Faricy said.
SunPower’s competitor, Sunrun Inc (RUN.O), is deploying drones to survey roofs ahead of installation, reducing the number of workers required to scale roofs. It is also rewarding top crews with office parties.
“As best you can game-ify the experience for the employee… it just makes the industry more fun, more attractive,” Chris McClellan, Sunrun’s senior vice president of operations, said in an interview.
Offshore wind developer Orsted (ORSTED.CO), a Danish company that is planning to build projects off the East Coast, hopes to fly in employees from projects in the United Kingdom and Asia to help train staff. State reports have indicated that New York and Massachusetts face large offshore wind workforce gaps.
“We’re creating sort of an ecosystem where we don’t just have an offshore wind academy, but really train the trainers of the future,” said Mads Nipper, Orsted’s CEO, told Reuters.
The Biden Administration has repeatedly promised that new green energy jobs would be well-paying union jobs.
But many of those jobs have lagged the fossil fuel industry in pay, according to a 2021 study by BW Research, as clean energy companies have sought to contain costs to compete with entrenched industries. The IRA seeks to address that by tying prevailing wage and apprenticeship requirements to the subsidies.
Those provisions — and the hiring challenges — have put pressure on some employers to use unionized labor.
Learning from its earlier hiring challenges in Europe and Asia, Orsted signed an agreement with North America’s Building Trades Unions to secure workers.
Even Amazon.com Inc (AMZN.O), a company that has been embroiled in disputes with workers trying to organize, has used union labor to build the electric charging infrastructure for its fleet of electric delivery vehicles in Maspeth, Queens, NY.
Amazon did not respond to requests for comment.
Corrine Case, an electrician represented by the International Brotherhood of Electrical Workers, said she was paid $43 an hour to install the charging system at Amazon.
A single mother, Case said she was excited about the job security offered by the rising demand for electricians to install charging stations.
“Our field is constantly changing because of new energy sources and to be a part of that is amazing,” she said.
FREE WORKER TRAINING
In their hunt for workers, solar, wind and electric vehicle companies have expanded programs offering free and subsidized training to military veterans, women and the formerly incarcerated.
SK told Reuters that it has been recruiting at military job fairs and American Legion chapters and collaborating with programs like the Georgia National Guard’s Work for Warriors and the Manufacturing Institute’s Heroes MAKE America.
Some solar companies have tried to recruit veterans, saying the skills learned in military life translate well to the industry.
Utility scale solar developer SOLV Energy, SunPower and Nextracker last year teamed up with nonprofit Solar Energy International to fund a women-only training program for solar installers. More than 30 women attended the week-long course in Colorado.
In October, the nonprofit Solar Hands-On Instructional Network of Excellence (SHINE) teamed up with the Virginia Department of Corrections on a pilot program to train 30 prison inmates and recently incarcerated people in solar panel installation. SHINE’s director David Peterson said the group is discussing expanding the program.
In California, the nonprofit Grid Alternatives has trained 150 inmates at the Madera County jail in solar installation since 2017 and is expanding its program this year to other facilities in the state. Potential employers are more open to hiring the formerly incarcerated once they see they have received some training, Tom Esqueda, the nonprofit’s outreach manager, said.
In Los Angeles, nonprofit Homeboy Industries, which works to rehabilitate former gang members, is using the potential job opportunities for solar panel installers to help recruits for its state-funded jobs program. Homeboy trains 50-60 people a year as solar panel installers.
More than 80% of the people who have gone through the training in the last year have found jobs in solar, according to Jackie Harper, who oversees the program.
“I’m going to be sticking with this,” said Marco Reyes, 28, who went through the program after his release from prison in February and earns $23 an hour as an installer in Valencia, California.
He now plans to train in the electrical end of solar installation, which would bump up his pay.
“Everyone has a chance to move up the ladder into a better position,” he said. “This job to me is a life changer.”
Read more:
Korea’s Hanwha Qcells to invest $2.5 bln in U.S. solar supply chain
U.S. solar installations to fall 23% this year due to China goods ban -report
Reporting by Nichola Groom and Valerie Volcovici; Edited by Richard Valdmanis and Suzanne Goldenberg
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Jan 9 (Reuters) – Microsoft Corp (MSFT.O) is in talks to invest $10 billion into OpenAI, the owner of ChatGPT, which will value the San Francisco-based firm at $29 billion, Semafor reported on Monday, citing people familiar with the matter.
The funding includes other venture firms and deal documents were sent to prospective investors in recent weeks, with the aim to close the round by the end of 2022, the report said.
Microsoft declined to comment, while OpenAI did not immediately respond to Reuters’ request for comment.
This follows a Wall Street Journal report that said OpenAI was in talks to sell existing shares at a roughly $29 billion valuation, with venture capital firms such as Thrive Capital and Founders Fund buying shares from existing shareholders.
OpenAI, founded by Tesla Inc (TSLA.O) CEO Elon Musk and investor Sam Altman, made the ChatGPT chatbot available for free public testing on Nov. 30. A chatbot is a software application designed to mimic human-like conversation based on user prompts.
The Semafor report said the funding terms included Microsoft getting 75% of OpenAI’s profits until it recoups its initial investment once OpenAI figures out how to make money on ChatGPT and other products like image creation tool Dall-E.
On hitting that threshold, Microsoft would have a 49% stake in OpenAI, with other investors taking another 49% and OpenAI’s nonprofit parent getting 2%, the report said, without clarifying what the stakes would be until Microsoft got its money back.
Microsoft, which invested $1 billion in OpenAI in 2019, was working to launch a version of its search engine Bing using the AI behind ChatGPT, the Information reported last week.
Reporting by Aarati Krishna in Bengaluru; Editing by Savio D’Souza
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Macy’s, Lululemon drop on holiday-quarter warnings
Indexes: Dow down 0.3%, S&P 500 down 0.1%, Nasdaq up 0.6%
NEW YORK, Jan 9 (Reuters) – The S&P 500 index (.SPX) erased early gains to close nearly flat on Monday as expectations that the Federal Reserve will become less aggressive with its interest rate hikes were offset by lingering worries about inflation.
The Dow ended lower, and the Nasdaq Composite (.IXIC) ended well off the day’s highs.
Investors are awaiting comments Tuesday from Fed Chair Jerome Powell, who some strategists expect could say more time is needed to show inflation is under control.
Money market bets were showing 77% odds of a 25-basis point hike in the Fed’s February policy meeting.
A consumer prices report due Thursday could be key for rate expectations, said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina. “The CPI report this week is going to be essential for fine-tuning the Fed funds futures market.”
Investors also may have sold some shares after recent strong market gains, said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “You’re seeing a little bit of profit-taking ahead of the CPI number due out this week.”
The technology sector (.SPLRCT) gained as Treasury yields fell. Consumer discretionary stocks (.SPLRCD) also rose, with Amazon.com Inc (AMZN.O) up 1.5% after Jefferies said it saw cost pressures easing for the e-commerce giant in the second half of the year.
Also, S&P 500 companies are about to kick off the fourth-quarter earnings period, with results from top U.S. banks expected later this week.
Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly
The Dow Jones Industrial Average (.DJI) fell 112.96 points, or 0.34%, to 33,517.65, the S&P 500 (.SPX) lost 2.99 points, or 0.08%, to 3,892.09 and the Nasdaq Composite (.IXIC) added 66.36 points, or 0.63%, to 10,635.65.
Shares of Broadcom Inc (AVGO.O) fell in late trading to end down 2% after Bloomberg, citing people familiar with the matter, reported that Apple Inc (AAPL.O) plans to drop a Broadcom chip in 2025 and use an in-house design instead.
Friday’s jobs report, which showed a moderation in wage increases, lifted hopes that the Fed might become less aggressive in its rate-hike push to reduce inflation.
Tesla Inc (TSLA.O) shares rose 5.9% after the electric-vehicle maker indicated longer waiting times for some versions of the Model Y in China, signaling the recent price cuts could be stoking demand.
Macy’s Inc (M.N) fell 7.7% and Lululemon Athletica Inc (LULU.O) dropped 9.3% after both retailers issued disappointing holiday-quarter forecasts.
Volume on U.S. exchanges was 11.35 billion shares, compared with the 10.90 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered decliners on the NYSE by a 1.85-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers.
The S&P 500 posted 13 new 52-week highs and two new lows; the Nasdaq Composite recorded 129 new highs and 32 new lows.
Additional reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Richard Chang
Our Standards: The Thomson Reuters Trust Principles.
WASHINGTON, Jan 9 (Reuters) – The National Highway Traffic Safety Administration (NHTSA) Monday said it was in contact with Tesla (TSLA.O) about a tweet Chief Executive Elon Musk wrote about a driver monitoring function.
A Dec. 31 tweet suggested drivers with more than 10,000 miles using Tesla’s “Full Self-Driving” (FSD) software system should be able to disable the “steering wheel nag,” an alert that instructs drivers to hold the wheel to confirm they are paying attention. Musk responded: “Agreed, update coming in Jan.”
NHTSA Monday said it “is in contact with Tesla to gather additional information.” The Associated Press reported NHTSA’s statement earlier. Tesla did not immediately comment.
The auto safety agency confirmed the questions about Musk’s tweet are in connection with its ongoing defect probe into 830,000 Tesla vehicles with driver assistance system Autopilot and involving crashes with parked emergency vehicles.
NHTSA is reviewing whether Tesla vehicles adequately ensure drivers are paying attention, and previously said evidence suggested drivers in most crashes under review had complied with Tesla’s alert strategy that seeks to compel driver attention, raising questions about its effectiveness.
Tesla sells the $15,000 FSD software as an add-on which enables its vehicles to change lanes and park autonomously. That complements its standard “Autopilot” feature, which enables cars to steer, accelerate and brake within their lanes without driver intervention. Both systems use the steering wheel monitoring function.
Last month, NHTSA said it had opened two new special investigations into crashes involving Tesla vehicles where advanced driver assistance systems are suspected to have been in use. Since 2016, NHTSA has opened more than three dozen Tesla special crash investigations where advanced driver assistance systems such as Autopilot were suspected of being used with 19 crash deaths reported.
In December 2021, NHTSA opened a probe into Tesla’s decision to allow games to be played by passengers on the front center touchscreen covering 580,000 vehicles over the vehicle’s “Passenger Play” over driver distraction concerns.
Soon after the investigation was opened, Tesla told NHTSA it would stop allowing video games to be played on vehicle screens while its cars are moving, the agency said.
Reporting by David Shepardson
Editing by Nick Zieminski
Our Standards: The Thomson Reuters Trust Principles.
SHANGHAI, Jan 9 (Reuters) – Prospective Tesla Inc (TSLA.O) buyers in China are waiting longer for certain versions of its Model Y car, suggesting the electric-vehicle maker’s decision to cut prices is stoking demand in its second-largest market.
The waiting time for orders of the rear-wheel-drive and long-range versions of Model Y was a week longer on Monday than it had been on Friday, Tesla’s website showed.
The company’s shares rose about 8% to $122.20 on Monday after losing 68% in the past 12 months.
The wait as of Monday was two to five weeks on those models. The wait time for all versions of the Model 3 and the performance version of the Model Y remained at one to four weeks as of Monday.
Tesla cut prices by 6% to 13.5% on Friday in discounts that brought some of its cars to near BYD’s (1211.HK) best-selling models in a step analysts read as a sign that a price war could be building at a time when demand in China has faltered.
As of Monday, Tesla had not made any adjustment to its January production plan for its Shanghai plant, with suspension of the assembly lines to start from Jan. 20 through the end of the month, a person with knowledge of the matter said.
“It (the wait time) is an early indication that the price cuts are having their intended impact, which is to boost demand,” said CFRA Research analyst Garrett Nelson.
Nelson added that Tesla’s vehicle production has exceeded sales for three straight quarters and the company has chosen to lower prices and take some additional downtime at the Shanghai factory to bring supply and demand back in balance.
People check a Tesla Model Y electric vehicle (EV) displayed at its booth during the 2021 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 4, 2021. REUTERS/Florence Lo
Reuters Graphics
Angry Chinese owners who bought Tesla cars in late 2022 and missed out on the additional discount said they were waiting for a response from the company for their demand for some kind of compensation after a flurry of impromptu protests.
A Tesla representative told Reuters on Saturday that the company has no plan to compensate those buyers for price cuts they had missed. The company did not respond to a request for comment on Monday.
Some of the buyers in China said they had been led to believe that the further discounts would not be coming. Many were also looking to take advantage of a nation-wide EV subsidy that expired at year end.
Chinese state media have largely opted not to cover the protests, which online videos showed happened in cities including Beijing, Shenzhen, Chengdu and Xi’an. Reuters witnessed a protest at a Tesla facility in Shanghai.
Comments on Chinese social media were largely negative toward the Tesla buyers who have protested, with many saying online they should have understood the terms of the contract.
“I feel ashamed for them protesting after Tesla cut the prices,” a popular law blogger named “Wind Blows” commented on his Weibo social media.
Separately, Tesla began offering discounts to buyers in Singapore as of Monday who agreed to purchase existing inventory, adding that market to China, South Korea, Japan and Australia to those where it has offered new incentives.
Reporting by Zhang Yan, Brenda Goh; Additional reporting by Akash Sriram in Bengaluru; Editing by Muralikumar Anantharaman and Shounak Dasgupta
Our Standards: The Thomson Reuters Trust Principles.
