Futures dip, DOJ mulls Google break-up, Rio-Arcadium deal – what’s moving markets
Investing.com — Stock futures tick down on Wednesday following a tech-driven rise in equities in the previous session. The US Justice Department weighs a possible break-up of search titan Google (NASDAQ:GOOGL) in a federal court filing. Rio Tinto (NYSE:RIO) agrees to a $6.7 billion acquisition of US peer Arcadium Lithium, signaling the miner’s drive to enhance its position ahead of an anticipated jump in electric vehicle demand.
1. Futures dip
US stock futures pointed lower on Wednesday after a positive session on Wall Street.
By 03:30 ET (07:30 GMT), the Dow futures contract was trading down by 94 points or 0.2%, S&P 500 futures had dipped by 18 points or 0.3%, and Nasdaq 100 futures had fallen by 87 points or 0.4%.
The main indices ended higher on Tuesday, buoyed by hopes the Federal Reserve is on track to engineer a so-called “soft landing” for the US economy, in which price pressures are quelled without sparking a steep downturn in labor demand or broader activity. Investors will have the chance to pour through fresh inflation data later in the week.
Technology stocks did most of the “heavy lifting” for the gains, analysts at Vital Knowledge said in a note to clients. Artificial intelligence-darling Nvidia (NASDAQ:NVDA) in particular added 4%, while peer Broadcom (NASDAQ:AVGO) increased by 3%.
2. US Justice Department weighs potential Google break-up
The US Department of Justice is mulling possible sanctions against Alphabet-owned Google, including a break-up of the search giant, following a landmark antitrust case that found the group guilty of abusing its dominant market position.
The DOJ is “considering behavioral and structural remedies” that would prevent Google from using products like its web browser, app store or operating system to advantage its search business over its competitors, according to a federal court filing on Tuesday. Officials also suggested that Amit Mehta, the US judge presiding over the case, could force Google into revealing the underlying data used to build its search engine and artificial intelligence products.
“For more than a decade, Google has controlled the most popular distribution channels, leaving rivals with little-to-no incentive to compete for users,” the DOJ added.
Google responded in a blog post, warning that the proposal could have damaging effects on both “American innovation and America’s consumers.”
The DOJ’s filing comes after Mehta declared in August that the tech giant was a “monopolist,” arguing that it paid companies like phone manufacturers and web browser operators billions of dollars to make Google their default search option.
3. Rio Tinto agrees to $6.7 bn acquisition of Arcadium Lithium
Global miner Rio Tinto has agreed to acquire US peer Arcadium Lithium in a $6.7 billion all-cash deal, according to a statement on Wednesday.
Rio Tinto said the deal would see it purchase Pennsylvania-based Arcadium for $5.85 per share, representing a premium of 90% to Arcadium’s closing price on Oct. 4.
The move will bring Arcadium’s lithium unit into Rio Tinto’s portfolio, bolstering its position ahead of an anticipated wave of demand for electric vehicles. Lithium, which Rio currently does not produce, plays a key role in the manufacturing of EVs.
“Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition,” Rio Tinto CEO Jakob Stausholm said.
The acquisition, which was approved by the boards of both Rio Tinto and Arcadium, is expected to close in mid-2025, pending the backing of at least 75% of Arcadium shareholders.
4. Boeing withdraws offer to striking workers
Boeing (NYSE:BA) has withdrawn an offer to roughly 33,000 striking machinists and suspended negotiations with the union representing them.
In a letter to employees released on Tuesday, the planemaker said the International Association of Machinists and Aerospace Workers had made “non-negotiable” demands, and that further talks did not “make sense at this point.” The firm had previously offered a 30% wage hike and improved retirement benefits.
The breakdown in talks came after two days of negotiations with a federal mediator, denting chances of an immediate end to an almost month-long work stoppage impacting Boeing’s operations in the US Pacific Northwest.
Boeing is reportedly hemorrhaging cash due to the strike, heaping further issues on to a business already facing heavy scrutiny over its safety record.
Meanwhile, S&P Global Ratings said on Monday it had placed Boeing’s credit and senior unsecured debt rating on a negative credit watch, adding that the likelihood of a downgrade into junk status may increase if the strike persists toward the end of the year.
5. Oil rebounds
Oil prices rose Wednesday, recouping some of the prior session’s steep losses, although the indication of a large increase in US inventories has limited gains.
By 03:31 ET, the Brent contract climbed 0.8% to $77.83 per barrel, while U.S. crude futures (WTI) traded 0.8% higher at $74.12 per barrel.
Both contracts slumped more than 4% on Tuesday on disappointment over the lack of new fiscal stimulus measures from top oil importer China. Reports that Lebanese military group Hezbollah was seeking a ceasefire with Israel also suggested a potential de-escalation of tensions in the Middle East.
Elsewhere, data from the American Petroleum Institute, released on Tuesday, showed US oil inventories grew by 10.9 million barrels in the past week, much more than expectations for an increase of 1.95 million barrels.
Official data from the Energy Information Administration are due later in the session, and could spark concerns that US fuel demand was cooling, especially as the country’s South grapples with a series of devastating hurricanes.