Ford stock has biggest daily drop since 2011 after inflation warning

The Ford logo is pictured at the Frankfurt Motor Show (IAA) 2019 in Frankfurt, Germany. REUTERS/Wolfgang Rattay

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Sep 20 (Reuters) – Ford Motor Co’s (FN) Shares fell more than 12% on Tuesday in their biggest one-day drop in more than a decade after the automaker said inflation-related costs would be $1 billion higher than expected at the in the current quarter and that parts shortages had delayed deliveries.

The stock ended at $13.09, making its percentage decline for the session its largest since January 2011.

Ford’s preliminary third-quarter results, released late Monday, sent shares of rival General Motors Co. (GM.N)down 5.6% as analysts said it may take longer for automakers to recover from chip shortages.

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“It appears that across the sector, chip and component shortages may be improving at a slower pace than expected,” said Deutsche Bank analyst Emmanuel Rosner.

In July, Ford said it expected raw material costs to rise by $4 billion for the year. Read more

The Greater Detroit manufacturer’s warning comes less than a week after delivery company FedEx Corp (FDX.N) withdrew its financial guidance due to slowing global demand. Read more

Ford’s inflation troubles and weak demand from FedEx underscore the bond the Federal Reserve finds itself in ahead of the US central bank’s policymaking meeting on Wednesday.

The Fed is expected to raise rates by 75 basis points in its battle against high inflation for decades. His aggressive monetary policy campaign has hit the U.S. stock market in recent weeks as investors fear the Fed’s actions could hurt the economy.

Ford also estimated that it would have between 40,000 and 45,000 vehicles in stock missing parts.

Ford, which is due to report third-quarter results on Oct. 26, confirmed 2022 adjusted earnings before interest and tax guidance of $11.5 billion to $12.5 billion.

It was unclear whether the supply of chips and parts would normalize by the end of the year, Deutsche Bank’s Rosner said.

Ford shares are down 37% in 2022, well above the S&P 500 (.SPX) 19% decrease.

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Reporting by Kannaki Deka in Bengaluru and Noel Randewich in Oakland, California; Editing by Shounak Dasgupta, Richard Chang and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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