On the last day of the quarter, Federal Reserve Chair Yellen pleased Wall Street by saying the Fed will not quickly reverse its stimulus policies because the economy is still in weak condition. The Dow gained 134 points, the Nasdaq rose by 43, and the S&P 500 Index advanced 14. Twenty-five of the Dow’s thirty components gained ground, led by Visa (V), which rose almost 2%. Volume was light, and advancing issues outnumbered decliners by three to one. The prices of Treasuries weakened, while the price of gold futures lost 0.81% to $1,283.80 an ounce. The price of crude oil on the New York Mercantile Exchange slipped lower by 0.09% to $101.58 a barrel.
In Other Business News:
- Carlyle Group, an asset management firm, announced it has a binding agreement to acquire the Ortho-Clinical Diagnostics division of Johnson & Johnson for $4.1 billion. “We have been focused on the diagnostics industry for many years given its attractive growth prospects, driven by the crucial role it plays in health care decision-making and influencing patient outcomes,” a Carlyle director said.
- Speaking in Chicago, Federal Reserve Chair Janet Yellen said the Fed will maintain its “extraordinary” support for the economy “for some time to come.” She explained that the job market is worse than the 6.7% unemployment rate would suggest because there are so many people (7 million) who are working part time but would rather be working full time. She also noted that wages are growing slowly and an extraordinary number of people have been out of work for six months or more.
- Preparing to address a congressional hearing on Tuesday, General Motors’ chief executive officer, Mary Barra, issued a preliminary statement previewing her testimony. In the statement, she says: “More than a decade ago, GM embarked on a small car program. Sitting here today, I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out.” The price of General Motors shares (GM) lost 0.8%.
Nothing gets our attention like an impending apocalypse. The end is coming! The end is coming! Am I right? The latest end-of-days proclamation I spotted was on CBS MarketWatch, where a columnist recently declared: “The end of the car is coming.”
If a reader is thinking of investing in auto stocks for the next year or two, the article makes some points worth considering. Although there has been a lot of talk on Wall Street about Detroit’s bounce-back from the Great Recession and about China’s voracious appetite for cars, auto manufacturers think sales in the coming year will be sluggish. The pent-up demand for cars that developed during the recession may now have been satisfied. And, as for China, the government there is beginning to put restrictions on car ownership out of concern for the environment.
On top of that, we are seeing America’s passion for vehicles beginning to wane. The percentage of 19-year-olds in this country with driver’s licenses fell from almost 90% in 1983 to 70% in 2010 as young people’s fancies are increasingly captivated by tech gadgets like smartphones. Moreover, suburban life is losing allure and some people are returning to city living, a trend that prompted one real estate mogul to declare recently that we are seeing the end of suburbia. (There we go again: The end of something is coming.)
So, are we witnessing the death of cars? Not likely. Cars may be losing their ability to satisfy our yearning for mobility, but they still get us from Point A to Point B with unmatched speed and efficiency. Teenagers may no longer beg the parents for keys to the convertible so they take their Sweeties out on Saturday night, but they still want wheels. It’s just that on Saturday morning, they’re satisfied to tweet their friends instead of driving over. So, the car’s role will change. Autos may get smaller, cleaner, slower, and duller, but it is still a huge industry, and innovators within it—like Tesla—will still provide hotspots. And, if anyone says to me “the end of the car is coming,” I’m more likely to check that I’m not standing in a driveway with a car backing out than I am to think our offices will soon be paperless, er, I mean our streets will soon be carless.
Potential headlines for this story:
- From one mobile device, the car, to another mobile device, the smartphone.
- From wheels to apps.
- From Sweetie in person to Sweetie in Tweetie.