U.S. Manufacturers like Arconic, Deere and Company, and Caterpillar are facing a rough couple of weeks... and it's probably not going to change anytime soon.
Last week, Arconic had a disappointing 1Q Earnings Report, which sent its stock falling more than 20% ($4.63) in one day. On Monday, May 7th, Mark Grywacheski joined us live on Good Morning Quad Cities for our weekly "Your Money with Mark" segment. He explained that U.S. Manufacturers like Aronic are facing higher operating costs because of these three challenges:
"One of the biggest factors is rising interest rates, which significantly increases borrowing costs for expanding their operations, building new factories and purchasing new machinery/equipment," he explained. "President Trump’s 25% tariff on imported steel and 10% tariff on imported aluminum are driving up manufacturing costs and energy costs are rising as the price of crude oil has risen from $40/barrel to almost $70/barrel."
He added that it doesn't sound like there's going to be any relief anytime soon:
"What's unique for Arconic is during its 1Q Earnings Report - the CEO highlighted a number of operational inefficiencies and setbacks, but when he said that 2018 will be a year of transition, the markets immediately realized this will not be some overnight quick fix. This will take a significant amount of time, energy, and resources to get these concerns resolved."
Arconic's stock is recovering a little bit since last week, but since the beginning of the year it's down 36.81% as of Monday, May 7th, 2018.