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Ford Shares Take Biggest Daily Drop Since 2011 After Inflation Warning

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

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September 20 (Reuters) – Ford Motor Cos (FN) The stock fell more than 12% on Tuesday in its deepest one-day decline in more than a decade after the automaker said inflation-related costs would exceed $1 billion in the current quarter and parts shortages had slowed deliveries.

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

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

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

In July, Ford said it expected raw material costs to rise $4 billion this year. read more

Bigger Detroit manufacturer’s warning comes less than a week after delivery company FedEx Corp (FDX.N) withdrew its financial forecast due to dwindling global demand. read more

Ford’s inflation concerns and FedEx’s weak demand emphasize the ties with which the Federal Reserve finds itself ahead of the US central bank’s policy-making meeting on Wednesday.

The Fed is widely expected to raise interest rates by 75 basis points in its fight against decades-long inflation. Its aggressive monetary policy campaign has battered the US stock market in recent weeks, with investors worried that the Fed’s measures could hamper the economy.

Ford also estimated it would have 40,000 to 45,000 vehicles in stock without parts.

Ford, which will release its third quarter results on Oct. 26, confirmed adjusted earnings before interest and taxes for 2022 of $11.5 billion to $12.5 billion.

It was unclear whether the supply of chips and parts will 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% drop.

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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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